Holding

A maritime claim cannot be recovered by arresting a ship owned by a third party when the party liable in personam is the charterer and not the ship’s de jure owner.

Summary

The case arose from ONGC’s award of a seismic survey contract to Reflect Geophysical, which chartered the vessel Geowave Commander on a bare‑boat basis and entered into charter‑hire agreements with two appellants for the use of their trawlers. The appellants claimed unpaid dues and obtained orders for the arrest of the Geowave Commander, but the vessel’s owners obtained a vacation of the arrest. The Supreme Court examined whether a maritime claim against a charterer who is not the de jure owner can be satisfied by arresting a third‑party ship. Relying on the International Convention on Arrest of Ships (1999) and Indian admiralty statutes, the Court held that arrest is permissible only when the party liable in personam is the owner (or de jure owner) of the vessel sought to be arrested. Since the liability lay with Reflect Geophysical, not the owners of Geowave Commander, the arrest was not maintainable. Consequently, the appeals were dismissed and the interim security deposit was ordered to be returned to the vessel owners.

Issues considered

Whether a maritime claim against a charterer who is not the de jure owner of a ship can be enforced by arresting a vessel owned by a third party.
Whether the appellants’ claim qualifies as a ‘maritime claim’ within the meaning of the 1999 Arrest Convention and Indian admiralty law.
Whether the owners of the respondent vessel can be held liable in personam for the charter‑hire debts of the charterer.

Legislation cited

Administration of Justice Act, 1956s. 1(h), s. 1(j), s. 1(l), s. 3(4)
Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017s. 4(1)(j), s. 4(1)(l), s. 5(b)
International Convention on Arrest of Ships, 1999

Subjects

Admiralty jurisdictionArrest of vesselMaritime claimBareboat charterDe facto vs de jure ownershipInternational Convention on Arrest of Ships 1999Beneficial ownershipIndian Admiralty Act 2017Administration of Justice Act 1956In rem action

Judgment

[2018] 5 S.C.R. 471 471

SUNIL B. NAIK A
v.
GEOWAVE COMMANDER
(Civil Appeal No. 2617 of 2018)
MARCH 09, 2018 B
[J. CHELAMESWAR AND SANJAY KISHAN KAUL, JJ.]
Admiralty laws/Maritime laws: Admiralty jurisdiction – Arrest
of vessel – Maritime claim against charterer of ship who is not dejure
owner of ship – Recovery of amount through a restraint order against
C
the ship owned by a third party – Maintainability of – On facts,
award of contract by ONGC to a foreign company for carrying
seismic survey operations off the coast of Gujarat – Foreign
company in turn entered into a Charter Party Agreement to charter
the vessel-respondent vessel – Charterer further entered into contract
with two appellants for assistance in survey operations to be D
conducted by charterers seismic vessel – Invoices raised by
appellants on Charterers from time to time but payment not made –
Also non-payment of charter hire to owners of respondent vessel –
Admiralty suit by appellants wherein separate order of arrest of
vessel passed – Thereafter, on application by respondent, vacation
E
of ex parte stay by Single Judge of High Court – Upheld by the
Division Bench – On appeal, held: Maritime claim against the
charterer of a ship, who is not the de jure owner of the ship, cannot
be recovered through a restraint order against the ship owned by a
third party – Maritime claim is not maintainable for an action in
rem against the respondent vessel in respect of the dues of the F
appellants when the charterer himself is in default of the payment
to the owner – Maritime claim is in respect of the vessels which are
owned by the appellants and the party liable in personam is charterer
– There could not be a detention of a ship as a security and
guarantee arising from its owner for a claim which is in respect of
G
a non-owner or a charterer of the ship – Amount deposited by the
owners of the respondent vessel, along with accrued interest thereon,
to be remitted back to the owner – International Convention on
Arrest of Ships, 1999.

H
471
472 SUPREME COURT REPORTS [2018] 5 S.C.R.

A Dismissing the appeals, the Court
HELD: 1.1 The charter party is defined as a contract by
which an entire ship, or some principal part thereof, is let by the
owner to another person for a specified time or use. The Charter
can be of two kinds-(i) Charter of demise; and (ii) Contract of
B affreightment. In the instant case, the concern is with the charter
of demise by which the whole vessel is let to the charterer with
the transfer to him of its entire command and possession and
consequent control over its navigation. Such a charter is called a
bareboat charter. A demised charterer, like RG, who is the owner
for services stipulated, assumes in large measures the customary
C rights and liabilities of vessel owners in relation to third persons,
who have dealt with him or with the ship, illustratively, repairs
and supplies ordered for the vessel, wages of seamen, etc. [Para
14, 15] [484-H; 485-A-B; 486-G-H]
M.V. Elisabeth & Ors. v. Harwan Investment & Trading
D Pvt. Ltd. [1992] 1 SCR 1003 : AIR 1993 SC 1014 –
referred to.
Commentary on “Bareboat Charters by Mark Davis 2nd
Edn – referred to.

E 1.2 The emphasis of the respondent is on the maritime claim
being maintained against the owner of the ship and detention of a
ship as a sequitur thereto as security for a decree liable to be
passed against the owners of the ship in personam. It was
submitted that since the claim is stated to be one against RG and
not against the owners, such a detention could not have been
F made. RG in fact, has not even been made a party to the suit, the
entity, which would be liable in personam. [Para 22] [494-B-C]
Liverpool & London S.P. & I Association Limited v. M.V.
Sea Success I & Anr. [2003] 5 Suppl. SCR 851 : (2004)
9 SCC 512 – referred to.
G
1.3 In the interest of international comity, though India is
not a signatory to the Convention of 1999, the principles of the
same are utilized and applied to appropriate situations to
determine whether a ‘maritime claim’, as understood in the
international context has arisen and whether the same warrants
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 473

the arrest of the vessel in question as per its provisions. A
[Para 24] [495-B-C]
1.4 Article 1 of the Convention defines Maritime Claim.
Article 2 stipulates the powers of arrest and sub-clause (2)
clarifies that the ship may be arrested only respect a maritime
claim. Sub-clause (3) stipulates that ship may be arrested for B
purposes of obtaining security notwithstanding that by virtue of a
jurisdiction clause or arbitration clause, it has to be adjudicated
in a State other than the State where it has been arrested. Article
3 deals with the exercise of right of arrest. [Paras 25-27] [495-C-
D, F-H; 496-C-D]
C
1.5 The endeavour of the appellants to bring the claim within
the provisions is naturally opposed by the respondent on the
ground that the agreement between the appellants and RG is
actually a charter hire agreement between RG and the two
appellants. It was contended that there were neither any goods
supplied nor services rendered and, in fact, the survey operations D
never commenced as the ships remained stationed at the port at
place O whereas the respondent vessel never arrived at place
O. RG is stated to have actually engaged the vessels of the
appellant through a charter hire agreement and this cannot form
a part of the maritime claim against the respondent ship. Thus, E
the plea is that the charter hire agreement is for use of the
appellant’s vessel by RG. The respondent is not liable personally
for the maritime claim and, thus, there can be no arrest of the
ship since the ship is not owned by RG. The charter agreement
provisions were referred to (extracted aforesaid) to substantiate
that at present, at best RG was only a de facto owner and not a de F
jure owner and that in order for RG to be de jure owner the
provisions provided how six months in advance of the expiry of
the contract recourse could be had to the same. That occasion
never arose. [Paras 29, 30] [497-D-G; 498-D-E]
1.6 A reference was made to Article 3(3) of the Convention, G
which provides for arrest of the ship only if the judgment in respect
of that claim can be enforced against the ship by judicial or forced
sale of that ship and in the absence of any provision under the
Indian law by which the ship not owned by a person could be
made liable for a maritime claim, the arrest of the ship could not H
474 SUPREME COURT REPORTS [2018] 5 S.C.R.

A take place. The judgment could be obtained only under the
contract which would be against RG. [Para 31] [498-F-G]
Epoch Enterrepots v. M.V. Won Fu [2002] 3 Suppl. SCR
507 : (2003) 1 SCC 305 – referred to.
Medway Drydock & Engineering Co. Ltd. v. M.V.
B Andrea Ursula [1973] QB 265; The “Permina
3001”(1979) Vol. 1 Lloyd’s Law Reports 327; The
“Leoborg” (1962) Vol.. 2. Lloyd’s List Law Reports
146 – referred to.
1.7 The essential ingredients for maintaining a maritime
C claim for which a vessel may be detained were specified as under
that in order to ascertain whether in an action in rem filed in the
Admiralty jurisdiction of the court, the plaintiff is entitled to an
order of arrest of the Defendant vessel, the following needs to
be established: (a) The plaintiff has a maritime claim; (b) The
D vessel in respect of which the plaintiff has a maritime claim; (c)
The party liable in personam in respect of the maritime claim;
and (d) The party liable in personam is the owner of the vessel
sought to be arrested.” [Para 37] [500-D-G]
1.8 The conclusion of the Single Judge, was that there was
E no principle or authority for proposition that a maritime claim for
unpaid charter hire in respect of vessel ‘A’ against the hirer
thereof can be enforced by arresting vessel ‘B’, which is on
bareboat charter of the hirer of the former vessel vis-à-vis vessel
‘A’. [Paras 38, 39] [500-G-H; 501-E-F]

F Polestar Maritime Ltd. v. M.V. Qi Lin Men & Ors.
Admiralty Suit (Lodging) No.3547/2008 decided on
22.10.2008 – referred to.
Maritime law by Christopher Hill 5th Edn – referred
to.
G 1.9 Insofar as the respondent vessel is concerned, there is
no agreement entered into by either of the two appellants and,
thus, it cannot be a maritime claim in respect of Article 1(1)(f) of
the Arrest Convention. Consequently, there would be no occasion
to arrest the vessel under Article 3(1)(b) of the Arrest Convention
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 475

as no maritime claim has resulted in the hands of the demised A
charterer with regard to the demised vessel. The maritime claim
by either of the appellants could, thus, be enforced only by
arresting another vessel owned by RG and the de facto ownership,
could not be converted into a de jure ownership. In respect of
Article 1(1)(l), it was, once again, held that there was no supply
B
of goods to the vessel or of supply of services to the vessel in
question, which was the respondent vessel. Insofar as the
reasoning in appellant’s case, so far as Article 1(1)(l) is concerned,
it has been categorically found that it was not a case where goods
had been given on hire or for use of the respondent vessel.[Para
42] [502-C-F] C
2.1 It is clear from the various terms of the bareboat charter
that RG had the status of a de facto owner. The charter agreement
did contain a clause for conversion of the status into a de jure
owner but the occasion for the same never arose. The option to
purchase was to be exercised by an advance intimation of six D
months prior to the end of the charter period and the purchase
price was also specified as US$ 3,01,50,000. The charterer could
not make any structural changes in the vessel or in the machinery,
boilers, appurtenances or space parts thereof without first
securing the owner’s approval and the vessel had to be restored
to its former condition before the termination of the charter, if so E
required by the owners. This was, thus, a deed between the owner
of the respondent and RG. [Para 44] [502-G-H; 503-A-B]
2.2 The contracts entered into with the appellants by RG
are completely another set of charter hire agreements/contracts.
The unpaid amounts under these contracts amount to claims F
against RG. Thus, if there was another vessel owned by RG, the
appellants would have been well within their rights to seek
detention of that vessel as they have a maritime claim but not in
respect of the respondent vessel. The maritime claim is in respect
of the vessels which are owned by the appellants and the party G
liable in personam is RG. Were the respondent vessel put under
the de jure ownership of RG, the appellants would have been within
their rights to seek a detention order against that vessel for
recovery of their claims. [Para 45] [503-C-E]

H
476 SUPREME COURT REPORTS [2018] 5 S.C.R.

