Supreme Court of India
SHIPPING CORPORATION OF INDIA LTD.versusMARE SHIPPING INC.
- Citation
- 2011 INSC 490
- Decided
- 13 July 2011
- Disposal
- Dismissed
- Bench
- ALTAMAS KABIR
Holding
The vessel was an arrived ship upon reaching the customary anchorage at Vadinar, and the charterers bore responsibility for the failure to moor, making demurrage payable to the owners.
Summary
The case involved a charter party for the carriage of crude oil from Ras Sukheir to a safe Indian port, where the charterers nominated Vadinar Single Berth Mooring (SBM) for discharge. The vessel arrived at Vadinar, tendered a Notice of Readiness (NOR) but could not moor at the SBM due to inadequate equipment. An addendum was later signed, diverting the vessel to Mumbai and making the charterers bear all extra costs, including demurrage. The arbitral tribunal awarded demurrage to the vessel owners, a decision upheld by the Bombay High Court. The Supreme Court examined whether the vessel was an “arrived ship” upon reaching the customary anchorage at Vadinar and, if so, whether the owners were entitled to demurrage. It held that the vessel was an arrived ship under Clause 6 of the charter party, that the charterers were responsible for the failure to moor, and that demurrage was payable to the owners. Consequently, the Special Leave Petition was dismissed.
Issues considered
- Whether the vessel qualified as an ‘arrived ship’ capable of issuing a Notice of Readiness upon arrival at the customary anchorage at Vadinar despite not being moored at the SBM.
- Assuming the vessel was an arrived ship, whether the owners were entitled to demurrage (or damages) from the charterers.
Legislation cited
Subjects
demurragenotice of readinessarrived shipcharter partymaritime lawarbitration awardsafe berthliabilityspecial leave petition
Judgment
[2011] 9 S.C.R. 70
A SHIPPING CORPORATION OF INDIA LTD.
v.
MARE SHIPPING INC.
(Special Leave Petition (C) No. 19461 of 2006)
JULY 13, 2011
B
[ALTAMAS KABIR AND A.K. PATNAIK, JJ.]
Shipping: Demurrage charges on account of delay in
discharge of cargo - Claim for - Charter Party providing for
C carriage of crude oil from Ras Sukheir to a safe port on the
Indian coastline - No specific port in the Indian coastline
mentioned in the Charter Party - Charterers given choice of
nominating port for discharge of the cargo - After vessel left
Ras Sukheir, intimation given by Charterers for discharge of
o the cargo at the SBM at Port Vadinar - Vessel reached Port
Vadinar on 15. 12. 1999 and Master of vessel tendered Notice
of Readiness (NOR) - However, vessel was not so equipped
and could not be moored at the SBM - The Addendum to
Charter Party drawn up between Charterer and owner of vessel
E containing conditions that vessel would be diverted from
Vadinar to Mumbai for discharge and all extra cost/
demurrage charges would be borne by Charterer - Thereafter
vessel diverted to Mumbai and completed discharge - Claim
for demurrage charges made by owner of vessel - Dispute
arose and arbitration clause contained in Charter party
F invoked - Arbitral Tribunal allowed the claim of owner of
vessel - High Court upheld the order of the Arbitral Tribunal
- On appeal, held: In giving Notice of Readiness upon arrival
at the customary anchorage at Vadinar, the Master of the
Vessel duly complied with the conditions of the Charter Party
G - The responsibility for the failure of the ship to moor at the
SBM in Vadinar lay squarely on the Charterers and the
receiver as they had nominated the SBM for the safe mooring
of the vessel -It cannot also be said that the owners of the
H 70
SHIPPING CORPORATION OF INDIA LTD. v. MARE 71
SHIPPING INC.
vessel contributed in any way to such failure since the A
equipment on board the vessel were made known to the
Charterers when the Charter Party was signed - The terms
of the Charter Party were agreed upon by the parties with their
eyes wide open - Even after the vessel was denied mooring
at the SBM for safety reasons, no steps were taken by the B
Charterers to either arrange for an alternate safe berthing in
Vadinar or to give instructions as to where the cargo was to
be discharged - Even the subsequent deviation of the vessel
from Vadinar to Mumbai was not on account of any /aches
on the part of the owners of the vessel - Read with the Charter c
Party, the Addendum made it abundantly clear that the
Charterers had accepted the responsibility for the failure of
the vessel to discharge her cargo at Vadinar and had agreed
to bear.cal/ the expenses for the delay in diversion of the vessel
from Vadinar to Mumbai, including the time spent at Vadinar 0
port and the expenses incurred towards pilotage, tugs and
other port expenses - Apart from that the Charter Party
specifically provided that extra expenses incurred on account
of any change in loading or discharging ports, has to be paid
by the Charterers, and any time thereby lost to the vessel
shall count as used lay time - There was no reason to interfere E
with the award of the Arbitral Tribunal - Arbitration.
On 9.11.1999, the petitioner-Charterers and the
respondent-owner entered into a Charter Party in respect
of the respondent's vessel for carriage of 8150 ·metric F
tones of crude oil from the Egyptian Red Sea port of Ras
Sukheir to one/two safe anchorage/lighterage points/
SBMs/one/two safe port(s) one/two safe berth(s)
anywhere in India. The vessel was described in the
Charter party as being fitted with "AK Tongue Type Bow G
i Chain Stopper of min SWL 2000 Mts." The Charter Party
contained arbitration clause ..
On 19.11.1999, the vessel arrived at Ras Sukheir at
4.00 a.m. and tendered Notice of Readiness (NOR). The
loading commenced at 10 p.m., on 20.11.1999 and was H
72 SUPREME COURT REPORTS [2011J 9 S.C.R.
A completed by 3.15 p.m. on 21.11.1999. The total lay time
provided for loading and discharge of cargo was 72
running hours. Out of the said lay time hours, the lay
time used at Ras Sukheir was 37 hours and 30 minutes.
On account of a mishap involving the vessel's anchor
B and the submarine pipe-lines, the vessel was delayed at
Ras Sukheir for fourteen days and could leave the port
only on 4.12.1999. On 6.12.1999 while the vessel was
sailing, the respondents-owners nominated Vadinar
Single Berth Mooring (SBM) for discharge of the cargo.
C The port of discharge was not nominated earlier. The
vessel arrived at Vadinar and the Master tendered NOR
at 8 p.m. on 15.12.1999. Since the vessel had only one
chain stopper/Bow Panama Chock as specified in the
Charter Party, the vessel could not be safely moored at
the SBM and the Master was asked by the Receiver,
0
Indian Oil Corporation on 21.12.1999 to take away the
vessel from the Vadinar SBM.
