Owners’ previous written consent is a pre-requisite for sale or purchase of any vessel on which there is hypothecation/charge

Gujarat High Court: The Bench comprising of of R.M. Chhaya, J., was hearing a suit filed for urgent interim orders, regarding the defendant vessel which was likely to sail away. The plaintiff has submitted that after entering into the agreement by the plaintiff and defendant for financing the purchase of three ships including the vessel in question, the plaintiff had advanced a sum of 800,000 USD, and that the plaintiff had a hypothecation/charge on the vessel and required a previous written consent for purchase or sale. However, the managers of the vessel including the defendant vessel, Marine Spirit Management addressed an email to the plaintiff informing about the sale of the vessel.

The plaintiff further contended that, since, no written consent of the plaintiff was obtained before the sale, the sale would be bad in law and null and void and would not affect the plaintiffs’ rights. Also, after resistance from the plaintiff all the defendants had approached for settlement and executed private settlement and release agreement for the defendant vessel, but the owners failed to adhere to their obligations, the result being that the plaintiffs’ entitled to all rights under the previous agreement.

The plaintiff had also filed a recovery suit before the Multi-member Court of First Instance of Piraeus. Thereafter, when the vessel was called at the Cotonou Port in Benin, near Nigeria, the plaintiff got her arrested, but the Cotonou Court later released her by a court order. Before an appeal could have been filed, the defendant vessel had sailed away from the African jurisdiction and had entered the Indian jurisdiction at Dahej Port, hence the claim here being made on the ground that the plaintiff is entitled to initiate action in rem for maritime claim.

This Court after taking into consideration all the circumstances and hearing all the contentions, permitted the direct service of warrant, directing the Registrar to issue a warrant for arrest of the vessel along with all her parts, with the condition that arrest be done within the Indian territorial waters. [Zatrix Ltd., v. MV Nikiforos (IMO 9108116), 2017 SCC OnLine Guj 1404, decided on 4.12.2017]

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