A 2.3 In the facts of the instant case, the owners of the
respondent vessel, in fact, also have a claim against RG for unpaid
charter amount. Thus, unfortunately it is both the owner of the
respondent vessel on the one hand and the appellants on the
other, who have a maritime claim against RG, which has gone
into liquidation. The appellants quite conscious of the limitations
B
of any endeavour to recover the amount from RG, have ventured
into this litigation to somehow recover the amount from, in effect,
the owners of the respondent vessel by detention of the
respondent vessel. That may also be the reason why the appellants
did not even think it worth their while to implead RG against
C whom they have their claim in personam, possibly envisaged as a
futile exercise. [Para 46] [503-E-G]
2.4 The test of the ownership of both the ships as one and
the same is not satisfied in the instant case. The second situation
envisaged is where another ship owned by the charterer is
D detained, i.e., he has taken ‘A’ ship on charter where he has only
de facto ownership and his ship ‘B’ is detained where charterer
has de jure ownership. It cannot be countenanced that where no
in personam claim lies against an entity, still the ship of that entity
taken on bareboat charter can be detained to recover the dues.
The owner of the respondent vessel is as much a creditor of RG
E as the appellants. [Para 48] [504-A-C]
2.5 The arrest of the ship is regarded as a mere procedure
to obtain security to satisfy the judgment. To that extent it is
distinguished from a right in personam to proceed against the
owner but there has to be a liability of the ship owner and in that
F eventuality the legal proceedings commenced in rem would
become a personal action in personam against the defendant when
he enters appearance. There cannot be a detention of a ship as a
security and guarantee arising from its owner for a claim which is
in respect of a non-owner or a charterer of the ship. [Para 49]
G [504-D-E]
2.6 On turning to the provisions of the Convention, a
maritime claim is specified as relating to use or hire of a ship
whether contained in a charter party or otherwise [clause (f)].
Insofar as clause (l) is concerned they relate inter alia to services
H rendered to the ship. Such an order of detention can be in respect
SUNIL B. NAIK v. GEOWAVE COMMANDER 477

of a ship where there is identity of the owner against whom the A
claim in personam lies and the owner of the ship. It cannot be
used to arrest a ship of a third party or a non-owner. [Para 50]
[504-E-G]
2.7 For a claim against the owner of the vessel, a vessel
may be detained and not that somebody else’s vessel would be B
detained for the said purpose. The crucial test would be of
ownership, which in the instant case clearly does not vest with
RG and the de facto ownership under their bareboat charter cannot
be equated to a de jure owner, which is necessary for an action in
personam. [Para 51] [505-A-B]
C
2.8 Mere possession of the ship, however, complete and
whatever be the extent of the control was not found good enough
to confer the status of ownership. The “beneficial use” of a
chartered ship would not ipso facto convert the status of a
charterer into a “beneficial owner.” The attention to the word
“beneficial” in the Act of 1956 was, thus, attributed to the D
requirement to take into account the special English Institution
of Trust which forms no part of domestic law of other signatories
to the Convention. [Para 59] [511-G-H; 512-A-B]
I Congreso Del Partido [1978] Q.B. 500; The “Father
Thames” [1979] 2 Lloyd’s Rep. 364; Mount Royal/ E
Walsh Inc. v. The Ship Jensen Star el al, [1990] 1 F.C
199; Antares Shipping Corporation v. The Ship
‘Capricorn’ et al. [1980] 1 S.C.R. 553 – referred to.
2.9 There is a clear distinction between a beneficial
ownership of a ship and the charterer of a ship. [Para 65] [514-C] F
2.10 The Arrest Convention of 1999, Article 1 specifies
that the maritime claim means a claim inter alia arising out of an
agreement relating to use or hire of “the ship.” The connotation
of “the ship” would mean the 16 trawlers or the OL vessel and
not the respondent ship. Thus, there is no maritime claim against G
the respondent ship. Article 3 deals with the exercise of rights of
arrest and the eventualities are specified thereunder. In terms
of clause (2) of Article 3, the arrest is permissible of any other
ship (which would connote the respondent ship), which, when
the arrest is effected is owned by the person who is liable for the
H
478 SUPREME COURT REPORTS [2018] 5 S.C.R.

A maritime claim. The liability of the maritime claim is RG and not
the owners of the respondent ship. In terms of sub-clause (b) of
clause (2) of Article 3, a demise charterer, time charterer or
voyage charterer of that ship is liable. The ship in question, is
not the respondent but the 16 trawlers or the OL. In view thereof,
really speaking RG cannot be said to be the beneficial owner in
B
the capacity of a demised charterer of the respondent ship. RG is
not the owner of the respondent ship and the owner cannot be
made liable for a maritime claim, which is against the trawlers
and OL vessel. [Para 66] [514-C-G]
2.11 Clause 5(b) of the 2017 Act is in consonance with Article
C 3 of the 1999 Convention. The expression “the vessel”, “owner”
and “demise charterer”, thus, must be read in the aforesaid
context and the maritime claims in respect of 16 trawlers and OL
cannot be converted into a maritime claim against the respondent
ship not owned by RG. [Para 68] [515-B-D]
D 2.12 The appellants have neither any agreement with the
owners of the respondent vessel nor any claim against the
respondent vessel but their claim is on account of their own
vessels hired by the charterer of the respondent vessel. There
is no claim against the owners of the respondent vessel. [Para
E 69] [515-D-E]
2.13 The interim order is dissolved and the amount along
with accrued interest thereon is to be remitted back to the owners
of the respondent vessel, who deposited the same before the
High Court in pursuance of the interim order. [Para 71] [515-F]
F The “Eschersheim” [1976] Vol. I Lloyd’s Law Reports
81-referred to.
Case Law Reference
[1992] 1 SCR 1003 referred to Para 16
G [2003] 5 Suppl. SCR 851 referred to Para 23
[2002] 3 Suppl. SCR 507 referred to Para 36
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2617
of 2018.

H
SUNIL B. NAIK v. GEOWAVE COMMANDER 479

From the Judgment and Order dated 10.05.2013 of the High Court A
of Judicature at Bombay in the Appeal (L) No. 209 of 2013
WITH
C. A. No. 2618 of 2018.
Shekhar Naphade, Sr. Adv., Mrs. Shubhangi Tuli, E. R. Kumar, B
Ms. Rukmini Bobde, Ms. Sonal Gupta, Ms. Anwesha Padhi,
Ms. Aishwarya Bhati, M/s. Parekh & Co, Advs. for the Appellant.
Prashant S. Pratap, Sr. Adv. Siddhartha Dave, Ms. Jemtiben AO,
Senthil Jagadeesan, Advs. for the Respondent.
The Judgment of the Court was delivered by C

SANJAY KISHAN KAUL, J. 1. Leave granted.
2. A maritime claim against the charterer of a ship, who is not the
de jure owner of the ship, and the endeavor to recover that amount
through a restraint order against the ship owned by a third party has D
given rise to the present appeal.
3. Oil and Natural Gas Corporation Limited (for short ‘ONGC’)
awarded a contract to one Reflect Geophysical Pte. Ltd., Singapore
(for short ‘Reflect Geophysical’) for carrying out seismic survey
operations off the coast of Gujarat near the Okha Port in the year 2012.
E
In order to facilitate the carrying out of its obligations, Reflect Geophysical
in turn entered into a Charter Party Agreement vide contract dated
29.6.2012 to charter the vessel ‘Geowave Commander’, the registered
owner being Master and Commander AS Norway,(for short ‘Geowave
Commander’) for a period of three years. The said vessel is stated to
be a specialized ship equipped to carry out seismic survey operations. F
In terms of the said contract, it is defined as a ‘Bareboat Charter’. The
charterer also has the option to purchase the vessel and the owners’
seismic equipment provided the purchase option is declared by the
charterers to the owners in writing latest on 18.1.2015 being six months
prior to the end of the charter period.
G
4. In order to fully appreciate the terms of the charter, it is
necessary to discuss/reproduce some of the clauses of the Charter
Agreement:
“10. Maintained and Operation
H
480 SUPREME COURT REPORTS [2018] 5 S.C.R.

A (a)(i) Maintenance and Repairs: - During the Charter Period the
Vessel shall be in the full possession and at the absolute disposal
for all purposes of the Charters and under their complete control
in every respect. The Charterers shall maintain the Vessel, her
machinery, boilers, appurtenances and spare parts in a good state
of repair. In efficient operating condition and in accordance with
B
good commercial maintenance practice and except as provided
for in Clause 14(1) if applicable at their own expense they shall at
all times keep the Vessel’s class fully upto date and free of overdue
recommendations and/or conditions with the classification.”
xxxx xxxx xxxx xxxx xxxx
C
“(ii) New Class and Other Safety Requirements – In the event of
any improvement, structural changes or new equipment becoming
necessary for the continued operation of the Vessel by reason of
new class requirements or by compulsory legislation costing
(excluding the Charterer’s loss of time) more than the percentage
D stated in Box 23 or if Box 23 is left blank, 5 per cent of the Vessel’s
insurance value as stated in Box 29 then the extent, if any, to
which the rate of hire shall be varied and the ratio in which the
cost of compliance shall be shared between the parties concerned
in order to achieve a reasonable distribution thereof as between
E the Owners and the Charterers having regard, inter alia to the
length of the period remaining under this Charter shall, in the
absence of agreement, be referred to dispute resolution method
agree in Clause 30.
(iii) Financial Security: The Charterers shall maintain financial
F security or responsibility in respect of third party liabilities as
required by any government including federal state or municipal
or other division or authority thereof to enable the Vessel without
penalty or charge, lawfully to enter, remain at or leave any port,
place territorial or contiguous waters of any country, state or
municipality in performance of this Charter without any delay.
G This obligation shall apply whether or not such requirements have
been lawfully imposed by such government or division or authority
thereof. The Charterers shall make and maintain all arrangements
by bond or otherwise as may be necessary to satisfy such
requirements at the Charterers’ sole expenses and the Charterers
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 481
[SANJAY KISHAN KAUL, J.]

shall indemnify the Owners against all consequences whatsoever A
(including loss of time) for any failure or inability to do so.
(b) Operation of the Vessel: The Charterers shall at their own
expense and by their own procurement man, victual, navigate,
operate, supply fuel and whenever required, repair the Vessel during
the Charter Period and they shall pay all charges and expenses of B
every kind and nature whatsoever incidental, to their use and
operation of the Vessel under this Charter, including annual flag
State fees and any foreign general municipality and/or state taxes.
The master officers and crew of the Vessel shall be the servants
of the Charterers for all purpose whatsoever, even for any reason
appointed by the Owners.” C

xxxx xxxx xxxx xxxx xxxx
“(d) Flag and Name of Vessel: During the Charter period, the
Charterers shall have the liberty to paint the Vessel in their own
colours, install and display their funnel insignia and fly their own D
house flag. The Charterer shall also have the liberty, with the
Owners’ and Mortgagee’s prior written consent, which shall not
be unreasonably withheld to change the flag and/or the name of
the Vessel during the Charter Period. Painting and re-painting,
installment and re-installment, registration and re-registration if
required by the Owners shall be at the Mortgage(s) bearing on E
the Vessel that would be required as a result of a change of flag
initiated by the Charterers shall be Charterer’s cost.
(e) Changes to the Vessel: Subject to Clause 10(a)(ii) the Charterers
shall make no structural changes in the Vessel or changes the
machinery, boilers, appurtenances or spare parts thereof without F
in each instance first securing the Owners approval thereof, if the
Owners so agree, the Charterers shall, if the Owners so require,
restore the Vessel to its former condition before the termination
of this Charter.”
…. …. …. …. …. G
“11. Hire
(a) The charterers shall pay hire due to the Owners punctually in
accordance with the terms of this Charter in respect of which
time shall be of the essence.”
H
482 SUPREME COURT REPORTS [2018] 5 S.C.R.