·On 21.12.1999, a message was sent to the petitioner's
agents by the Manager of the respondents drawing
E attention to the fact that the vessel could not be berthed
at the SBM and requesting that immediate steps be taken
to berth the vessel. But no steps were taken by the
petitioners in that regard. Finally a decision was arrived
at on 28.12.1999 and Addendum to the Charter Party was
F drawn up and signed by the Owner and the Charterers
containing the conditions that the vessel would be
diverted by the Charterers from Vadinar to L.P.O. Mumbai
for discharge into a daughter vessel and all the extra cost/
-
expenses of daughter vessel/demurrage charges would
G be born by the Charterers. Pursuant to this arrangement,
the vessel sailed from Vadinar at 1 a.m. on 29.12.1999 and
arrived at Mumbai Lighterage point on 30.12.1999 at 2
p.m. The vessel tendered Notice of Readiness at 2 p.m.
on 30.12.1999 and completed discharge at 3.30 p.m. on
H 1.1.2000. The respondents/owner submitted the
SHIPPING CORPORATION OF INDIA LTD. v. MARE 73
SHIPPING INC.
demurrage claims along with supporting documents to A
the Charterer. As the said claim was disputed, arbitration
clause was invoked by the parties under the provisions
of the Arbitration & Conciliation Act, 1996. The Arbitral
Tribunal passed an award allowing the respondents'
demurrage claim in full. Certain other amounts payable B
under the Addendum were also· awarded in favour of the
respondents. The petitioner-charterers challenged the
award. The Single Judge of the High Court upheld the
award. The Division Bench of the High Court affirmed the
same. c
The question which arose for consideration in the
instant special leave petition was whether on arriving at
anchorage point at Port Vadinar, despite the destination
point being the SBM mooring, it could be said that it was
an arrived ship which was competent under the Charter 0
Party dated 9.11.1999, to issue Notice of Readiness of
discharge of its cargo; if the finding of the Arbitral
Tribunal that the vessel was an arrived ship at Port
Vadinar, as upheld by the Single Judge and the Division
Bench of the High Court is accepted, would the E
respondent/owners of the vessel be entitled to damages
or demurrage.
Dismissing the special leave petition, the Court
F
HELD: 1. The Charter Party dated 9.11.1999 was in
respect of a transaction which provided for carriage of
crude oil from Ras Sukheir to a safe port on the Indian
coastline. The Charterers were given the choice of
nominating such port for discharge of the said cargo of
crude oil. In the absence of any named port of destination G
in the Charter Party itself, it was only after the vessel left
Ras Sukheir that an intimation was given by the
Charterers for discharge of the cargo at the SBM at Port
Vadinar in Gujarat. That the said nomination was a
conscious decision on the part of the Charterers, despite H
74 SUPREME COURT REPORTS [2011] 9 S.C.R.
A having knowledge of the equipment available on board
the vessel for mooring at a SBM, and in keeping with
such decision the vessel set its course from Ras Sukheir
to Vadinar. The fiasco at Vadinar was occasioned by the
fact that no prior checking had been done to see whether
B with the mooring equipment on board, the vessel would
be able to safely berth at the SBM for discharge of its
cargo. (Para 43] (95-A-E]
2. The concept of an arrived ship in shipping
terminology requires that a vessel should reach a
C destination in a port where she could be safely berthed
and thereupon be ready to either discharge or load cargo
from and on to the vessel. That is a general concept, but
the Charterers and the Owners of the vessel could in the
Charter Party agree to a specific destination point within
D the port area for discharging or loading of cargo. Once
the vessel arrived at the said spot and was ready to
discharge its cargo, it could be described as an "arrived
ship" with the authority to issue and tender Notice of
Readiness. In the instant case, the nominated port for the
E arrival of the vessel was Vadinar Port, but the destination
point was the SBM where the vessel was to be moored
and was to discharge its cargo of crude oil. In fact, in the
Charter Party dated 9.11.1999, Clause 6 specifically
provided for arrival of the vessel at the port of loading or
F discharge and cast an obligation upon the Master or his
Agent to give the Charterer or his Agent Notice of
Readiness in relation to discharge of the cargo. It is a
possibility that since no specific port in the Indian
coastline had been mentioned in the Charter Party, the
G Master of the vessel or his Agent was required to give
Notice of Readiness upon the vessel arriving at
customary anchorage. It is only after the vessel sailed
from Ras Sukheir that the receiver, IOC, nominated
Vadinar to be the port of discharge with the specific
H destination point being the SBM within the port. In giving
SHIPPING CORPORATION OF INDIA LTD. v. MARE 75
SHIPPING INC.
such Notice of Readiness upon arrival at the customary A
anchorage at Vadinar, the Master of the Vessel duly
complied with the conditions of Clause 6 of the Charter
Party and in terms of the said clause irrespective of
whether a berth was available or not, lay time
commenced upon the expiry of six hours after receipt of B
such notice. That the vessel could not be moored at the
SBM is a different facet of the story. The Charterers had
full knowledge of the equipment on board vessel through
the questionnaire provided by the respondents/Owners
to the petitioners/Charterers. It cannot be denied that c
despite having such knowledge the IOC nominated the
SBM as the destination point for discharge of the cargo.
Obviously, the parties to the Charter Party had not made
any attempt to verify as to whether the equipment on
board the vessel was sufficient for her to be safely 0
moored at the SBM and to discharge her cargo safely. As
it turned out later on, the vessel was not so equipped and
could not, therefore, be moored at the SBM and had to
be requested to move away therefrom. The
responsibility for the failure of the ship to moor at the E
SBM in Vadinar must lie squarely with the Charterers and
the receiver as it was they who had nominated the SBM
for the safe mooring of the vessel. The lay time must,
therefore, be held to have recommenced after the expiry
of six hours from the tendering of the Notice of
Readiness upon the vessel's arrival at the customary F
anchorage at Vadinar on 15.12.1999 in keeping with the
provisions of Clause 6 of the Charter Party. It was not the
case of the Charterers that the failure of the vessel to
discharge its cargo at the SBM at Vadinar was for
reasons beyond their control. It cannot also be said that G
the owners of the vessel contributed in any way to such
failure since the equipment on board the vessel had been
made known to the Charterers when the Charter Party
was signed.[Paras 44 and 45) [95-G-H; 96-A-C-G-H; 97-A-
H; 98-A-B] H
76 SUPREME COURT REPORTS [2011] 9 S.C.R.
A 3. In the face of the specific conditions indicated in
Clause 6 of the Charter Party, the theoretical and/or
academic exercise of what constitutes an "arrived ship"
loses much of its relevance. The terms of the Charter
Party were agreed upon by the parties with their eyes
B wide open. Even after the vessel was denied mooring at
the SBM for safety reasons on 21.12.1999, no steps were ~
taken on behalf of the petitioners to either arrange for an
alternate safe berthing in Vadinar or to give instructions
as to where the cargo was to be discharged. In fact, on
c behalf of the respondent/Owners a legal notice was
addressed to the petitioners on 24.12.1999 pointing out
that the vessel continued to await discharge incurring
demurrage. It was only thereafter that Addendum to the
Charter Party was drawn up and signed on 28.12.1999 by
0 the Owners and the Charterers, whereby the vessel was
diverted by the Charterers from Vadinar to a Lighterage
point at Mumbai port for discharge and it was specifically
agreed that the Charterers would bear all the costs of
discharge, including freight charges and the expenses of
E the daughter vessel. It was also agreed that demurrage
would be settled as per the terms of the Charter Party.
[Para 46] [98-C-G]
4. Once it is held that the vessel was an arrived ship
on reaching the customary anchorage at Vadinar port
F and it was the Charterers who having the choice of a safe
port, had selected the SBM at Vadinar as the discharge
point, the suggestion made on behalf of the Charterers
that it was the responsibility of the Owners of the vessel
to check whether the ship could be safely moored at the
G SBM, is untenable. The responsibility of the Owners of
the vessel ended with the declaration of the equipment
available on board for mooring and berthing for the
purpose of discharge of its cargo. Consequently, all the
other ancillary issues which arose had to be answered
H in favour of the respondents. The fiasco at Vadinar was
SHIPPING CORPORATION OF INDIA LTD. v. MARE 77
SHIPPING INC.
