Admiralty Act 2017 | Agent's Indemnity Claim Against Vessel For Unpaid Port Dues Is A Maritime Claim: Bombay High Court

A division bench of Justice KR Shriram and Justice Rajesh Patil held the words “arising out of” in section 4(1) (HC jurisdiction over maritime claim) have a wide meaning and would include an agent’s indemnity claim against the vessel over unpaid port dues.

“The words “arising out of” and “in connection with” are of wide nature and can take in their sweep a maritime claim which is made against any vessel where there are dues of any vessel to the port including a claim by an agent who has to be indemnified against a port’s claim. It need not be a claim only by the port but it can be even by an agent on indemnity action, as is the case at hand”, the court held.

The court held that both agent of the vessel and the port can simultaneously initiate action against the vessel for unpaid port dues.

The court dismissed a commercial appeal filed by Dominican vessel MV Golden Pride through its owner Golden Star Marine FZE against a single judge order directing the vessel’s arrest due to unpaid port dues.

In May 2018, GAC Shipping (India) Pvt. Ltd. (agent) was appointed as the agent of the vessel during her stay in Mumbai. The vessel was supposed to pay port charges to the Mumbai Port Trust in advance, but it didn’t. As on 31st July 2020, the estimated port charges were Rs. 46,000/- but the vessel only paid Rs. 10,000/-.

The agent had also given an undertaking to the port to pay all dues for all vessels in its agency. Apprehending that the port may ask it to pay the charges on behalf of the vessel, the agent filed a suit against the vessel seeking to be indemnified against potential payment of port dues. A single judge on August 24, 2020 ordered the arrest of the vessel. The vessel was sold and scrapped. Golden Star filed the present appeal bench challenging the order.

The appellant contended that the agent’s indemnity action is not a maritime claim under sections 4(1)(l), 4(1)(n) and 4(1)(p) or any other para of Section 4(1) of the Admiralty Act. The agent will only be entitled to agency fee payable directly to it and not what it may have to pay to the port. Only port can directly claim the port dues and not the vessel’s agent, it argued. If the agent incurs any payment on behalf of the vessel, it must first make the payment and then claim indemnity from the vessel, the appellant contended adding that the agent’s claim was premature. Hence, the court could not have ordered the arrest of the vessel, it submitted.

Under Section 4(1) of the Admiralty Act, the High Court has jurisdiction to determine any question on a Maritime claim, against any vessel, arising out of anything listed in paras (a) to (w) of the section.

Para (l) includes goods, materials, services rendered to the vessel, para (n) is for dues in connection with port or similar charges and, para (p) is for disbursements incurred on behalf of the vessel or its owners.

The court said that the words “arising out of” and “dues in connection with port” have a wide amplitude. Appellant argued that though these words have a wide meaning, they cannot be stretched to give a third party i.e., the agent in this case, a right to have a maritime claim over the port dues in addition to the Port itself having such right.

The court disagreed with this contention observing that otherwise there was no need to use the words “arising out of…dues in connection with port”, or “arising out of…services rendered to the vessel for its operation…”, or “arising out of…disbursements incurred”. If a narrow meaning has to be given, the section would not have used the words “arising out of”, the court opined. The court said that the provision is wide and comprehensive enough to include the indemnity action in the current case.

Relying on Khetarpal Amarnath v. Madhukar Pictures, the court held that there is no need to pay the dues before suing the indemnifier. The only requirement is that the indemnified must show that it has incurred absolute liability on behalf of the indemnifier.

Therefore, the agent’s claim would fall under paras (l), (n), and (p) of section 4(1) of the Act, the court held.

The court stated that agent of the vessel and the port can maintain an action against the vessel simultaneously. They are separate causes of action available to both the agent and the port, the court added.

As the vessel owner is the losing party in a commercial appeal, the court directed it to pay costs of Rs 7,50,000/- each to the agent and the port.

Case no. – Interim Application (L) No. 7724 Of 2021 In Commercial Admiralty Suit No. 7 Of 2021

Case Title – MV Golden Pride v. GAC Shipping (India) Pvt. Ltd.