A …. …. …. …. ….
“17. Indemnity
(a) The Charterers shall indemnify the Owners against any loss,
damage or expenses incurred by the Owners arising out of or in
relation to the operation of the Vessel by the Charterers, and against
B any lien of whatsoever nature arising out of an event occurring
during the Charter Period. If the Vessel be arrested or otherwise
detained by reason of claims or liens arising out of her operation
hereunder by the Charterers, the Charterers shall at their own
expense take all reasonable steps to secure that within a reasonable
C time the Vessel is released, including the provision of bail.
Without prejudice to the generality of the foregoing, the Charterers
agree to the indemnify the Owners against all consequences or
liabilities arising from the Master, officers or agents signing Bills
of Lading or other documents.
D (b) If the Vessel be arrested or otherwise detained by reason of a
claim or claims against the Owners the Owners shall at their own
expenses take all reasonable steps to secure that within a
reasonable time the Vessel is released, including the provision of
bail.
E In such circumstances the Owners shall indemnify the Charterers
against any loss, damage or expense incurred by the Charterers
(including hire paid under this Charter) as a direct consequence
of such arrest or detention.”
5. Reflect Geophysical entered into a Charter Hire Agreement on
F 30.10.2012 with M/s. Sunil B. Naik, the appellant in SLP(C) No.18845/
2013, in terms whereof the said appellant agreed to supply 24 fishing
trawlers being the chase vessels to assist in survey operations to be
conducted by the charterers seismic vessel Geowave Commander. The
charter was initially for 16 chase vehicles out of 24 fishing trawlers.
G The said agreement contained a dispute resolution clause 18 providing
for arbitration, which reads as under:
“18. All disputes arising out of or in connection with this Charter
Hire Agreement shall be finally settled in Mumbai under the rules
of India Arbitration Act before three arbitrators appointed in
accordance with the said Rules. Each party shall appoint one such
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 483
[SANJAY KISHAN KAUL, J.]

arbitrator and the two so appointed by the parties shall jointly A
appoint the third.”
6. It is the case of the appellant that the 16 vessels were made
ready for Reflect Geophysical to ensure that fishing vessels were kept
well clear of the towed in water seismic equipment so that their fishing
equipment is not damaged. The daily hiring rate, as per the agreement, B
varies for the different nature of vehicles. The said appellant also claims
that the vessels were mobilized at Okha port but the fact remains that
the respondent ship never went to Okha and was at the Pipavav port
from where it went to Mumbai.
7. Similarly Yusuf Abdul Gani, appellant in SLP(C) No.18899/ C
2013, agreed to give on hire the ‘Orion Laxmi’ to Reflect Geophysical to
work in support with the survey vessel ‘Geowave Commander’ vide
contract dated 1.10.2012. The purpose was to supply standby and
emergency towing duties. The two appellants claim to have raised invoices
on Reflect Geophysical from time to time, which are stated not to have
been paid. Reflect Geophysical also failed to pay the owners of the D
respondent vessel and consequently the owners gave a notice of default
dated 4.3.2013 to the charterers, Reflect Geophysical, for non-payment
of charter hire aggregating to US$ 4,36,790 (approximately Rs.2.23
crore). Reflect Geophysical, however, filed an application in the
Singapore Court for placing the company under judicial management, E
which was published in a notification dated 15.3.2013 in the Singapore
Gazette.
8. Sunil B. Naik issued a demand notice to Reflect Geophysical
for payment of outstanding dues on 16.3.2013. Yusuf Abdul Gani is also
said to have raised various invoices to Reflect Geophysical in respect of F
the dues arising out of the contract, between 16.11.12 and 16.2.13.
9. Yusuf Abdul Gani, moved the Bombay High Court by filing a
suit against the respondent vessel as an admiralty suit and obtained an
order on 15.3.2013 for arrest of the vessel. Similarly, on Reflect
Geophysical expressing its inability to make payments on account of G
lack of funds, Sunil B. Naik, filed an admiralty suit and obtained an order
of arrest of vessel on 12.4.2013. As noted, the vessel was already under
arrest in pursuance of the order passed in Yusuf Abdul Gani’s case.
10. The owners of the respondent vessel, Master and Commander
AS Norway, filed a notice of motion in the two proceedings for vacation
H
484 SUPREME COURT REPORTS [2018] 5 S.C.R.

A of the ex parte arrest of vessel. On hearing being held, the learned
single Judge on 17.4.2013 vacated the ex parte stay. The two appellants,
as aggrieved parties, moved the Division Bench of the Bombay High
Court, which dismissed the appeal on 10.5.2013. That is how the present
appeals were filed.
B 11. In the present appeals while issuing notice on 17.5.2013 an
interim arrangement was made whereby the respondent was directed to
deposit a sum of Rs.1 crore in each case as security before the Bombay
High Court and on such deposit the vessels were permitted to sail. The
amounts were directed to be kept in fixed deposits. We were informed
that these amounts were accordingly deposited and are lying in fixed
C deposits. The ship set sail. The question, thus, would be whether the
appellants are entitled to appropriate this amount along with interest against
their dues or whether the respondent is entitled to release of the amount
so deposited in Court.
The Legal Conundrum:
D
12. We are faced with the aforesaid factual position where there
are actually three creditors of Reflect Geophysical, being the owners of
the respondent ship and the appellants, who entered into contracts with
Reflect Geophysical to provide assistance in the operation of the task
for which the ship was engaged.
E
13. The first question, thus, which would arise is whether a maritime
claim could be maintained under the admiralty jurisdiction of the High
Court for an action in rem against the respondent ship in respect of the
dues of the appellants when the charterer himself is in default of the
payment to the owner. The case of the appellants, on the one hand, is
F that there is a liability of the respondent vessel on account of the charter
agreement and the rights and obligations of the charterer while the
respondent, who has succeeded before both the forums, seeks to establish
that the claim of the appellants cannot be categorized as a maritime
claim for invoking the admiralty jurisdiction of the High Court and that
G the vessel, thus, could not be arrested to secure such a claim of the
appellants.
Bareboat Charter:
14. The charter party is defined as a contract by which an entire
ship, or some principal part thereof, is let by the owner to another person
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 485
[SANJAY KISHAN KAUL, J.]

for a specified time or use. The Charter can be of two kinds – (i) A
Charter of demise; and (ii) Contract of affreightment. In the present
case, we are concerned with the charter of demise by which the whole
vessel is let to the charterer with the transfer to him of its entire command
and possession and consequent control over its navigation. Such a charter
is called a bareboat charter. It would be apposite at this stage to refer to
B
the Mark Davis’ Commentary on “Bareboat Charters” 2 nd Edition where
the nature and character of demised charters has been explained as
follows:
“A fundamental distinction is drawn under English law between
charter parties which amount to a demise or lease of a ship, and
those which do not. The former category, known as charters by C
demise, operate as a lease of the ship pursuant to which possession
and control passes from the owners to the charterers whilst the
latter, primarily comprising time and voyage charters, are in essence
contracts for the provision of services, including the use of the
chartered ship. Under a lease, it is usual for the owners to supply D
their vessel “bare” of officers and crew, in which case the
arrangement may correctly be termed a “bareboat” charter. The
charterers become for the duration of the charter the de facto
“owners” of the vessel, the master and crew act under their orders,
and through them they have possession of the ship.
E
A statement of the hallmarks of a demise charter can be found in
the judgment of Evans LJ in The Giuseppe di Vittorio [1998] 1
Lloyd’s Rep 136 at p 156:
“What then is the demise charter? Its hallmarks, as it seems to
me, are that the legal owner gives the charterer sufficient of F
the rights of possession and control which enable the transaction
to be regarded as a letting – a lease, or demise, in real property
terms – of the ship. Closely allied to this is the fact that the
charterer becomes the employer of the master and crew. Both
aspects are combined in the common description of a ‘bareboat’
lease or hire arrangement.” G
As indicated, charter parties which do not amount to a demise or
lease of a ship (Including time charters and voyage charters) are
classified in English law as contracts of affreightment, pursuant
to which the owners agree to carry goods by sea in return for a
H
486 SUPREME COURT REPORTS [2018] 5 S.C.R.

A sum of money. Although the charterers have a right as against
the owners to have their goods carried on the vessel, the ownership
and the possession of the ship remains with the owners through
the master and crew who remain their servants.
Whether or not a charter party amounts to a demise charter
B depends in every case upon the precise terms of the charter, taking
the instrument as a whole. The test has been summarized as
follows:
“The question depends, where other things are not in the way,
upon this: whether the owner has by the charter, where there
C is a charter, parted with the whole possession and control of
the ship, and to this extent, that he has given to the charterer a
power and right independent of him, and without reference to
him to do what he pleases with regard to the captain, the crew,
and the management and employment of the ship. That has
been called a letter or demise of the ship. The right expression
D is that it is a parting with the whole possession and control of
the ship.”
Thus, although time charters almost always contain words such
as “let”, “hire”, “delivery” and “redelivery”, the use of such words
are inapt in such a context, and are not in any sense to be regarded
E as conclusive, when determining the nature of the charter.
In Sea and Land Securities v. William Dickinson MacKinnon LJ
traced the origin of these words to demise charters, and at page
163 emphasised the difference between demise and time charters
thus: “there is all the difference between hiring a boat in which to
F row yourself about, in which case the boat is handed over to you,
and contracting with a man on the beach that he shall take you for
a row, in which case he merely renders services in rowing you
about.”
15. A demised charterer, like Reflect Geophysical, who is the owner
G for services stipulated, assumes in large measures the customary rights
and liabilities of vessel owners in relation to third persons, who have
dealt with him or with the ship, illustratively, repairs and supplies ordered
for the vessel, wages of seamen, etc.

H
SUNIL B. NAIK v. GEOWAVE COMMANDER 487
[SANJAY KISHAN KAUL, J.]