·I
•
·•
H
78 SUPREME COURT REPORTS [2011) 9 S.C.R.
A Case Law Reference:
(1908) 1 K.B. 499 referred to Para 14, 18
(1917) 2 K.B. 204 referred to Para 14
(1917) 2 K.B. 593 referred to Para 14
B
(1973) 11 LLR 285 referred to Para 17,18
2003 (3) SCR 691 referred to Para 25
CIVIL APPELLATE JURISDICTION : SLP (Civil) No.
c 19461 of 2004.
From the Judgment & Order dated 20.01.2006 of the
High Court of Judicature at Bombay in Appeal No. 1158 of
2005 in Arbitration Petition No. 531 of 2003.
D
Bhaskar Gupta, Manoj Khanna, R.K. Khanna for the
Petitioner.
Prashant Pratap, Siddhartha ['ave, Jemtiben AO, Vibha
Datta Makhija for the Respondent.
E
The Judgment of the Court was delivered by
ALTAMAS KABIR, J. 1. The Special Leave Petition
arises out of the Judgment and Order dated 24.10.2005
passed by the learned Single Judge of the Bombay High Court
F in A.P.No.531 of 2003 affirming the Award of the Arbitral
Tribunal dated 8.9.2005, and the judgment and order dated
20.1.2006 passed by the Division Bench dismissing
A.N.No.1158 of 2005 filed by the Petitioners herein.
G 2. On 9.11.1999 the Petitioners and the Respondent(s)
entered into a Charter Party in respect of the Respondents'
vessel, "m.t. Prestige", for carriage of minimum 8150 metric
tonnes of crude oil from the Egyptian Red Sea port of Ras
,
Sukheir to one/two safe anchorage(s)/lighterage points/SBM(s)/
H one/two safe port(s)one/two safe berth(s) anywhere in India.
SHIPPING CORPORATION OF INDIA LTD. v. MARE 79
r SHIPPING INC. [ALTAMAS KABIR, J.] \
The vessel was described in Clause 41 of the Charter Party A
as being fitted with "AK Tongue Type Bow Chain Stopper of
min SWL 2000 Mts."
3. Clause 9 of the Charter Party provided for settlement
-\ of all disputes arising out of the Charter Party by arbitration B
under the Arbitration & Conciliation Act, 1996, and the Maritime
Arbitration Rules of the Indian Council of Arbitration (ICA).
4. The vessel arrived at Ras Sukheir at 4.00 a.m. on
19.11.1999 and tendered Notice of Readiness (NOR). The
loading commenced at 10 p.m. on 20.11.1999 and was C
completed by 3.15 p.m. on 21.11.1999. The total lay time
provided for loading and discharge of cargo was 72 running
hours. Out of the said lay time hours, the lay time used at Ras
Sukheir was 37 hours and 30 minutes. On account of a mishap
involving the vessel's anchor and the submarine_pipe-lines, the D
vessel was delayed at Ras Sukheir for fourteen days and could
leave the port only on 4.12.1999. On 6.12.1999 while the
vessel was sailing, the Respondents nominated Vadinar Single
Berth Mooring (SBM) for discharge of the cargo. Port of
discharge had not been nominated earlier. The vessel arrived E
at Vadinar and the Master tendered NOR at 8 p.m. on
15.12.1999. Since the vessel had only one chain stopper/Bow
Panama Chock, which had been specified in the Charter Party,
the vessel could not be safely moored at the SBM and the
Master was asked by the Receiver, Indian Oil Corporation on F
21.12.1999 to take away the vessel from the Vadinar SBM.
5. On 21.12.1999 a message was sent to the Petitioners'
Agents, Mis. J.M. Baxi & Co. by the Manager of the
Respondents drawing attention to the fact that the vessel could G
not be berthed at the SBM and requesting that immediate steps
be taken to berth the vessel. In the absence of any positive
' response to the said letter, the Respondents' lawyer, Mr.
Prashant Pratap, sent a legal notice to the Petitioners on
24.12.1999 indicating that the vessel continued to await
discharge incurring demurrage for which the Petitioners were H
80 SUPREME COURT REPORTS [2011] 9 S.C.R.
1
A held responsible. The Petitioners were also informed that on
account of the detention of the vessel at Vadinar, there was a
serious possibility of the vessel missing its next engagement.
6. Finally a decision was arrived at on 28.12.1999 and
Addendum No.1 to the Charter Party dated 9.11.1999 was
8
drawn up and signed by the Owners and the Charterers
containing the following further conditions agreed upon, namely,
(a) m.t. Prestige will be diverted by the Charterers from
Vadinar to L.P.O. Mumbai for discharge.
c
(b) Charterers will pay freight basis Ras Sukheir/LPO
Mumbai where cargo will be discharged into a daughter
vessel and Charterers will pay all the expenses of the
daughter vessel, M.T. Maharaja Agrasen.
0 (c) Charterers will bear the cost of deviation of m.t. Prestige
basis Ras Sukheir/LPO Mumbai v/s Ras SukheirNadinar/
LOP Mumbai which included time at the demurrage rate.
(d) The extra cost of bunkers incurred as a result of the
E deviation will be on Charterers' account, subject to the
Owners submitting documentary evidence.
(e) All direct expenses incurred by the Owners at Vadinar
towards pilotage, tugs and other port expenses and
Agency fees, will be settled by the Charterers.
F
(f) Oemurrage to be settled as per Charter Party terms.
7. Pursuant to the above arrangement, m.t. Prestige sailed
from Vadinar at 1 a.m. on 29.12.1999 and arrived at Mumbai
G Lighterage point on 30.12.1999 at 2 p.m. The vessel tendered
Notice of Readiness at 2 p.m. on 30.12.1999 and completed
discharge at 3.30 p.m. on 1.1.2000. The Respondents/Owners
I
submitted their demurrage claims along with supporting
documents to the Charterers on 3.2.2000. As the said claim
H was disputed, arbitration was invoked by the parties under the
SHIPPING CORPORATION OF INDIA LTD. v. MARE 81
r SHIPPING INC. [ALTAMAS KABIR, J.]
provisions of the Arbitration & Conciliation Act, 1996, A
· hereinafter referred to as "the 1996 Act". Both the parties
appointed their Arbitrators and the two Arbitrators appointed
a third as the Presiding Arbitrator. The Arbitrators made and
published their Award dated 26.8.2003 by which they allowed
·\
the Respondents' demurrage claim in full. Certain other B
amounts payable under the Addendum dated 28.12.1999 were
also awarded in favour of the Claimants/Respondents.
8. The said Award was challenged by the Petitioners/
Charterers in the Bombay High Court on the ground that the
Respondents had not proved that the Notice of Readiness had C
been tendered at Vadinar and consequently the Respondents
were not entitled to demurrage for the period that m.t. Prestige
was detained at Vadinar. The learned Single Judge of the High
Court accepted the submission made on the Petitioners' behalf
and by his order dated 25.4.2005 remitted the matter to the D
Arbitration for a proper finding in this regard, with leave to the
Respondents/owners to lead evidence to prove tender of the
Notice of Readiness to the Petitioners/Charterers.
