Gujarat HC Directs Arrest Of Cargo Ship At Kandla After Company Exporting Parboiled Rice Claims $1.4 Million Loss Due To Delay In Shipping

The Gujarat High Court in an interim order directed the custom authorities to "arrest" a cargo ship, lying at Deendayal Port, Kandla which is within Indian territorial waters, after an entity filed an admiralty suit claiming that delay in shipping of its cargo–2000 metric tonnes of parboiled rice, led it to incur financial loss of 1.4 million US dollars.

A single judge bench of Justice Mauna M Bhatt in its October 10 order said, "The Port Officer and the Customs Authorities at Deendayal Port (Kandla) are directed to arrest the Defendant Vessel i.e. MV SW SOUTH WIND I at present lying at Deendayal Port (Kandla), within the Indian territorial waters and to keep the Defendant Vessel under arrest until further orders of this Court. It is further ordered that the Port Officer and the Customs Officer at Deendayal Port (Kandla) shall also intimate about this order to the Master / Chief Engineer of the Defendant Vessel and effect the warrant of arrest for the Defendant Vessel through email".

After reading the contents of the plea the high court in its order observed “On a reading of the plaint and the exhibits thereto, prima facie it appears that the claim in the Plaint is in the nature of a maritime claim as the Plaintiff's claim arises out loss or damage to or in connection with any goods".

The high court further ordered that in the event the defendant vessel or those interested in securing or satisfying the Plaintiff's claim of US Dollars 1,437,794 along with simple interest of 12% per annum "from suit date till payment and /or realisation", deposit it in the court, the warrant of arrest would not be executed against the vessel.

It further directed its Registry to send the order to the Port and Customs authorities at Deendayal Port (Kandla). Issuing notice in the suit the high court directed the Authorities at Deendayal Port (Kandla) to act on Email copy of the court order and take the Defendant Vessel.

Listing the matter on October 24, the high court said, "It is made clear that it will be open for the Defendants to approach this Court even prior to the returnable date with adequate notice to the Plaintiff".

Background

The plaintiff Farmart Service Private Limited had entered into a Sales Contract with ATC (ATC Trading SARL), a company in Benin, West Africa to export "2000 metric tons of "parboiled rice. To transport the cargo, Farmart entered into a separate agreement with one OK International Logistics LLC –the owner of the vessel MV SW South Wind I–for a Voyage Charter of the Defendant Vessel for exporting the Cargo to ATC.

The plaintiff said that its cargo "formed a small part of the entire cargo" shipped on board the Defendant Vessel. The plaintiff said that it issued a commercial invoice and packing list on June this year, confirming the shipment details. By the end of July, Farmart had completed packing 40,000 bags of rice and loaded the cargo onto the ship at Deendayal Port in Kandla. Customs clearance for the rice was obtained, and the cargo was fully loaded by July 27. The plaintiff said that that on August 9 the ship was ready for departure with necessary Bills of Lading being issued.

However the vessel did not leave the Port and further the plaintiff received a mail on September 9 from one Commodity Care Shipping Pte Ltd., claiming to be the owner of the vessel. The email stated that the vessel was detained by Kandla Customs due to a "lack of clearance for the cargo.” The plaintiff's counsel further submitted that its cargo met all export standards and it was not the reason for the detention. Instead, the ship was held because of some other prohibited cargo on board. The plaintiff's cargo is not banned by customs regulations, and the plaintiff is now facing significant financial losses due to the "negligence" of the vessel's owners, agents, or crew.

The plaintiff further said that it received an email on October 6 from the purchaser informing that the sales contract had been cancelled due to the defendant vessel's failure to depart and deliver the cargo in time.

The Counsel submitted that nearly two months have passed since the cargo was loaded, with no clarity on whether the ship will sail or if the cargo will be offloaded at Kandla port. Due to the detention, the plaintiff is facing financial losses and damage to its reputation, risking default with its buyers, he added. The plaintiff claimed that the ship is responsible for these losses, amounting to US dollars1,437,794, even though the plaintiff is not at fault. The lawyer also pointed out that the cargo is not prohibited under government regulations and that the plaintiff's claim qualifies as a valid maritime claim under the Admiralty (Jurisdiction and Settlement of Maritime Claims)Act of 2017 for loss or damages related to goods.

Case Title: Farmart Service Private Ltd. v/s M.V. SW South Wind I

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