Maritime Claims & Admiralty Jurisdiction in India: A
16. This Court in M.V. Elisabeth &Ors. v. Harwan Investment
& Trading Pvt. Ltd.1 had an opportunity to discuss the scope of exercise
of the admiralty jurisdiction and consequently of an action in rem. The
Admiralty Court Act, 1861, was referred to in this behalf but that was
stated not to inhibit the exercise of jurisdiction by the High Court subject B
to its own rules, in exercise of its maritime jurisdiction. The fact that the
High Court continues to enjoy the same jurisdiction as it had immediately
before the commencement of the Constitution (Article 225 of the
Constitution of India) was to be read in the context of the judicial
sovereignty of the country manifested in the jurisdiction of the High
Courts as superior courts, thus, though the colonial statutes may remain C
in force, by virtue of Article 372 of the Constitution of India, that was
observed not to stultify the growth of law or blinker its vision or fetter its
arms. The latter Admiralty Act of 1890 was said not to incorporate any
particular English statue into the Indian law for the purpose of conferring
admiralty jurisdiction, but to assimilate the competent courts in India to D
the position of the English High Court. The lack of legislative exercise
was noted with regret. The said lament apparently has still not had its
full impact!
17. The draft Admiralty Act of 1987, did not see the light of the
day. Section 3 of that Act seeks to define the admiralty jurisdiction of E
the court. The fate was no different for the draft Admiralty Act of 1999,
Section 5 of which defines the admiralty jurisdiction. Finally, we have
The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act,
2017, which was passed by the Parliament and received the assent of
the President of India on 9.8.2017 and was duly published in the Gazette
on the said date but the date of its coming into force has still not been F
notified. Interestingly, the statement of object and reasons of this Act
itself refers to the desirability of the codifying and clarifying the admiralty
law in view of the observations of this Court in M.V. Elisabeth &Ors.2.
The present dispute is, once again, a reminder to the Government of the
necessity of bringing into force the said Act! G
18. We may note that these Acts were referred to by Mr. Shekhar
Naphade, learned Senior Advocate appearing for the appellant, Sunil B.
Naik, for purposes of elucidating the expanding admiralty jurisdiction as
1
AIR 1993 SC 1014
2
supra H
488 SUPREME COURT REPORTS [2018] 5 S.C.R.

A observed in M.V. Elisabeth &Ors.3. Thus, Section 3(1)(h),( j) & (l) of
the 1987 Act was referred, which reads as under:
“3. Admiralty Jurisdiction of the Court. – (1) The Admiralty
Jurisdiction of the Court shall be as follows, that is to say
Jurisdiction to hear and determine any of the following questions
B or claims:
xxxx xxxx xxxx xxxx xxxx
(h) Any claim arising out of any Agreement relating to the carriage
of goods in a ship or to the use or hire of a ship;

C xxxx xxxx xxxx xxxx xxxx
(j) Any claim in the nature of towage in respect of a ship or any
aircraft;
xxxx xxxx xxxx xxxx xxxx
(l) Any claim in respect of goods, materials, bunker or other
D
necessaries supplied to a ship for her operation of maintenance.”
19. The claim of the appellants was sought to be brought within
the expression “or to use or hire of a ship”. The same aforesaid clause
of 1999 Act was also referred to state that the expression “operation or
maintenance” was specified “operation or maintenance.” The object, it
E
was, thus, pleaded, in the expanding jurisdiction was to include any
services rendered to the ship and it was claimed that the appellants had
actually rendered those services in the form of the agreement with Reflect
Geophysical. Insofar as 2017 Act is concerned, the provision of Section
4(1)(j) & (l) were referred to, which read as under:
F “4. Maritime claim. – (1) The High Court may exercise
jurisdiction to hear and determine any question on a maritime claim,
against any vessel, arising out of any –
xxxx xxxx xxxx xxxx xxxx

G (j) towage;
xxxx xxxx xxxx xxxx xxxx
(l) goods, materials, perishable or non-perishable provisions, bunker
fuel, equipment (including containers), supplied or services rendered
3
supra
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 489
[SANJAY KISHAN KAUL, J.]

to the vessel for its operation, management, preservation or A
maintenance including any fee payable or leviable.”
20. In respect of the aforesaid clause (l), once again, it is claimed
that the appellant rendered services to the vessel for its operation and
management. Section 6 of that Act also provides for admiralty jurisdiction
in personam in respect of a maritime claim. B
21. Mr. Prashant S. Pratap, learned Senior Advocate appearing
for the respondent referred to the same judgment in M.V. Elisabeth
&Ors.4to emphasise that despite the expanding jurisdiction of the courts,
certain fundamentals have to be kept in mind as reflected in the
observations made in the said judgment. As to what is the object of C
exercise of jurisdiction in rem and the manner of exercise is discussed in
the following paragraphs:
“44. “The law of admiralty, or maritime law, …. (is the) corpus of
rules, concepts, and legal practices governing … the business of
carrying goods and passengers by water.” (Gilmore and Black, D
The Law of Admiralty, page 1). The vital significance and the
distinguishing feature of an admiralty action in rem is that this
jurisdiction can be assumed by the coastal authorities in respect
of any maritime claim by arrest of the ship, irrespective of the
nationality of the ship or that of its owners, or the place of business
or domicile or residence of its owners or the place where the E
cause of action arose wholly or in part.
45.… In admiralty the vessel has a juridicial personality, an almost
corporate capacity, having not only rights but liabilities (sometimes
distinct from those of the owner) which may be enforced by process
and decree against the vessel, binding upon all interested in her F
and conclusive upon the world, for admiralty in appropriate cases
administers remedies in rem, i.e., against the property, as well as
remedies in personam, i.e., against the party personally ….”
(Benedict, The Law of American Admiralty, 6th ed., Vol. I p. 3.)
46. Admiralty Law confers upon the claimant a right in rem to G
proceed against the ship or cargo as distinguished from a right in
personam to proceed against the owner. The arrest of the ship is
regarded as a mere procedure to obtained security to satisfy
judgment. A successful plaintiff in an action in rem has a right to
4
supra H
490 SUPREME COURT REPORTS [2018] 5 S.C.R.

A recover damages against the property of the defendant. “The
liability of the ship owner is not limited to the value of the res
primarily proceeded against …. An action … though originally
commenced in rem, becomes a personal action against a defendant
upon appearance, and he becomes liable for the full amount of a
judgment unless protected by the statutory provisions for the
B
limitation of liability”.’ (Roscoe’s Admiralty Practice, 5th ed. p.
29)
47. The foundation of an action in rem, which is a peculiarity of
the Anglo-American law, arises from a maritime lien or claim
imposing a personal liability upon the owner of the vessel. A
C defendant in an admiralty action in personam is liable for the full
amount of the plaintiff’s established claim. Likewise, a defendant
acknowledging service in an action in rem is liable to be saddled
with full liability even when the amount of the judgment exceeds
the value of the res or of the bail provided. An action in rem lies in
D the English High Court in respect of matters regulated by the
Supreme Court Act 1981, and in relation to a number of claims
the jurisdiction can be invoked not only against the offending ship
in question but also against a ‘sistership’ i.e., a ship in the same
beneficial ownership as the ship in regard to which the claim arose.
E “The vessel which commits the aggression is treated as the
offender, as the guilty instrument or thing to which the forfeiture
attaches, without any reference whatsoever to the character or
conduct of the owner ….” (Per Justice Story, The United States
v. The Big Malek Adhel [43 US (2 How) 210, 233 (1844)] ).

F xxxx xxxx xxxx xxxx xxxx
59. The real purpose of arrest in both the English and the Civil
Law systems is to obtain security as a guarantee for satisfaction
of the decree, although arrest in England is the basis of assumption
of jurisdiction, unless the owner has submitted to jurisdiction. In
G any event, once the arrest is made and the owner has entered
appearance, the proceedings continue in personam. All actions in
the civil law — whether maritime or not — are in personam, and
arrest of a vessel is permitted even in respect of non-maritime
claims, and the vessel is treated as any other property of the owner,
and its very presence within jurisdiction is sufficient to clothe the
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 491
[SANJAY KISHAN KAUL, J.]

competent tribunal with jurisdiction over the owner in respect of A
any claim. [See D.C. Jackson, Enforcement of Maritime Claims,
(1985) Appendix 5] [ See D.C. Jackson, Enforcement of Maritime
Claims, (1985) Appendix 5, p. 437 et seq.] . Admiralty actions in
England, on the other hand, whether in rem or in personam, are
confined to well defined maritime liens or claims and directed
B
against the res(ship, cargo and freight) which is the subject-matter
of the dispute or any other ship in the same beneficial ownership
as the res in question.”
xxxx xxxx xxxx xxxx xxxx
“99. What then was the jurisdiction that the Court of England C
exercised in 1890? The law of Admiralty was developed by English
courts both as a matter of commercial expediency and due to
equity and justice. Originally it was a part of common law
jurisdiction, but the difficulty of territorial limitations, constraints
of common law and the necessity to protect the rights and interests
of its own citizens resulted in growth of maritime lien a concept D
distinct from common law or equitable lien as it represents a charge
on maritime property of a nature unknown alike to the common
law or equity. The Privy Council explained it as ‘a claim or privilege
upon a thing to be carried into effect by legal process’ [Harmer v.
Bell, (1851) 7 Moo PC 267 : 13 ER 884] . Law was shaped by E
exercise of discretion to what appeared just and proper in the
circumstances of the case. Jurisdiction was assumed for injurious
act done on high seas and the scope was extended, ‘not only to
British subjects but even to aliens’ [Hailey (The), LR 2 PC 193] .
Maritime law has been exercised all over the world by Maritime
powers. In England it was part of Municipal law but with rise of F
Britain as empire the law grew and it is this law, that is, ‘Maritime
Law that is administered by the Admiralty Court’ [Halsbury’s Laws
of England, 4th Edn., Vol. 1] . From the Maritime law sprang the
right known as Maritime lien ascribing personality to a ship for
purposes of making good loss or damage done by it or its master G
or owner in tort or contract. In England it grew and was developed
in course of which its scope was widened from damage done by
a ship to claims of salvor, wages, bottomry, supply of necessaries
and even to bills of lading. Its effect was to give the claimant a
charge on res from the moment the lien arose which follows the
H
492 SUPREME COURT REPORTS [2018] 5 S.C.R.

A res even if it changed hands. In other words a maritime lien
represented a charge on the maritime property. The advantage
which accrued to the maritime lienee was that he was provided
with a security for his claim up to the value of the res. The essence
of right was to identify the ship as wrongdoer and compel it by the
arrest to make good the loss. Although the historical review in
B
England dates back to the 14th Century but its statutory recognition
was much later and ‘maritime law came to jurisprudential maturity
in the first half of the 19th Century’ [Maritime Liens by D.R.
Thomas]. And the first statutory recognition of such right came in
1840 when the Admiralty Court Act of 1840 was enacted
C empowering the admiralty court to decide all questions as to the
title or ownership of any ship or vessel or the procedure thereof
remaining in the territory arising in any cause of possession,
salvage, damage, wages or bottomry. By clause (6) of the Act
jurisdiction was extended to decide all claims and demands
whatsoever in the nature of salvage for services rendered to or
D
damage received by any ship or sea-going vessel or in the nature
of towage or for necessaries supplied to any foreign ship or sea-
going vessel and the payment thereof whether such ship or vessel
may have been within the body of a country or upon the high seas
at the time when the services were rendered or damage received
E or necessary furnished in respect of such claims. But the most
important Act was passed in 1861 which expanded power and
jurisdiction of courts and held the field till it was replaced by
Administration of Justice Act, 1920. The importance of the Act
lay in introducing the statutory right to arrest the res on an action
in rem. Section 35 of the 1861 Act provided that the jurisdiction
F
by the High Court of Admiralty could be exercised either by
proceedings in rem or proceedings in personam. “The essence of
the rem in procedure is that ‘res’ itself becomes, as one might
say, the defendant, and ultimately the ‘res’ the ship may be arrested
by legal process and sold by the Court to meet the plaintiff’s claim.
G The primary object, therefore, of the action in rem is to satisfy the
claimant out of the res” [Maritime Lawby Christopher Hill] . If
the 1840 Act was important for providing statutory basis for various
types of claims then 1861 Act was a step forward in expanding
the jurisdiction to claims of bill of lading. Section 6 of the Act was
construed liberally so as to confer jurisdiction and the expression
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 493
[SANJAY KISHAN KAUL, J.]