9. After remand, the Arbitrators passed another Award on E
8.9.2005 after admitting fresh evidence, including documentary
evidence, holding that the service of the Notice of Readiness
by the Master of the vessel on the Agents of the Petitioners at
Jamnagar had been duly proved in view of the evidence of the
Petitioners' witness, Mr. Sunil D'Souza that he had asked F
Captain Jude D'Souza for a copy of the Notice of Readiness
sent by the Master to the Petitioners' Agents at Jamnagar. The
said fact was also confirmed by Mr. S.J. Joshi during his
evidence before the Tribunal. The Arbitrators also noted that
.j no attempt had been made by the Charterers to rebut Mr. Sunil G
) D'Souza's evidence by producing Captain Jude D'Souza.
- '
10. The Tribunal accordingly held that the Respondents/
Owners were entitled to receive demurrage in the amount of
U.S. $220376.48, together with interest and costs, as awarded
in the earlier Award of 26.8.. 2003. H
82 SUPREME COURT REPORTS [2011] 9 S.C.R.
A 11. On receiving a copy of the Award of the Tribunal dated
8.9.2005, the Petitioners applied for amendment of the Petition
under Section 34 of the 1996 Act. However, by order dated
24.10.2005 the learned Single Judge dismissed the Arbitration
Petition No.531 of 2003. An appeal, being No.1158 of 2005,
B was filed by the Petitioners before the Division Bench of the ..
Bombay High Court which dismissed the same on 20.1.2006.
12. The present Special Leave Petition has been filed
against the said Award of the Arbitration dated 8.9.2005, as
well as the judgments and orders dated 24.10.2005 and
C 20.1.2006 passed by the learned Single Judge and the Division
Bench of the Bombay High Court confirming the Award.
13. Mr. Bhaskar Gupta, learned Senior Advocate, who
appeared for the Petitioners, focused his submissions on the
D sustainability of the Respondents' claim for demurrage. Urging
that a claim for demurrage can only arise after the expiry of the
"lay days", namely, the time specified for loading or discharging
the cargo from the vessel, Mr. Gupta submitted that the all-
important question in respect of such a claim is when do the
E lay days commence and when are they used up. Mr. Gupta
submitted that the commencement of lay days depends on three
factors :-
(a) Firstly, the ship must be an "arrived ship" in order
to give Notice of Readiness.
F
(b) Secondly, she must have given the prescribed
notice to load or discharge, as the case may be.
(c) Thirdly, she must be ready to load or discharge, as
G the case may be.
14. Mr. Gupta submitted that whether the ship is an "arrived
ship" or not depends on the point designated as the destination
in the mutual understanding of the parties in the Charter Party •
itself or the terms thereof - the degree of precision being a
H
SHIPPING CORPORATION OF INDIA LTD. v. MARE 83
r SHIPPING INC. [ALTAMAS KABIR, J.]
matter of agreement between the parties. Mr. Gupta urged that A
in practice, the destination is usually a part or a specified area
within the port such as a basin, a dock, or a buoy at a certain
distance from the shore or a river. A still more precise point
would be where the loading or discharge is to take place, e.g.,
a particular quay, pier, wharf or mooring. Mr. Gupta submitted s
that a ship is said to be an "arrived ship" only when she has
reached the particular point and has moored there. Mr. Gupta
urged that the said propositions are well-established and have
been laid down in (1) Leonis Steamship Company Ltd. Vs.
Rank Limited (1908) 1 K.B. 499; (2) Armament Adolf Deppe c
Vs. John Robinson & Company Ltd. [1917) 2 K.B. 204; and
(3) Owners of S.S. Plata Vs. Ford & Co. (1917) 2 K.B. 593.
We shall have recourse to refer to the aforesaid decisions later
in this judgment.
15. Mr. Gupta submitted that Clause 'D' of the Charter D
Party dated 9.11.1999, specifies "discharging port" as one/two
safe anchorage(s)/lighterage point(s)/SBM(s), 1/2 safe Ports,
1/2 safe Berth(s) and full India. Mr. Gupta also submitted that
the Charter Party provides that on arrival of the vessel for
discharge__at Vadinar, the vessel was to maintain 70% of her E
deadweight on board for safe mooring at a SBM.
16. Mr. Gupta urged that by a communication dated
6.12.1999, the Petitioners/Charterers designated Vadinar SBM
as the destination and not a 'Port'. The destination was, F
therefore, a specific point and not a large area like a Port.
Vadinar SBM, therefore, became the destination as if
incorporated in the Charter Party itself. Mr. Gupta submitted
that inspite of the best efforts of the Terminal Authorities, IOC,
who were also the receivers of the cargo, m.t. Prestige was G
unable to moor at the Vadinar Single Berth Mooring (SBM) on
account of the fact that it had only one bow chain. It may be of
interest to note that Vadinar is the only SBM in the whole of
India. Mr. Gupta urged that inspite of the various attempts of
the Port Authorities, the vessel could not be berthed at the
H
84 SUPREME COURT REPORTS [2011] 9 S.C.R.
A Vadinar SBM and was asked to move away. Mr. Gupta
contended that since the vessel could not be moored at
Vadinar, it was not an "arrived vessel' and "lay time" could not
be said to have commenced running on 15.12.1999. The
Notice of Readiness given by the Petitioners could not,
B therefore, be treated as valid and the period spent at Vadinar
could not be taken into consideration while computing the
number of lay days utilized.
17. In support of his aforesaid contention, Mr. Gupta
referred to and relied on the decision of the House of Lords in
C the case of Johanna Oldendorff, (1973) 11 LLR 285, in which
Viscount Dilhorne laid down ten tests for determining when a
ship is an arrived ship. Mr. Gupta referred to the first and fifth
tests as being relevant in the context of this case and the same
are extracted hereinbelow :
D
(i) That under a port Charter Party to be an "arrived
ship", that is to say a ship c1t a place where a valid
Notice of Readiness to load or discharge can be
given, she must have ended her voyage at the port
E named; and
(ii) A vessel has not reached her port of destination until
it has ended its voyage within the port, either in its
legal, or if it differs, in its commercial sense. If it is
refused permission and ordered to wait outside the
F port by the Port Authority, it is not an "arrived ship".
18. Mr. Gupta submitted that the mere fact that the vessel
had arrived near the SBM and had anchored there would not
make the vessel an "arrived ship", because the destination was
G the SBM and not the port and the vessel could end her voyage
only when she was moored at the SBM, which the vessel was
unable to do. Mr. Gupta submitted that the decision in Johanna
Oldendorff's case was an affirmation of the Kings Bench
decision in the case of Leonis Steamship Company Ltd. Vs.
H Rank Limited (1908) 1 K.B. 499. Mr. Gupta urged that not
SHIPPING CORPORATION OF INDIA LTD. v. MARE 85
SHIPPING INC. [ALTAMAS KABIR, J.]
having been allowed to berth at the SBM, the vessel could not A
be categorized as an "arrived ship" for the purpose of issuing
Notice of Readiness, which Mr. Gupta submitted had not been
served on the Petitioners in the first place.
