Case Note & Summary
An admiralty suit was filed by a foreign company against, inter alia, the bunkers on board the vessel M.V. African Eagle and its charterers, seeking arrest of the bunkers and freight to secure its claim in pending arbitration. The plaintiff did not seek a decree on merits but only interim security pending the outcome of foreign arbitration proceedings. On 7 January 2013, the Bombay High Court ordered arrest of the bunkers and freight. Defendant no. 3, the charterer of the vessel, applied to vacate the arrest. By judgment dated 4 February 2013, the court set aside the arrest of freight for want of jurisdiction and, keeping open the question whether bunkers can be arrested independent of the vessel, directed defendant no. 3 to furnish security limited to the value of the bunkers, i.e., USD 34,692.80. The court granted liberty to defendant no. 3 to claim damages for wrongful arrest with adequate particulars. Consequently, defendant no. 3 filed Notice of Motion No. 735 of 2013 claiming damages of USD 398,888.64. In response, the plaintiff filed the present Notice of Motion No. 1591 of 2013 seeking a stay of the damages proceedings, contending that the claim was premature because the core issue of whether bunkers could be arrested at all remained open. Defendant no. 3 resisted the stay, arguing that it had originally offered to secure the plaintiff’s claim in the same amount but the plaintiff refused, and that the court’s liberty granted was unconditional. More fundamentally, defendant no. 3 raised the objection that the suit itself was not maintainable, relying on the Supreme Court’s decision in Bharat Aluminium Co. v. Kaiser Aluminium Technical Service, Inc., (2012) 9 SCC 552 (BALCO), which held that a suit for interim relief pending arbitration does not disclose an existing cause of action and is liable to be rejected under Order 7 Rule 11(a) of the Code of Civil Procedure, 1908. The court heard detailed arguments on both these points and reserved its order. However, the available text of the judgment does not contain the final decision or ratio, ending after the defendant’s submissions.
Headnote
A) Admiralty Law - Arrest of Bunkers for Security Pending Arbitration - Maintainability of Suit - Code of Civil Procedure, 1908, Order 7 Rule 11(a) - The plaintiff filed an admiralty suit seeking arrest of bunkers and freight solely to secure its claim in pending arbitration. Defendant no.3 argued that the plaint should be rejected for want of cause of action, relying on the BALCO judgment which held that a suit purely for interim relief pending arbitration is not maintainable as the right to interim injunction is not a cause of action. (Paras 8-9) B) Civil Procedure - Rejection of Plaint - Cause of Action in Suits for Interim Relief - CPC Order 7 Rule 11(a) - It was contended that under the BALCO judgment, a suit for interim security pending foreign arbitration is not maintainable because the claim is contingent on the outcome of arbitration, and thus, the cause of action is speculative. (Paras 8-9) C) Admiralty - Wrongful Arrest - Damages - Prematurity of Claim - The plaintiff sought to stay the defendant's notice of motion for damages on the ground that the issue of whether bunkers could be arrested was still undecided, making the damages claim premature. The defendant countered that it had offered security from the outset and the court had granted liberty to seek damages, so the claim was not premature. (Paras 6-7, 4) D) Practice and Procedure - Stay of Proceedings - Pending Arbitration - The plaintiff applied for stay of the damages claim proceedings, arguing that until the legality of the bunkers arrest is finally determined, the claim for wrongful arrest cannot proceed. (Paras 5-6)
Issue of Consideration
Whether the defendant no.3's notice of motion for damages for wrongful arrest should be stayed as premature, and whether the plaintiff's suit itself is maintainable in view of the BALCO judgment that a suit for interim security pending arbitration does not disclose a cause of action.
Final Decision
Decision not clearly stated
Law Points
- Legal points not extracted
- Admiralty suit for arrest of bunkers to secure arbitration claim must disclose existing cause of action
- a right to interlocutory injunction is not a cause of action
- pendency of foreign arbitration does not provide cause of action for suit seeking only interim security
- Order 7 Rule 11(a) CPC allows rejection of plaint for lack of cause of action
- under Rule 941 of Bombay High Court (Original Side) Rules plaintiff undertaking to pay damages for wrongful arrest
- issue of whether bunkers on board a vessel can be independently arrested in admiralty is kept open