‘carried into any port was’ was expanded to mean not only when A
the goods were actually carried but even if they were to be carried
[(The) Ironsides, 167 ER 205(The) St. Cloud, 167 ER 29(The)
Norway, 167 ER 347] . Further the section was interpreted as
providing additional remedy for breach of contract [ Carter: History
of English Courts] . By the Jurisdiction Act of 1873 the court of
B
Admiralty was merged in High Court of Justice. Result was that
it obtained jurisdiction over all maritime cases. Therefore what
was covered by enactments could be taken cognisance of in the
manner provided in the Act but there was no bar in respect of any
cause of action which was otherwise cognizable and arose in
Admiralty. Section 6 of 1861 Act was confined to claim by the C
owner or consignee or assignee of any bill of lading of any goods
carried into any port in England or Wales (to be read as India).
But it did not debar any action or any claim by the owner or
consignee or assignee of any bill of lading in respect of cargo
carried out of the port. Even if there was no provision in 1861
D
Act, as such, the colonies could not be deprived under 1890 Act
from exercising jurisdiction on those matters which were not
provided by 1861 Act but could be exercised or were otherwise
capable of being exercised by the High Court of England. ‘The
theory was that all matters arising outside the jurisdiction of
common law i.e. outside the body of a country were inside the E
jurisdiction of Admiralty’ [Carter: History of English Courts]. ‘That
this Court had originally cognizance of all transaction civil and
criminal, upon the high seas, in which its own subjects were
concerned, is no subject of controversy’ [ Lord Stowell in ‘The
Hercules’ 2 Dod. 371] . To urge, therefore, that the Admiralty
F
court exercising jurisdiction under 1890 Act could not travel beyond
1861 Act would be going against explicit language of the Statute.
Even now, the Admiralty jurisdiction of the High Court of Justice
in England is derived ‘partly from Statute and partly from the
inherent jurisdiction of Admiralty’ [Maritime Liens by D.R.
Thomas] . Observations of Lord Diplock in Jade (The) [ See G
D.C. Jackson, Enforcement of Maritime Claims, (1985) Appendix
5, p. 437 et seq.] that Admiralty jurisdiction was statutory only
have to be understood in the context they were made. By 1976
the statutory law on Admiralty had become quite comprehensive.
Brother Thommen, J., has dealt with it in detail. Therefore those
H
494 SUPREME COURT REPORTS [2018] 5 S.C.R.

A observations are not helpful in deciding the jurisdiction that was
exercised by the High Court in England in 1890.”
(emphasis supplied)
22. The emphasis of the respondent is, thus, on the maritime claim
being maintained against the owner of the ship and detention of a ship as
B a sequitur thereto as security for a decree liable to be passed against the
owners of the ship in personam. Since the claim is stated to be one
against Reflect Geophysical and not against the owners, such a detention
could not have been made, it was contended. Reflect Geophysical, in
fact, has not even been made a party to the suit, the entity, which would
C be liable in personam.
International Convention on Arrest of ship, 1999:
23. The provisions of the aforesaid Convention have been referred
to especially keeping in mind the observations of this Court in Liverpool
& London S.P. & I Association Limited v. M.V. Sea Success I &
D Anr.5,which read as under:
“57. This Court in M.V. Elisabeth [M.V. Elisabeth v. Harwan
Investment and Trading (P) Ltd., 1993 Supp (2) SCC 433]
observed that Indian statutes lag behind any development of
international law and further it had not adopted the various
E conventions but opined that the provisions thereof having been
made as a result of international unification and development of
the maritime laws of the world should be regarded as the
international common law or transnational law rooted in and
evolved out of the general principles of national laws, which, in
F the absence of any specific statutory provisions can be adopted
and adapted by courts to supplement and complement national
statutes on this subject.”
xxxx xxxx xxxx xxxx xxxx
“59.M.V. Elisabeth [M.V. Elisabeth v. Harwan Investment and
G Trading (P) Ltd., 1993 Supp (2) SCC 433] is an authority for the
proposition that the changing global scenario should be kept in
mind having regard to the fact that there does not exist any primary
act touching the subject and in absence of any domestic legislation
to the contrary; if the 1952 Arrest Convention had been applied,
5
H (2004) 9 SCC 512
SUNIL B. NAIK v. GEOWAVE COMMANDER 495
[SANJAY KISHAN KAUL, J.]

although India was not a signatory thereto, there is obviously no A
reason as to why the 1999 Arrest Convention should not be applied.
60. Application of the 1999 Convention in the process of interpretive
changes, however, would be subject to: (1) domestic law which
may be enacted by Parliament; and (2) it should be applied only
for enforcement of a contract involving public law character.” B
24. Therefore, in the interest of international comity, though India
is not a signatory to the Convention of 1999, the principles of the same
are utilized and applied to appropriate situations to determine whether a
‘maritime claim’, as understood in the international context has arisen
and whether the same warrants the arrest of the vessel in question as C
per its provisions.
25. Article 1 of the Convention defines ‘Maritime Claim to include:
“Article 1
Definitions
D
For the purposes of this Convention:
1. “Maritime Claim” means a claim arising out of one or more of
the following:
xxxx xxxx xxxx xxxx xxxx
E
“(f) any agreement relating to the use or hire of the ship, whether
contained in a charter party or otherwise;”
xxxx xxxx xxxx xxxx xxxx
“(l) goods, materials, provisions, bunkers, equipment (including
containers) supplied or services rendered to the ship for its F
operation, management, preservation or maintenance;”
26. Article 2 stipulates the powers of arrest and sub-clause (2)
clarifies that the ship may be arrested only respect a maritime claim.
Sub-clause (3) stipulates that ship may be arrested for purposes of
obtaining security notwithstanding that by virtue of a jurisdiction clause G
or arbitration clause, it has to be adjudicated in a State other than the
State where it has been arrested. For an elucidation we reproduce the
said clauses:

H
496 SUPREME COURT REPORTS [2018] 5 S.C.R.

A “Article 2
Powers of arrest
xxxx xxxx xxxx xxxx xxxx
2. A ship may only be arrested in respect of a maritime claim but
in respect of no other claim.
B
3. A ship may be arrested for the purpose of obtaining security
notwithstanding that, by virtue of a jurisdiction clause or arbitration
clause in any relevant contract, or otherwise, the maritime claim
in respect of which the arrest is effected is to be adjudicated in a
State other than the State where the arrest is effected, or is to be
C arbitrated, or is to be adjudicated subject to the law of another
State.”
27. Article 3 deals with the exercise of right of arrest, which reads
as under:

D “Article 3
Exercise of right of arrest
1. Arrest is permissible of any ship in respect of which a maritime
claim is asserted if:
(a) the person who owned the ship at the time when the maritime
E claim arose is liable for the claim and is owner of the ship when
the arrest is effected; or
(b) the demise charterer of the ship at the time when the maritime
claim arose is liable for the claim and is demise charterer or owner
of the ship when the arrest is effected; or
F (c) the claim is based upon a mortgage or a “hypothèque” or a
charge of the same nature on the ship; or
(d) the claim relates to the ownership or possession of the ship; or
(e) the claim is against the owner, demise charterer, manager or
G operator of the ship and is secured by a maritime lien which is
granted or arises under the law of the State where the arrest is
applied for.
2. Arrest is also permissible of any other ship or ships which,
when the arrest is effected, is or are owned by the person who is
liable for the maritime claim and who was, when the claim arose:
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 497
[SANJAY KISHAN KAUL, J.]

(a) owner of the ship in respect of which the maritime claim arose; A
or
(b) demise charterer, time charterer or voyage charterer of that
ship.
This provision does not apply to claims in respect of ownership or B
possession of a ship.
3. Notwithstanding the provisions of paragraphs 1 and 2 of this
article, the arrest of a ship which is not owned by the person liable
for the claim shall be permissible only if, under the law of the
State where the arrest is applied for, a judgment in respect of that C
claim can be enforced against that ship by judicial or forced sale
of that ship.”
28. We may note that the claim of the appellant, Sunil B. Naik, is
based on the definition clause of the maritime claim clause (f) & (l) as
discussed even in the impugned order while the claim of Yusuf Abdul D
Gani is restricted to clause (f).
29. The endeavour of the appellants to bring the claim within the
aforesaid provisions is naturally opposed by the respondent on the ground
that the agreement between the appellants and Reflect Geophysical is
actually a charter hire agreement between Reflect Geophysical and the E
two appellants. It was contended that there were neither any goods
supplied nor services rendered and, in fact, the survey operations never
commenced as the ships remained stationed at the port at Okha whereas
the respondent vessel never arrived at Okha. Reflect Geophysical is
stated to have actually engaged the vessels of the appellant through a
F
charter hire agreement and this cannot form a part of the maritime claim
against the respondent ship. In this behalf, reference has been made to
the judgment in The “Eschersheim”6. The relevant portion, which is
also reproduced in the impugned judgment is extracted as under:
“In my opinion there is no good reason for excluding from the
G
expression “an agreement for the use or hire of a ship” any
agreement which an ordinary ASN 12/14 Appeal-209-13.doc
business man would regard as being within it. If which an ordinary
business man would regard as being within it. If A and B make an

6
[1976] Vol. I Lloyd’s Law Reports 81 H
498 SUPREME COURT REPORTS [2018] 5 S.C.R.

A agreement for A’s ship to be used for carrying out any operation
for B, I consider that the agreement is one for the use, if not for
the hire of the ship. Thus an agreement for a ship to be employed
for dredging, towing, cable laying and salvage would be an
agreement for the use of the ship. But is an agreement for dredging
or towage or cable laying or salvage an agreement for the use of
B
a ship if there is no express reference in the agreement to any
such use. If the operation can only be carried by means of a ship.
I consider that the agreement must be one for the use or hire of a
ship. A towage agreement would therefore always come within
the words. Dredging or cable laying could conceivably be
C performed by other means but in the great majority of cases it
would be so obvious that the use of a ship must be intended that
this would be implied.....”
30. Thus, the plea is that the charter hire agreement is for use of
the appellant’s vessel by Reflect Geophysical. The respondent is not
D liable personally for the maritime claim and, thus, there can be no arrest
of the ship since the ship is not owned by Reflect Geophysical. The
charter agreement provisions were referred to (extracted aforesaid) to
substantiate that at present, at best Reflect Geophysical was only a de
facto owner and not a de jure owner and that in order for Reflect
Geophysical to be de jure owner the provisions provided how six months
E in advance of the expiry of the contract recourse could be had to the
same. That occasion never arose.
31. A reference was, thus, made to Article 3(3) of the aforesaid
Convention, which provides for arrest of the ship only if the judgment in
respect of that claim can be enforced against the ship by judicial or
F forced sale of that ship and in the absence of any provision under the
Indian law by which the ship not owned by a person could be made
liable for a maritime claim, the arrest of the ship could not take place.
The judgment could be obtained only under the contract which would be
against Reflect Geophysical.
G 32. Mr. Naphade, learned Senior Advocate for the appellants has
referred to the judgment in Medway Drydock & Engineering Co. Ltd.
v. M.V. Andrea Ursula7 dealing with the action in rem on the question
whether the ship under a demised charter is “beneficially owned as
respects all the shares therein” by the charterer, within the meaning of
7
H [1973] QB 265
SUNIL B. NAIK v. GEOWAVE COMMANDER 499
[SANJAY KISHAN KAUL, J.]