., 19. By way of an alternative argument, Mr. Gupta submitted B
that under Clause 6 Part II of the Charter Party, the delay at
Vadinar could not be counted as lay time, because it was the
receivers (1.0.C.) and not the Charterers who declared that safe
berthing of the vessel at Vadinar was not possible because of
infra-structural deficiencies and not because of any fault on
behalf of the Petitioners since the Petitioners had no control C
over the situation. Accordingly, the entire time from the tender
of the Notice of Readiness on 15.12.1999, if at all tendered,
till the vessel started discharge in Bombay, had to be excluded
in calculating lay time. ·
D
20. Mr. Gupta submitted that service of the Notice of
Readiness had not been proved even after remand, as the only
evidence tendered was that of Sunil D'Souza which, in any
event, did not prove anything beyond the fact that he had been
asked to get a copy of the Notice of Readiness from the Agent. E
Furthermore, the entire evidence of Sunil D'Souza was hearsay.
21. On the question of Safe Port Warranty, Mr. Gupta
contended that only after all attempts had been made to berth
the vessel at the SBM that it was asked to move away from
the mooring. Consequently, even if the finding of the Arbitrators F
that the Petitioners had failed to designate a safe port was
accepted, at best the ship owners could be entitled to damages
and not demurrage and would be subject to the ordinary rules
as to remoteness, mitigation etc., as available under Section
73 of the Contract Act. Mr. Gupta submitted that the G
Respondents had claimed damages before the learned
Arbitr~tors who, however, allowed demurrage in their Award on
the ground that demurrage is a genuine pre-estimate of
damages. Mr. Gupta submitted that even if there was a breach
of warranty on the Petitioners' part, the same would give rise H
86 SUPREME COURT REPORTS [2011] 9 S.C.R.
A to a claim for damages and not demurrage within the scope of
Sections 73 and 74 of the Contract Act.
22. Mr. Gupta submitted that in the Addendum dated
28.12.1999 to the Charter Party dated 9.11.1999 since the
Charterers had agreed to bear the cost of deviation basis Ras
B Sukheir/LPO Mumbai vs Ras SukheirNadinar/LPO Mumbai,
which included time at the demurrage rate, there could not be
a separate claim for demurrage as that would amount to double
jeopardy. Mr. Gupta submitted that it is the said provision
contained in Clause (f) of the aforesaid Addendum which has
C given rise to this arbitration. Mr. Gupta submitted that although
the Award has relied on Clause 4(1) of Part II of the Charter
Party, which provides that extra expenses incurred in
connection with any change in loading or discharging ports, has
to be paid by the Charterers, and any time thereby lost to the
D vessel shall count as used lay time, the said clause would have
to be read in the context of Clauses 4(a) and 4(b) where certain
ports, other than any Indian Port, have been named.
23. On the question of mitigation of damages, Mr. Gupta
E urged that the Petitioners/Owners had done everything in its
power to safely berth the vessel at the SBM Vadinar, which was
perhaps the only SBM in operation in India at the relevant point
of time and would otherwise have been ideal for discharge of
the cargo of crude oil. Mr. Gupta contended that it was IOC,
F the receiver, who had taken almost two weeks to decide to
redirect the vessel from Vadinar to Mumbai. Mr. Gupta
submitted that it was, in effect, the Respondents who did not
take any steps to mitigate the damages.
24. On the quantum of demurrage or damages, Mr. Gupta
G submitted that since the demurrage rate was fixed at US
$16000 per day and the same has really a genuine pre-
estimate of damages, the Tribunal should have awarded
damages at a reasonable rate, instead of making its Award
on the consideration of damage as fixed in the Charter Party.
H Mr. Gupta urged that the Tribunal had gone completely wrong
SHIPPING CORPORATION OF INDIA LTD. v. MARE 87
SHIPPING INC. [ALTAMAS KABIR, J.)
;
in giving a go-bye to the provisions of Sections 73 and 74 of A
the Contract Act in awarding compensation in keeping with the
provisions for fixed demurrage in the Charter Party, particularly
when all the lay days had not been used up.
25. Mr. Gupta submitted that the scope of a petition under
.. Section 34 of the 1996 Act had been considered by this Court
8
in detail in Oil & Natural Gas Corporation Ltd. Vs. Saw Pipes
Ltd. [(2003) 5 sec 705), and it was indicated therein that if
the Award passed by the Arbitral Tribunal was contrary to any
of the provisions of the Act or the substantive law governing C
the parties or was against the terms of the contract, the same
could be set aside. Mr. Gupta urged that even in the instant
case, the law had been misapplied by the Arbitrators who had
missed considering the all-important issue that no valid Notice
of Readiness could have been tendered by a ship which was
not an "arrived ship". In such circumstances, the petition under D
Section 34 of the 1996 Act was clearly not maintainable.
26. In conclusion, Mr. Gupta drew our attention to the
wording of Clause 6 of the Charter Party which deals with
Notice of Readiness and in particular, to the last sentence E
thereof where delay in getting a berth for a vessel after giving
Notice of Readiness, for any reason over which the Charterer
has no control, shall not count as used lay time. Mr. Gupta
submitted that the facts of the case would clearly indicate that
the Arbitral Tribunal failed to take into consideration the facts F
in their true sequence and ended up in a "cart before the horse"
situation, since no demurrage, which is the consequence of
using up all the lay time, could have been awarded without a
correct computation of the used "lay time".
27. Going to the heart of the matter, Mr. Prashant Pratap, G
learned Advocate, submitted that the case of the Petitioners/
Charterers of the vessel depended primarily on the terms and
conditions of the Charter Party on the basis whereof the Arbitral
Tribunal had awarded demurrage to the Respondents/Owners
of the vessel. As was also done by Mr. Gupta, special H
88 SUPREME COURT REPORTS [2011) 9 S.C.R.
A emphasis was laid by Mr. Prashant Pratap on Clause 6 of the '
Charter Party relating to Notice of Readiness. Learned
counsel emphasized the fact that in terms of the said clause,
the Master of the vessel or his Agent would give the Charterer
or his Agent notice by letter, telegraph, wireless or telephone
B that the vessel is ready to load or discharge cargo, berth or no
berth, and lay time would commence upon the expiration of six
hours from receipt of such notice or upon the vessel's arrival
in berth, which would mean finished mooring when at a sea
loading or discharging terminal and all fast when loading or
c discharging alongside a wharf whichever first occurs. Then
follows the rider that, however, where the delay is caused to
the vessel getting into berth after giving Notice of Readiness
for any reason over which the Charterer has no control, the delay
caused could not be counted as used lay time.
D 28. Mr. Prashant Pratap referred to Clauses 8 and 9 of
the Charter Party dealing with Demurrage and Safe Berthing
Shifting. Clause 8 provides that the Charterer shall pay
demurrage per running hour and pro rata for a part thereof at
the rate specified in Part I for all the time taken for loading and
E discharging when the time taken for discharging the cargo
exceeds the allowed lay time specified. If, however, delay in
discharge of the cargo is caused at the port of loading and/or
discharge by reason of fire or other unavoidable circumstances,
the rate of demurrage would be reduced to one-half of the
F amount stated in Part I per running hour or pro rata for part of
an hour for demurrage so incurred. It was also stipulated that
the Charterer would not be liable for demurrage for delay
caused by strike, lockout, stoppage or restraint of labour for
master, officers and crew of the vessel or tugboat or pilots. Mr.