the expression in Section 3(4) of the Administration of Justice Act, 1956. A
It was observed that “a ship would be beneficially owned by the person
who, whether or not he was the legal or equitable owner or not, lawfully
had full possession and control of her, and, by virtue of such possession
and control, had all the benefit and use of her which a legal or equitable
owner would ordinarily have.”
B
33. In the aforesaid context it may be noticed that in Section 1 of
the Administration of Justice Act, 1956, the Admiralty jurisdiction could
be invoked inter alia in the following case:
“1. Admiralty jurisdiction of the High Court
(I) The Admiralty jurisdiction of the High Court shall be as follows, C
that is to say, jurisdiction to hear and determine any of the following
questions or claims -
xxxx xxxx xxxx xxxx xxxx
(h) any claim arising out of any agreement relating to the carriage D
of goods in a ship or to the use or hire of a ship;”
34. A reference, has, thus, also been made to the decision in The
“Permina 3001”8 of the Singapore Court of Appeal, the relevant portion
of which reads as under:
“The question is what do the words “beneficially owned as respects E
all the shares therein” mean in the context of the Act. These
words are not defined in the Act. Apart from authority, we would
construe them to refer only to such ownership of a ship as is
vested in a person who has the right to sell, dispose of or alienate
all the shares in that ship. Our construction would clearly cover
F
the case of a ship owned by a person, who whether he is the legal
owner or not, is in any case the equitable owner of all the shares
therein. It would not, in our opinion, cover the case of a ship
which is in the full possession and control of a person who is not
also the equitable owner of all the shares therein. In our opinion,
it would be a misuse of language to equate full possession and G
control of a ship with beneficial ownership as respects all the
shares in a ship. The word “ownership” connotes title, legal or
equitable whereas the expression “possession and control”,
however full and complete, is not related to title. Although a person
8
(1979) Vol. 1 Lloyd’s Law Reports 327 H
500 SUPREME COURT REPORTS [2018] 5 S.C.R.

A with only full possession and control of a ship, such as a demise
charterer, has the beneficial use of her, in our opinion he does not
have the beneficial ownership as respects all the shares in the
ship and the ship is not “beneficially owned as respects all the
shares therein” by him within the meaning of s.4(4).”
B 35. In an ex parte case in The “Leoborg”9 the Admiralty Judge
dealt with a claim of escorting services provided by a tug from outside a
port into a port for services in the nature of towage.
36. The Appellants have also placed reliance on the case of Epoch
Enterrepots v. M.V. Won Fu10to differentiate between different types
C of charter parties and to assert that in the case of a demise charter, the
charterer has complete control of the vessel.
The Legal view which prevailed with the Courts below:
37. The bedrock of the submissions of Mr. Prashant S. Pratap,
learned Senior Advocate, who appeared even in the proceedings before
D the Courts below would show that the plea of no right of arrest of the
respondent vessel was based on Reflect Geophysical not being the owner
but only a charterer of the vessel. The essential ingredients for maintaining
a maritime claim for which a vessel may be detained were specified as
under:
E “In order to ascertain whether in an action in rem filed in the
Admiralty jurisdiction of the court, the Plaintiff is entitled to an
order of arrest of the Defendant vessel, the following needs to be
established:
(a) The plaintiff has a maritime claim;
F
(b) The vessel in respect of which the plaintiff has a maritime
claim;
(c) The party liable in personam in respect of the maritime
claim; and
G (d) The party liable in personam is the owner of the vessel
sought to be arrested.”
38. The learned single Judge opined that the claim in Yusuf Abdul
Gani’s case was in respect of use or hire of another ship Orion Laxmi
9
(1962) Vol.. 2. Lloyd’s List Law Reports 146
H 10
(2003) 1 SCC 305
SUNIL B. NAIK v. GEOWAVE COMMANDER 501
[SANJAY KISHAN KAUL, J.]

and the claim, thus, could not be maintained against the respondent vessel. A
It was stated to be a claim in personam against Reflect Geophysical
and thus, only a vessel owned by Reflect Geophysical could have been
restrained. The learned single Judge also records that it has not been
the case of Yusuf Abdul Gani that Reflect Geophysical is a de facto
owner of the ship sought to be arrested and the position of an owner of
B
a ship is different from a demised charter when it comes to the arrest of
a vessel owned or chartered. In this behalf a reference has been made
to the case of Polestar Maritime Ltd. v. M.V. Qi Lin Men & Ors.11
where Article 3(2) of the Arrest Convention was elucidated specifying
that a ship can be arrested in respect of a maritime claim against another
ship only in the following circumstances: C
(a) The owner of both the ships is one and the same.
(b) In case a maritime claim exists qua the owner of a ship, which
is taken on a demised charter then the liability can be recovered
by restraint of the ship owned by the charterer.
D
This view originally elucidated by the learned single Judge of
the Bombay High Court found favour with the Division Bench
when the appeal was dismissed vide order dated 6.1.2009 in Appeal
(Lodging) No.772/2008. The Special Leave Petition filed against
the same was also dismissed vide order dated 23.1.2009.
E
39. The conclusion, thus, was that there was no principle or
authority for proposition that a maritime claim for unpaid charter hire in
respect of vessel ‘A’ against the hirer thereof can be enforced by arresting
vessel ‘B’, which is on bareboat charter of the hirer of the former vessel
vis-à-vis vessel ‘A’.
F
40. The order passed by the learned single Judge in Sunil B. Naik’s
case merely referred to the said view adopted in Yusuf Abdul Gani’s
case to vacate the injunction. The Division Bench affirmed the orders
of the learned single Judge by passing two separate orders in the appeals
filed. The orders are of the same date, i.e. 10.5.2013, which have been
assailed in the two appeals. G
41. The Division Bench took note of the fact that though India is
not a signatory to the Arrest Convention, the same principles would apply
while determining whether a maritime claim has arisen causing for such
11
Admiralty Suit (Lodging) No.3547/2008 decided on 22.10.2008
H
502 SUPREME COURT REPORTS [2018] 5 S.C.R.

A detention of the vessel. The Division Bench referred to the judgment in
Epoch Enterrepots12 to conclude that the distinction sought to be drawn
between a bareboat charter and a demised charter was an issue no
more res integra. A reference was also made to the Commentary on
“Maritime Law” 5th Edition by Christopher Hill, which explained that in
a demised charter or bareboat charter the ship owner fades into the
B
background and merely collects its hire payment for the period of the
charter. It was stated to be akin to a lease of a ship, similar to a hire
purchase arrangement rather than a simple agreement for hire or use of
the ship. Thus, the so-called de facto ownership of Reflect Geophysical
qua the respondent vessel was held to be immaterial in respect of a
C maritime claim arising from an agreement for use or hire of another
vessel, which is the situation in both the cases.
42. Insofar as the respondent vessel is concerned, there is no
agreement entered into by either of the two appellants and, thus, it cannot
be a maritime claim in respect of Article 1(1)(f) of the Arrest Convention.
D Consequently, there would be no occasion to arrest the vessel under
Article 3(1)(b) of the Arrest Convention as no maritime claim has resulted
in the hands of the demised charterer with regard to the demised vessel.
The maritime claim by either of the appellants could, thus, be enforced
only by arresting another vessel owned by Reflect Geophysical and the
de facto ownership, could not be converted into a de jure ownership.
E In respect of Article 1(1)(l), it was, once again, held that there was no
supply of goods to the vessel or of supply of services to the vessel in
question, which was the respondent vessel. Insofar as the reasoning in
Sunil B. Naik’s case, so far as Article 1(1)(l) is concerned, it has been
categorically found that it was not a case where goods had been given
F on hire or for use of the respondent vessel.
Conclusion:
43. On giving our thoughtful consideration to the issue at hand,
we are in full agreement with the view taken by the Courts below and
find no reason to interfere in appeal.
G
44. We have referred to the various terms of the bareboat charter
which make it quite clear that Reflect Geophysical had the status of a
de facto owner. The charter agreement did contain a clause for
conversion of the status into a de jure owner but the occasion for the
12
supra
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 503
[SANJAY KISHAN KAUL, J.]

same never arose. The option to purchase was to be exercised by an A
advance intimation of six months prior to the end of the charter period
and the purchase price was also specified as US$ 3,01,50,000. The
charterer could not make any structural changes in the vessel or in the
machinery, boilers, appurtenances or space parts thereof without first
securing the owner’s approval and the vessel had to be restored to its
B
former condition before the termination of the charter, if so required by
the owners. This was, thus, a deed between the owner of the respondent
and Reflect Geophysical.
45. The contracts entered into with the appellants by Reflect
Geophysical are completely another set of charter hire agreements/
contracts. The unpaid amounts under these contracts amount to claims C
against Reflect Geophysical. Thus, if there was another vessel owned
by Reflect Geophysical, the appellants would have been well within their
rights to seek detention of that vessel as they have a maritime claim but
not in respect of the respondent vessel. The maritime claim is in respect
of the vessels which are owned by the appellants and the party liable in D
personam is Reflect Geophysical. Were the respondent vessel put under
the de jure ownership of Reflect Geophysical, the appellants would have
been within their rights to seek a detention order against that vessel for
recovery of their claims.
46. In the facts of the present case the owners of the respondent E
vessel, in fact, also have a claim against Reflect Geophysical for unpaid
charter amount. Thus, unfortunately it is both the owner of the
respondent vessel on the one hand and the appellants on the other, who
have a maritime claim against Reflect Geophysical, which has gone into
liquidation. The appellants quite conscious of the limitations of any
endeavour to recover the amount from Reflect Geophysical, have F
ventured into this litigation to somehow recover the amount from, in
effect, the owners of the respondent vessel by detention of the respondent
vessel. That may also be the reason why the appellants did not even
think it worth their while to implead Reflect Geophysical against whom
they have their claim in personam, possibly envisaged as a futile exercise. G
47. It is in the aforesaid context that while discussing this issue in
the impugned order, the essential ingredients for detention of a vessel in
a maritime claim were specified (para 37 aforesaid).

H
504 SUPREME COURT REPORTS [2018] 5 S.C.R.

A 48. The aforesaid issue has also been discussed in Polestar
Maritime Ltd.13 while dealing with Article 3(2) of the Arrest Convention.
The test of the ownership of both the ships as one and the same is not
satisfied in the present case. The second situation envisaged is where
another ship owned by the charterer is detained, i.e., he has taken ‘A’
ship on charter where he has only de facto ownership and his ship ‘B’ is
B
detained where charterer has de jure ownership. It cannot be
countenanced that where no in personam claim lies against an entity,
still the ship of that entity taken on bareboat charter can be detained to
recover the dues. The owner of the respondent vessel is as much a
creditor of Reflect Geophysical as the appellants.
C 49. Mr. Naphade, learned Senior Advocate while relying on the
judgment in M.V. Elisabeth &Ors.14had referred to the expanding
jurisdiction of a maritime claim. However, the observations made in the
said judgment reproduced hereinabove in para 21 would show that the
arrest of the ship is regarded as a mere procedure to obtain security to
D satisfy the judgment. To that extent it is distinguished from a right in
personam to proceed against the owner but there has to be a liability of
the ship owner and in that eventuality the legal proceedings commenced
in rem would become a personal action in personam against the defendant
when he enters appearance. There cannot be a detention of a ship as a
security and guarantee arising from its owner for a claim which is in
E respect of a non-owner or a charterer of the ship.
50. On turning to the provisions of the Convention, a maritime
claim is specified as relating to use or hire of a ship whether contained in
a charter party or otherwise [clause (f)]. Insofar as clause (l) is concerned
they relate inter alia to services rendered to the ship. The question,
F however, is – which is the ship in question? Such an order of detention
can be in respect of a ship where there is identity of the owner against
whom the claim in personam lies and the owner of the ship. It cannot
be used to arrest a ship of a third party or a non-owner.
51. As an illustrative example if we consider the principles of a
G garnishee order where amounts held by a third party on behalf of a
defendant can be injuncted or attached to satisfy the ultimate claim,
which may arise against the defendant. It is not as if somebody else’s
money is attached in pursuance to a garnishee’s order. Similarly for a
13
supra
14
supra
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 505
[SANJAY KISHAN KAUL, J.]

claim against the owner of the vessel, a vessel may be detained and not A
that somebody else’s vessel would be detained for the said purpose.
The crucial test would be of ownership, which in the present case clearly
does not vest with Reflect Geophysical and the de facto ownership
under their bareboat charter cannot be equated to a de jure owner,
which is necessary for an action in personam.
B
52. We may note that for the purposes of determining the
controversy, it is not really of much relevance that effectively no work
was carried out under the agreements between the appellants and Reflect
Geophysical as the chartered ship never commenced its task and never
reached the port from where the task was to be commenced.
C
53. One of the contentions advanced by the learned Senior
Advocate for the appellant recorded by us relates to the plea of “beneficial
ownership” of the respondent ship by Reflect Geophysical and, thus, the
enforceability of a claim by the appellants against the respondent ship.
In support of this plea reliance is placed on the judgment in Medway
Drydock & Engineering Co. Ltd.15. We must record at the inception D
itself that this issue appears not to have been raised either before the
learned single Judge or the Division Bench as there is no discussion on
this aspect. We, however, still feel necessary to deal with this aspect
and in some detail largely based on our own foray into this area of law
rather than simply relying on the judgment referred to aforesaid. E
54. United Kingdom became a signatory to two international
conventions – ‘International Convention relating to Arrest of Sea Going
Ships’ and ‘International Convention on certain Rules concerning Civil
Jurisdiction in matters of Collision’ signed at Brussels on 10.5.1952.
Article 3 of the former in sub-clause (2) states that “Ships shall be deemed F
to be in the same ownership when all the shares therein are owned by
the same person or persons.” The context is, thus, the ownership of the
ship when a reference is made to “shares therein” and whether they are
owned by the same person or not. “Shares” in a ship owes its origination
to sailing vessels being expensive items and subject to unexpected loss
and thus, were not owned by one person. Thus, more than one person G
could own a share in a ship on the basis of capital tied up in the vessel.
Such shares were fairly random but by mid 19th century it was usual for
shares to be in multiples of 64 parts and, thus, ownership by 64th is still
15
supra
H
506 SUPREME COURT REPORTS [2018] 5 S.C.R.

A the norm in England. The various requirements of a ship, for example,
rope-maker, sail maker, etc. were parts of a share owner and such shares
could be sold or bought like any other commodity. Normally there would
be a main owner who would have a large investment and be responsible
for the sail and working of the ship called “ship’s husband” while other
owners were simply cash investors. The profits and liabilities were
B
accordingly shared in the same ratio. This concept finds mention in The
Merchant Shipping Act, 1958 under Section 25, which deals with
‘Register Book’ as under:
“25. Register book.¯Every registrar shall keep a book to be
called the register book and entries in that book shall be made in
C accordance with, the following provisions:¯
xxxx xxxx xxxx xxxx xxxx
(b) subject to the provisions of this Act with respect to joint owners
or owners by transmission, not more than ten individuals shall be
D entitled to be registered at the same time as owners of any one
ship; but this rule shall not affect the beneficial interest of any
number of persons represented by or claiming under or through
any registered owner or joint owner;”
55. In view of United Kingdom signing the two Conventions
E referred to aforesaid and giving legislative backing, Section 3 of The
Administration of Justice Act, 1956, incorporated the same. In sub-
section (4) of Section 3, while dealing with the invocation of an action in
rem, the concept of “beneficially owned” vis-à-vis a ship was introduced
and the right to invoke it against the same.

F 56. The observations in Medway Drydock & Engineering Co.
Ltd. referred to while recording the submissions of Mr. Naphade, have
16

to be appreciated in that context. However, a deeper study of the issue
shows that this judgment has been dissented from even by the Queen’s
Bench itself in I Congreso Del Partido17 by Robert Goff, J. This
judgment debates the concept of “beneficially owned” in respect of shares
G therein within the meaning of Section 3(4) of The Administration of
Justice Act, 1956. There is a respectful disagreement with the line adopted
by Brandon, J. in the Medway Drydock & Engineering Co. Ltd.18.
16
supra
17
[1978] Q.B. 500
18
H supra
SUNIL B. NAIK v. GEOWAVE COMMANDER 507
[SANJAY KISHAN KAUL, J.]

Thus, it is noticed that Brandon, J. construed the words “beneficially A
owned as respects all the shares therein” as not being restricted to legal
or equitable ownership, but as being wide enough to include such
“ownership” as is conferred by a demise charter. Robert Goff, J.
recorded the reasoning of Brandon, J. for doing so as under:
“The reasoning of Brandon J. which led him to reach this B
conclusion was as follows: (1) The expression “beneficially
owned” in section 3 (4) is capable of more than one meaning:
either owned by someone who, whether he is the legal owner or
not, is in any case the equitable owner; or beneficially owned by a
person who, whether he was the legal or equitable owner or not,
lawfully had full possession and control of her, and, by virtue of C
such possession and control, had all the benefit and use of her
which a legal or equitable owner would ordinarily have. An example
of the latter would be such “ownership” as was conferred by a
demise charter. A demise charterer has, because of the extent of
his possession and control, often been described as the owner pro D
hac vice or the temporary owner. (2) Since the meaning of the
words “beneficially owned” is not clear the court can and should
look at the terms of the Brussels Convention of 1952, section 3 of
the Act of 1956 being intended to give effect to article 3 of the
Convention; and having done so the court should so construe the
statute as to give effect, so far as possible, to the presumption E
that Parliament intended to fulfil, rather than to break, its
international obligations. If section 3 (4) of the Act is to give full
effect to article 3, the expression “beneficially owned” in the
section must be given the second of the two meanings of which it
is capable, which embraces not only a demise charterer, but also F
any other person with similar complete possession and control.
(3) Although Hewson J. had reached a different conclusion in
The St. Merriel [1963] P. 247, Brandon J. felt justified in declining
to follow that decision having regard in particular to two points.
First, Hewson J. had not been invited to look at the Brussels
Convention, because at that time it was commonly thought that it G
was not permissible to do so unless the Act contained an express
reference to the Convention. Second, the view accepted by
Hewson J. in The St. Merriel was no different in principle from
one which was discussed and rejected by Lord Atkinson in Sir
H
508 SUPREME COURT REPORTS [2018] 5 S.C.R.

A John Jackson Ltd. v. Steamship Blanche (Owners) (The Hopper
No. 66) [1908] A.C. 126, 135–136.”
57. Robert Goff, J. then records the significant factor, i.e., that
Medway Drydock & Engineering Co. Ltd.19 was decided on a motion
by plaintiffs for judgment in an ex parte proceedings while he had the
B benefit of submissions of both the sides and Robert Goff, J. sought to be
persuaded by the counsel appearing for the ship Mr. Davenport in the
following manner:
“Mr. Davenport, for Mambisa, to whose argument I am much
indebted, has however urged me not to follow The Andrea Ursula
C [1973] Q.B. 265. The decision in that case is not binding upon me
and, while of course I have the greatest respect for any decision
of Brandon J., I have reconsidered the matter and, having done
so, I have reached the conclusion that the words “beneficially
owned as respects all the shares therein” refer only to cases of
equitable ownership, whether or not accompanied by legal
D ownership, and are not wide enough to include cases of possession
and control without ownership, however full and complete such
possession and control may be. Since I have reached a different
conclusion to Brandon J., I think it right to point out that I have
had the benefit of a full argument by counsel for the defendants in
E this case, whereas The Andrea Ursula came before Brandon J.
on a motion by plaintiffs for judgment in default of appearance, on
which the defendants were not represented.”
(emphasis supplied)
58. Thereafter Robert Goff, J. records his conclusion in the
F following manner:
“My approach to the case before me is as follows. I start with the
statute, and the words with which I am particularly concerned,
and which I have to construe in the context of the statute, are
“beneficially owned as respects all the shares therein.” In my
G judgment, the natural and ordinary meaning of these words is that
they refer only to such ownership as is vested in a person who,
whether or not he is the legal owner of the vessel, is in any case
the equitable owner, in other words, the first of the two meanings
of which Brandon J. thought the words to be capable. Furthermore,
19
H supra
SUNIL B. NAIK v. GEOWAVE COMMANDER 509
[SANJAY KISHAN KAUL, J.]

on the natural and ordinary meaning of the words, I do not consider A
them apt to apply to the case of a demise charterer or indeed any
other person who has only possession of the ship, however full
and complete such possession may be, and however much control
over the ship he may have.
Generally speaking, the essential characteristic of a demise charter B
is that it constitutes a contract of hire of the ship, under which the
possession of the ship passes to the charterer, the master of the
ship being the servant of the charterer, not of the owner. It is to be
compared with the ordinary form of time charter, which is not a
contract of hire but a contract of services, under which the
possession remains in the owner and the master is the servant of C
the owner: see Sea & Land Securities Ltd. v. William Dickinson
& Co. Ltd . [1942] 2 K.B. 65, 69–70 per Mackinnon L.J. and
Scrutton on Charterparties, 18th ed. (1974), articles 24–26. It is
true that a demise charterer has in the past been described variously
as “owner pro hac vice:” see, for example, Frazer v. Marsh (1811) D
13 East 238, 239, per Lord Ellenbrough C.J., The Lemington (1874)
2 Asp.M.L.C. 475, 478, per Sir Robert Phillimore, and The
Tasmania (1888) 13 P.D. 110, 118, per Sir James Hannen P.; or as
a person who is “for the time the owner of the vessel:” see
Sandeman v. Scurr (1866) L.R. 2 Q.B. 86, 96, per Cockburn C.J.;
or as a person with “special and temporary ownership:” see The E
Hopper No. 66 [1908] A.C. 126, 136, per Lord Atkinson. I doubt
however if such language is much in use today; and its use should
not be allowed to disguise the true legal nature of a demise charter.
Furthermore, no case has been drawn to my attention, and I am
aware of more, in which a demise charterer has been described F
as a “beneficial owner,” still less as a “beneficial owner as respects
all the shares in the vessel.” Indeed, any reference in this context
to ownership “as respects all the shares in the vessel” is, in my
judgment, inapt to describe the possession of a demise charterer;
such words are only appropriate when describing ownership in
the ordinary sense of the word, and not possession which is G
concerned with a physical relationship with the vessel founded
upon control and has nothing to do with shares in the vessel. A
demise charterer has, within limits defined by contract, the
beneficial use of the ship; he does not, however, have the beneficial
ownership as respects all the shares in the ship. H
510 SUPREME COURT REPORTS [2018] 5 S.C.R.