G Prashant Pratap also pointed out that Clause 9 of the Charter
Party which provides for Safe Berthing Shifting indicates that
the vessel shall load and discharge at any safe place or wharf,
or alongside vessels or lighterage point reachable on her
arrival, which shall be designated and procured by the
H Charterer, provided the vessel could proceed thereto, lie at and
SHIPPING CORPORATION OF INDIA LTD. v. MARE 89
SHIPPING INC. [ALTAMAS KABIR, J.]
depart therefrom always safely afloat. Clause 9 also enables A
the Charterer to shift the vessel at ports of loading and/or
discharge from one safe berth to another on payment of towage
and pilotage for shifting to the next berth and other expenses
and the time consumed on account of such shifting would count
as used lay time, except as otherwise provided in Clause 15. B
29. Mr. Prashant Pratap then contended that the question
as to whether M/s. m.t. Prestige was an "arrived ship" or not at
port Vadinar, had never been raised either before the learned
Single Judge or the Division Bench of the High Court, nor was C
it taken as a ground in the Special Leave Petition. Learned
counsel submitted that even the ground taken with regard to the
Notice of Readiness being invalid, as the vessel was allegedly
not ready in all respects to discharge its cargo, was neither
·argued before the learned Single Judge or the Division Bench
nor was the ground taken in the Special Leave Petition before D
this Court.
30. Coming to the question as to what constitutes an
"arrived ship", Mr. Prashant Pratap submitted that the said
question was extensively considered by the House of Lords in E
the case of Johanna Oldendorff (supra), which was also relied
upon by Mr. Gupta, where the House of Lords was of the view
that the vessel should have reached a position in the port where
she is at the immediate and effective disposition of the
Charterers and for practical purposes it is so much easier to F
establish that if the ship is at the usual waiting place within the
port where waiting vessels would normally lie before
proceeding to the berth nominated by the Charterers for
discharge of cargo. If the vessel is at such a place, then the
vessel is considered to be an "arrived ship". It is only thereafter G
that the vessel can tender Notice of Readiness. Furthermore,
if the Charter Party provides for the location where the vessel
should arrive and tender Notice of Readiness, then if the vessel
has reached that location, the vessel is considered to be an
"arrived ship". Mr. Prashant Pratap submitted that in the present H
90 SUPREME COURT REPORTS [2011] 9 S.C.R.
A Charter Party, the parties have expressly agreed in Clause 6
for the vessel to arrive at customary anchorage (emphasis
supplied) at the port of loading or discharge and tender Notice
of Readiness. Accordingly, once the vessel arrived at
anchorage at Vadinar, it became an arrived ship in terms of
8 Clause 6 of the Charter Party and was entitled to tender Notice
of Readiness.
31. Mr. Prashant Pratap submitted that it was not disputed
that Mis. m.t. Presitge was at customary anchorage at Vadinar
Port when Notice of Readiness was tendered. Mr. Prashant
C Pratap also placed emphasis on the expression "berth or no
berth", included in Clause 6 of the Charter Party which meant
that even if a berth was not available or the vessel had not
reached the berth, the vessel is entitled to tender Notice of
Readiness. Mr. Prashant Pratap submitted that the term had
D been explained in the case of the NOTOs where dealing with
a clause identical to Clause 6 of the Charter Party, it was held
that the meaning of the said words indicated that the Notice
of Readiness could be given upon arrival at the customary
anchorage and could take effect whether or not a berth was
E then available or not for the vessel.
32. Mr. Prashant Pratap then argued that the submission
made on behalf of the Petitioners/Charterers that since the
destination in the Charter Party had been shown as "SBM" and
F the vessel had failed to be moored at the SBM, no demurrage
could be claimed, was wholly erroneous on account of the fact
that such notice could be tendered on the arrival of the vessel
at the customary anchorage. The vessel is not, therefore,
required to be at the destination within the port for the purpose
G of becoming an "arrived ship" and for tendering of Notice of
Readiness.
33. Referring to Mr. Gupta's submissions that for the
purpose of tendering Notice of Readiness, the vessel must be
an arrived ship, Mr. Prashant Pratap submitted that the vessel,
H therefore, must be at the effective disposal of the Charterers
SHIPPING CORPORATION OF INOIA LTD. v. MARE 91
SHIPPING INC. [ALTAMA$:1(A8lR, J.).
who would have unrestricted access to the vessel's cargo A
tanks and the vessel pumps must b~ inworking order to pump
out the cargo upon the hoses being,connected, provided that
the Charterers were ready to receive the cargo. In this regard,
Mr. Prashant Pratap referred to the decision in the Leonis
Steamship Co. Ltd. (supra), where it was observed by Lord B
Justice Kennedy that "the ship's obligations, therefore, under
such a Charter Party the performance of which much precede
the commencement of the lay days (as the fixed loading period
is commonly termed) are three : Firstly, the ship must have
arrived at her destination and so be within the designation of C
an arrived ship. Till then she is not entitled to give a Notice of
Readiness to load. Secondly, she must have given the
prescribed Notice of Readiness to load. Thirdly, she must, in
fact, be so far as she· is concerned, ready to load. The ship
owner cannot claim against the Charterer that the lay days
0
begin to count until the ship is an arrived ship; .............. ." Mr.
Prashant Pratap submitted that the .aforesaid passage made
it clear that the vessel has to be ready to load or discharge,
as the case may be. The Tribunal's,flndings are that the vessel
was ready, but the terminal was not. The Tribunal held that the
vessel was at the immediate and effective disposition of the E
Charterers when Notice of Readiness was given.
34. Mr. Prashant Pratap then urged that from the Charter
., Party it is quite clear that the responsibility of providing a berth
where the vessel could moor safely was that of the Charterers F
and the same would be clear from the use of the word "safe"
in Clause D of Part I of the Charter Party which precedes the
words "Ahchorage/Lighterage Points/SBM". Even in terms of
Clause 9 of the Charter Party, the place of discharge must be
safe and has to be designated and procured by the Charterers. G
Mr. Prashant Pratap referred to various other judgments such
as the Sea Queen [(1988) Vol.1 KKR 500) and Fjordaas
[(1988) Vol.1 LLR 336). In the later case, it has been indicated
. that "reachable" or "arrival" are well-known expressions and
mean precisely what they say. It was further observed that if H
92 SUPREME COURT REPORTS [2011] 9 S.C.R.
A the berth cannot be reached on arrival, the warranty is broken,
unless there is some relevant protecting exception. Such berth,
in its term, is required to have two characteristics: it has to be
safe and it also has to be reachable on arrival. By nominating
SBM at Vadinar as the destination of the vessel and also the
B place for discharge of the cargo, it was the responsibility of the
Charterers to ascertain as to whether the vessel could be
moored there safely and be in a position to discharge the cargo
safely.
35. Apart from the aforesaid questions regarding the vessel
C being an arrived ship, Mr. Prashant Pratap urged that service
of the Notice of Readiness by the Master on the Agents of the
Charterers have been duly proved and is a finding based on
appreciation of evidence by the Arbitrators, which has been
upheld by the learned Single Judge and the Division Bench,
D whose orders were under challenge in the Special Leave
Petition.
36. Mr. Prashant Pratap uri;ied that if the Notice of
Readiness was valid, as had been found not only by the Arbitral
E Tribunal but also by the learned Single Judge and the Division
Bench of the Bombay High Court, then lay time commenced
six hours after the tender of Notice of Readiness. Accordingly,
lay time expired on 17.12.1999, and, thereafter, the vessel was
on demurrage all throughout, till discharge of the cargo was
F completed. Since in the instant case, the Charterers had failed
to nominate a safe berth at which the vessel could safely lie
and discharge the cargo and failing to provide a berth which
was reachable upon arrival of the vessel at Vadinar, the
consequent delay in berthing and discharge of the cargo, was
G the responsibility of the Charterers for which demurrage was
payable by them. Mr. Prashant Pratap pointed out that at no
stage did the Charterers question the validity of the Notice of
Readiness tendered at Vadinar either on the ground that the
vessel was not an arrived ship, or on the ground that the vessel
was not ready to discharge the cargo. On the contrary, the
H
... SHIPPING CORPORATION OF INDIA LTD. v. MARE
SHIPPING INC. [ALTAMAS KABIR, J.]
93
Charterers signed the Addendum dated 28.12.1999 by which A
they agreed to bear all the expenses incurred by the vessel at
Vadinar and also agreed to pay additional freight charges for
discharge of cargo at Mumbai. Significantly, the Charterers
also agreed that the time taken for the vessel to proceed from
Vadinar to Mumbai would count as demurrage time. Mr. B
Prashant Pratap urged that the Charterers would not have
agreed to the terms and conditions of the Addendum if it was
their contention that the vessel was not an arrived ship or that
the Notice of Readiness was invalid.
37. Mr. Prashant Pratap then submitted that the only
c
requirement as far as the vessel was concerned was that it had
to maintain 70% of the dead weight on board for safe mooring
at the SBM at Vadinar and it is nobody's case that the vessel
did not conform to such condition. ·
D
38. On the question of designation of the SBM as the
destination point within Vadinar Port by the Charterers, Mr.
Prashant Pratap contended that the Charterers had been put
on notice regarding the berthing arrangement both in the
Charter Party as well as in the questionnaire setting out the E
vessel's mooring arrangements provided to the Charterers.
Learned counsel submitted that it was for the Charterers to
check the vessel equipment vis-a-vis facilities available at the
-., Port of loading and discharge, before nominating the same.
Since the Charterers had failed to undertake such an exercise, F
there was a resultant problem faced at Vadinar whereby the
vessel could not discharge its cargo at Vadinar but had to be
diverted to Mumbai. Mr. Prashant Pratap also pointed out that
while the entire Indian coastline was available to the Charterers
to nominate a safe port for discharge of the cargo, it made a G
conscious decision to nominate the SBM at Vadinar which
ultimately turned out to be unsafe for mooring of the vessel,
given the equipment available on board the ship.
39. Mr. Prashant Pratap submitted that it had been agreed
on behalf of the Charterers that demurrage is a genuine pre- H
94 SUPREME COURT REPORTS [2011] 9 S.C.R.
A estimate of damages and even if the Charterers' argument is
-
to be accepted that the owners are entitled to damages and
not demurrage, the calculation of such damages would have
to be the demurrage rate in the facts and circumstances of the
case.
B
40. Mr. Prashant Pratap, accordingly, submitted that the
award of the Arbitral Tribunal, as upheld both by the learned
Single Judge and the Division Bench of the Bombay High
Court, did not warrant any interference and the Special Leave
C Petition was liable to be dismissed with appropriate costs.
41. Having gone through the submissions made on behalf
of the respective parties in the background of the facts as
disclosed, it is clear that we are required to consider two basic
questions for the purpose of deciding the present Special
D Leave Petition, namely :- ·
(a) Whether on arriving at anchorage point at Port
Vadinar, despite the destination point being the
SBM mooring, it could be said that it was an arrived
ship which was competent under the Charter Party
E
dated 9.11.1999, to issue Notice of Readiness of
discharge of its cargo?
(b) If the finding of the Arbitral Tribunal that the vessel
was an arrived ship at Port Vadinar, as upheld by
F the learned Single Judge and the Division Bench
of the Bombay High Court is accepted, would the
Respondents/Owners of the vessel be entitled to
damages or demurrage?
G 42. Various ancillary questions connected with the
aforesaid two questions also crop up, which we shall consider
shortly.
43. From the undisputed facts, the position that emerges
is as follows :-
H
SHIPPING CORPORATION OF INDIA LTD. v. MARE 95
SHIPPING INC. [ALTAMAS KABIR, J.]
.., ~
' (i) The Charter Party dated 9.11.1999 was in respect A
of a transaction which provided for carriage of
crude oil from Ras Sukheir to a safe port on the
Indian coastline. The Charterers were given the
choice of nominating such port for discharge of the
aforesaid cargo of crude oil. B
(ii) In the absence of any named port of destination in
the Charter Party itself, it was only after the vessel
left Ras Sukheir that an intimation was given by the
Charterers for discharge of the cargo at the SBM
at Port Vadinar in Gujarat.
c
(iii) That the aforesaid nomination was a conscious
decision on the part of the Charterers, despite
having knowledge of the equipment available on
board the vessel for mooring at a SBM, and in D
keeping with such decision m.t. Prestige set its
course from Ras Sukheir to Vadinar.
(iv) The fiasco at Vadinar was occasioned by the fact
that no prior checking had been done to see
E
whether with the mooring equipment on board, the
vessel would be able to safely berth at the SBM for
discharge of its cargo.
(v) Who was responsible for the detention of the vessel
at Vadinar since its arrival at the anchorage point F
and its final departure from the said Port? Whether
there was contributory negligence on the part of
both the parties in the cause of such delay?
44. The concept of an arrived ship in shipping terminology G
requires that a vessel should reach a destination in a port where
-sf:le..could_b~...§_afely berthed and thereupon be ready to either
discharge or load-cargo from and on to the vessel. That is a
general concept, but the Charterers and the Owners of the
vessel could in the Charter Party agree to a specific destination
H
96 SUPREME COURT REPORTS [2011] 9 S.C.R.
A point within the port area for discharging or loading of cargo.
Once the vessel arrived at the said spot and was ready to
discharge its cargo, it could be described as an "arrived ship"
with the authority to issue and tender Notice of Readiness. In
the instant case, the nominated port for the arrival of the vessel
B was Vadinar Port, but the destination point was the SBM where
the vessel was to be moored and was to discharge its cargo
of crude oil. In fact, in the Charter Party dated 9.11.1999,
Clause 6 specifically provided for arrival of the vessel at the
port of loading or discharge and cast an obligation upon the
c Master or his Agent to give the Charterer or his Agent Notice
of Readiness in relation to discharge of the cargo. Since the
decision in this case will to a large extent depend on the
interpretation of Clause 6, the same is extracted hereinbelow :
"Clause 6 Notice of Readiness :
D
Upon arrival at customary anchorage at each port of
loading or discharge, the Master or his Agent shall give
the charterer or his Agent notice by letter, telegraph,
wireless or telephone that the vessel is ready to load or
E discharge cargo berth or no berth and lay time as
hereinafter provided shall commence upon the expiration
of six (6) hours after receipt of such notice or upon the
vessel arrival in berth - finished mooring when at a sea
loading or discharging terminal and all fast when loading
F or discharging alongside a wharf which ever first occurs.
However, where delay is caused to vessel getting - berth
after giving notice of readiness for any reason over which
charterer has no control, such delay shall not count as used
lay time."