A Furthermore, I can find nothing in the remainder of the statute to
cause me to reject the natural and ordinary meaning of the words;
certainly, I would not construe other references in the statute to
“ownership” — as in section 1 (1) ( a ) — or “co-owner” — as in
section 1 (1) ( b ) — as referring in any way to demise charterers.
Indeed in Part V of the Act, which is concerned with Admiralty
B
jurisdiction and arrestment of ships in Scotland, the equivalent
provision, section 47 (1) ( b ), requires that “all the shares in the
ship are owned by the defendant.” This provision, to which I can
properly have regard: see The Eschersheim [1976] 1 W.L.R. 430,
436 per Lord Diplock, reinforces my conclusion that section 3 (4)
C of the Act is concerned with title, the word “beneficial” being
introduced to allow for the peculiar English institution of the trust.”
xxxx xxxx xxxx xxxx xxxx
“Accordingly, I do not regard the words “beneficially owned as
respects all the shares therein” as being capable of more than
D one meaning; in the absence of ambiguity this is not, on the
principles established by the Court of Appeal in Salomon v. Customs
and Excise Commissioners [1967] 2 Q.B. 116, Post Office v.
Estuary Radio Ltd . [1968] 2 Q.B. 740 and by the House of Lords
in the Convention The Eschersheim [1976] 1 W.L.R. 430, an
E appropriate case in which to have recourse to the Convention.
Even so, out of respect for the views of Brandon J., I propose to
examine the Convention. The relevant provisions of article 3 of
(the International Convention Relating to the Arrest of Sea-going
Ships 1952) are as follows:

F “(1) Subject to the provisions of paragraph (4) of this article
and of article 10, a claimant may arrest either the particular
ship in respect of which the maritime claim arose, or any other
ship which is owned by the person who was, at the time when
the maritime claim arose, the owner of the particular ship, even
though the ship arrested be ready to sail; but no ship, other
G than the particular ship in respect of which the claim arose,
may be arrested in respect of any of the maritime claims
enumerated in article 1, (1), ( o ), ( p ) or ( q ), (2) Ships shall be
deemed to be in the same ownership when all the shares therein
are owned by the same person or persons …. (4) When in the
H case of a charter by demise of a ship the charterer and not the
SUNIL B. NAIK v. GEOWAVE COMMANDER 511
[SANJAY KISHAN KAUL, J.]

registered owner is liable in respect of a maritime claim relating A
to that ship, the claimant may arrest such ship or any other
ship in the ownership of the charterer by demise, subject to the
provisions of this Convention, but no other ship in the ownership
of the registered owner shall be liable to arrest in respect of
such maritime claims. The provisions of this paragraph shall
B
apply to any case in which a person other than the registered
owner of a ship is liable in respect of a maritime claim relating
to that ship.”
As I read the Convention, article 3 (1), which is expressed to be
subject to article 3 (4), provides for the arrest of either the particular
ship in respect of which the maritime claim arose, or (except in C
certain specified cases) any other ship which is owned by the
person who was, at the time when the maritime claim arose, owner
of the particular ship. Furthermore, despite the argument of Mr.
Alexander for the plaintiffs to the contrary, in this context I read
the word “owner” as bearing its ordinary meaning, that is, the D
person with title to the ship; am confirmed in this view by the
provision relating to ownership in article 3 (2) and by the fact that
article 3 (4), to which article 3 (1) is expressed to be subject,
makes special provision for the case of the demise charterer and
others. It is to be observed that, if one puts article 3 (4) on one
side, the draftsman of the Act of 1956 appears to have been seeking E
to give effect to article 3 (1) and (2) of the Convention, subject to
the fact that he appears to have been concerned to extend the
word “ownership” by the addition of the adjective “beneficial,”
very possibly to take account of the special English institution of
the trust which may form no part of the domestic laws of other F
signatories to the Convention.”
(emphasis supplied)
59. We have been persuaded to extract in extensio from the
judgment in I Congreso Del Partido20 on account of the clarity of the
view expressed by Robert Goff, J. finding it difficult to be put in better G
words. Thus, mere possession of the ship, however, complete and
whatever be the extent of the control was not found good enough to
confer the status of ownership. The “beneficial use” of a chartered ship
20
supra
H
512 SUPREME COURT REPORTS [2018] 5 S.C.R.

A would not ipso facto convert the status of a charterer into a “beneficial
owner.” The attention to the word “beneficial” in the Act of 1956 was,
thus, attributed to the requirement to take into account the special English
Institution of Trust which forms no part of domestic law of other
signatories to the Convention.
B 60. In The “Father Thames”21 Sheen J. also declined to follow
Medway Drydock & Engineering Co. Ltd. 22 and followed
I Congreso Del Partido23 and held that the phrase “beneficially owned”
in the 1956 Act did not apply to a demise charter.
61. Similarly Wee Chong Jin, C.J. of the Singapore Court of Appeal
C in the decision of The “Permina 3001”24 has adopted the similar view
that a ship in full possession and control of a person, who is also not an
owner of all the shares therein cannot be utilized for the purposes of
restraint of the ship.

D 62. Even in Canada, the Federal Court of Appeal has taken the
same view on the import of the words “beneficial owner” in the context
of the Canadian ‘Federal Court Act 1985’ which confers courts with the
jurisdiction to arrest a ship. In Mount Royal/Walsh Inc. v. The Ship
Jensen Star el al,25 Marceau, J, writing on behalf of the Bench, stated
as follows :
E
“The problem, however, is that I simply do not see how a court
could suppose that Parliament may have meant to include a demise
charterer in the expression ‘beneficial owner’ as it appears in s-s.
43(3). Whatever be the meaning of the qualifying term ‘beneficial’,
the word owner can only normally be used in reference to title in
F the res itself, a title characterized essentially by the right to dispose
of the res. The French corresponding word ‘proprietaire’ is equally
clear in that regard. These words are clearly inapt to describe the
possession of a demise charterer…. In my view, the expression
‘beneficial owner’ was chosen to serve as an instruction, in a
G system of registration of ownership rights, to look beyond the

21
[1979] 2 Lloyd’s Rep. 364
22
supra
23
supra
24
supra
25
[1990] 1 F.C 199.
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 513
[SANJAY KISHAN KAUL, J.]

register in searching for the relevant person. But such search A
cannot go so far as to encompass a demise charterer who has no
equitable or proprietary interest which could burden the title of
the registered owner of the registered owner. As I see it, the
expression ‘beneficial owner’ serves to include someone who
stands behind the registered owner in situations where the latter
B
functions merely as an intermediary, like a trustee, a legal
representative or an agent. The French corresponding expression
‘veritable proprietaire’ leaves no doubt to that effect.”
63. The Supreme Court of Canada in Antares Shipping
Corporation v. The Ship ‘Capricorn’ et al.26 also referred to the concept
of beneficial ownership and cited with the approval, observations made C
in Halsbury’s Laws of England at para 15 as follows:
“Ownership in a British ship or share therein may be acquired in
any of three ways – by transfer from a person entitled to transfer,
by transmission or by building. Acquisition by transfer and
transmission have been the subject of statutory enactment. D
Acquisition by building is governed by the common law. Ownership
in a British ship or share therein is a question of fact and does not
depend upon registration of title. Whether registered or
unregistered, a person in whom ownership in fact vests is regarded
in law as the owner if registered, as the legal owner; if E
unregistered, as the beneficial owner.”
(emphasis supplied)
64. The successor to the 1956 Act is the Supreme Court Act of
1981. Section 21(4) of that Act of U.K. recognizes the discussion in
view of Robert Goff, J. by the following provision: F
“21. (4) In the case of any such claim as is mentioned in section
20(2)(e) to (r), where
(a) the claim arises in connection with a ship ; and
(b) the person who would be liable on the claim in an action in G
personam (“ the relevant person “) was, when the cause of action
arose, the owner or charterer of, or in possession or in control of,
the ship,

26
[1980] 1 S.C.R. 553
H
514 SUPREME COURT REPORTS [2018] 5 S.C.R.

A an action in rem may (whether or not the claim gives rise to a
maritime lien on that ship) be brought in the High Court against -
i) that ship, if at the time when the action is brought the relevant
person is either the beneficial owner of that ship as respects all
the shares in it or the charterer of it under a charter by demise ; or
B (ii) any other ship of which, at the time when the action is brought,
the relevant person is the beneficial owner as respects all the
shares in it.”
65. There is a clear distinction between a beneficial ownership of
a ship and the charterer of a ship.
C
66. In the aforesaid context, now turning to the Arrest Convention
of 1999, Article 1 specifies that the maritime claim means a claim inter
alia arising out of an agreement relating to use or hire of “the ship.”
The connotation of “the ship” would mean the 16 trawlers or the Orion
Laxmi and not the respondent ship. Thus, there is no maritime claim
D against the respondent ship. Article 3 deals with the exercise of rights
of arrest and the eventualities are specified thereunder. In terms of
clause (2) of Article 3 (these Articles are reproduced in paras 25 to 27
above), the arrest is permissible of any other ship (which would connote
the respondent ship), which, when the arrest is effected is owned by the
E person who is liable for the maritime claim. The liability of the maritime
claim is Reflect Geophysical and not the owners of the respondent ship.
In terms of sub-clause (b) of clause (2) of Article 3, a demise charterer,
time charterer or voyage charterer of that ship is liable. The ship in
question, as noticed above, is not the respondent but the 16 trawlers or
the Orion Laxmi. In view of the discussion aforesaid, really speaking
F Reflect Geophysical cannot be said to be the beneficial owner in the
capacity of a demised charterer of the respondent ship. Reflect
Geophysical is not the owner of the respondent ship and the owner cannot
be made liable for a maritime claim, which is against the trawlers and
Orion Laxmi.
G 67. We may also note that in the 2017 Act in India clause 5(b)
states as under:
“5. Arrest of vessel in rem.—(1) The High Court may order
arrest of any vessel which is within its jurisdiction for the purpose
of providing security against a maritime claim which is the subject
H
SUNIL B. NAIK v. GEOWAVE COMMANDER 515
[SANJAY KISHAN KAUL, J.]

of an admiralty proceeding, where the court has reason to believe A
that—
xxxx xxxx xxxx xxxx xxxx
(b) the demise charterer of the vessel at the time when the maritime
claim arose is liable for the claim and is the demise charterer or
the owner of the vessel when the arrest is effected; or” B

68. The aforesaid is in consonance with Article 3 of the 1999
Convention and, thus, must be read in that context (incidentally the Bill
was introduced on 21.11.2016 and passed by the Lok Sabha and the
Rajya Sabha on 10.3.2017 and 24.7.2017 respectively. It was published
in the Gazette on 9.8.2017 but is still not notified). The incident in this C
question is, thus, prior to beginning of this exercise. The expression “the
vessel”, “owner” and “demise charterer”, thus, must be read in the
aforesaid context and the maritime claims in respect of 16 trawlers and
Orion Laxmi cannot be converted into a maritime claim against the
respondent ship not owned by Reflect Geophysical. D
69. The appellants have neither any agreement with the owners
of the respondent vessel nor any claim against the respondent vessel but
their claim is on account of their own vessels hired by the charterer of
the respondent vessel. There is no claim against the owners of the
respondent vessel. E
70. The result of the aforesaid is that the appeals are dismissed
leaving the parties to bear their own costs.
71. The interim order dated 17.5.2013 stands dissolved and the
amount along with accrued interest thereon is to be remitted back to the
owners of the respondent vessel, who deposited the same before the F
Bombay High Court in pursuance of the interim order.

Nidhi Jain Appeals dismissed.

G

H