G 45. As will be evident from the above clause, the Master
of the vessel was under an obligation to give Notice of
Readiness on arrival at the customary anchorage at the port
of discharge. It is a possibility that since no specific port in
the Indian coastline had been mentioned in the Charter Party,
H the Master of the vessel or his Agent was required to give
SHIPPING CORPORATION OF INDIA LTD. v. MARE 97
SHIPPING INC. [ALTAMAS KABIR, J.]
Notice of Readiness upon the vessel arriving at customary A
anchorage. It is only after the vessel sailed from Ras Sukheir
that the receiver, IOC, nominated Vadinar to be the port of
discharge with the specific destination point being the SBM
within the port. In giving such Notice of Readiness upon arrival
at the customary anchorage at Vadinar, the Master of the B
Vessel duly complied with the conditions of Clause 6 of the
Charter Party and in terms of the aforesaid clause irrespective
of whether a berth was available or not, lay time commenced
upon the expiry of six hours after receipt of such notice. That
the vessel could not be moored at the SBM is a different facet c
of the story. The Charterers had full knowledge of the equipment
on board m.t. Prestige through the questionnaire provided by
the Respondents/Owners to the Petitioners/Charterers. It could
not be denied that despite having such knowledge the IOC.
nominated the SBM as the destination point for discharge of 0
the cargo. Obviously, the parties to the Charter Party had not
made any attempt to verify as to whether the equipment on
board the vessel was sufficient for her to be safely moored at
the SBM and to discharge her cargo safely. As it turned out
later on, the vessel was not so equipped and could not,
therefore, be moored at the SBM and had to be requested to E
move away therefrom. Although, an attempt has been made
on behalf of the Charterers to convince us that it was really the
duty and responsibility of the Owner of the vessel to check
whether the vessel could be safely moored at the SBM in
Vadinar, we are unable to convince ourselves that such a duty F
was that of the Owners of the vessel and not the Charterers
which had a choice of all the ports in India for discharge of the
cargo, as was subsequently done in Mumbai port. As has been
held by the Arbitral Tribunal and subsequently affirmed both by
the learned Single Judge and the Division Bench of the Bombay G ,
High Court, the responsibility for the failure of the ship to moor
at the SBM in Vadinar must lie squarely with the Charterers and
the receiver as it was they who had nominated the SBM for the
safe mooring of the vessel. The lay time must, therefore, be
held to have recommenced after the expiry of six hours from H
98 SUPREME COURT REPORTS [2011) 9 S.C.R.
A the tendering of the Notice of Readiness upon the vessel's
arrival at the customary anchorage at Vadinar on 15.12.1999
in keeping with the provisions of Clause 6 of the Charter Party.
It was not the case of the Charterers that the failure of the
vessel to discharge its cargo at the SBM at Vadinar was for
B reasons beyond their control. It cannot also be said that the
owners of the vessel contributed in any way to such failure since ..
the equipment on board the vessel had been made known to
the Charterers when the Charter Party was signed.
46. In the face of the specific conditions indicated in
C Clause 6 of the Charter Party, the theoretical and/or academic
exercise of what constitutes an "arrived ship" loses much of its
relevance. The terms of the Charter Party were agreed upon
by the parties with their eyes wide open. What is also
significant and cuts at the root of the submissions advanced
D on behalf of the Charterers is that even after the vessel was
denied mooring at the SBM for safety reasons on 21.12.1999,
no steps were taken on behalf of the Petitioners to either
arrange for an alternate safe berthing in Vadinar or to give
instructions as to where the cargo was to be discharged. In
E fact, on behalf of the Respondents/Owners a legal notice was
addressed to the Petitioners on 24.12.1999 pointing out that
the vessel continued to await discharge incurring demurrage.
It is only thereafter that Addendum No.I to the Charter Party was
drawn up and signed on 28.12.1999 by the Owners and the
F Charterers, whereby m.t. Prestige was diverted by the
Charterers from Vadinar to a Lighterage point at Mumbai port
for discharge and it was specifically agreed that the Charterers
would bear all the costs of discharge, including freight charges
and the expenses of the daughter vessel, m.t. Maharaja
G Agrasen. It was also agreed that demurrage would be settled
as per the terms of the Charter Party. In our view, the various
decisions cited on behalf of the Petitioners/Charterers do not
help them in the facts of this case. We do not, therefore, think
it necessary to consider all the decisions cited on behalf of the
H respective parties and those referred to hereinbefore are
SHIPPING CORPORATION OF INDIA LTD. v. MARE 99
SHIPPING INC. [ALTAMAS KABIR, J.]
/I
sufficient for our purpose. The decisions relied upon by the A
parties lay down certain propositions of law which are well-
established and with which there cannot be any disagreement,
but for the purposes of this case they are basically academic.
47. Once we have affirmed the finding that m.t. Prestige
B
~
was an arrived ship on reaching the customary anchorage at
Vadinar port and once we have also held that it was the
Charterers who having the choice of a safe port, had selected
the SBM at Vadinar as the discharge point, the suggestion
made on behalf of the Charterers that it was the responsibility
of the Owners of the vessel to check whether the ship could be c
safely moored at the SBM, is untenable. The responsibility of
the Owners of the vessel ended with the declaration of the
equipment available on board for mooring and berthing for the
purpose of discharge of its cargo. Consequently, all the other
ancillary issues which arise have to be answered in favour of D
the Respondents herein. As indicated hereinbefore, the fiasco
at Vadinar was occasioned by the fact that no prior checking
had been done by the Charterers to ascertain as to whether
with the mooring equipment on board the vessel she would be
able to moor safely at the SBM for discharge of her cargo. E
Even the subsequent deviation of the vessel from Vadinar to
Mumbai was not on account of any laches on the part of the
Owners of the vessel who were awaiting instructions once the
vessel had been asked to move away from the SBM. In fact, it
took a notice from the Owners of the vessel and a week for the F
Charterers to galvanize themselves into action, which ultimately
resulted in the Addendum No.1 dated 28.12.1999.
48. Read with Clause 6 of the Charter Party, the Addendum
dated 28.12.1999 makes it abundantly clear that the Charterers
had accepted the responsibility for the failure of the vessel to G
discharge her cargo at Vadinar and had agreed to bear all the
expenses for the delay in diversion of the vessel from Vadinar
to Mumbai, including the time spent at Vadinar port and the
expenses incurred towards pilotage, tugs and other port
expenses. H
100 SUPREME COURT REPORTS [2011] 9 S.C.R.
A 49. Apart from the above, Clause 4(1) of Part II of the
Charter Party specifically provides that extra expenses incurred
on account of any change in loading or discharging ports, has
to be paid by the Charterers, and any time thereby lost to the
vessel shall count as used lay time. We are not inclined to
B accept Mr. Gupta's submission that the aforesaid clause has
to be read in the context of Clauses 4(a) and 4(b) which refer
to ports other than Indian Ports in a different context.
50. We, therefore, see no reason to interfere with the
Award of the Arbitral Tribunal and the decisions, both of the
C learned Single Judge and the Division Bench, confirming the
Award of the Arbitral Tribunal and, accordingly, dismiss the
Special Leave Petition. In the facts of the case, the parties shall
bear their own costs as far as these proceedings are
concerned.
D
D.G. Special Leave Petition dismissed.
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