Allowed

Sembcorp Marine Repairs and Upgrade Pte. Ltd. v. M. v Karnika (Imo No. 8521220)

Bombay HC6 Dec 2022IA/4650/2022

Case brief

AI extract

What is this about?

The Bombay High Court allowed an interim application for summary judgment in a commercial admiralty suit. The plaintiff, a Singapore-based ship repair company, established an admitted liability for vessel refurbishment against the sale proceeds of the MV Karnika. The court found no real prospect of defense due to explicit acknowledgments of debt and lack of evidence to refute the claim.

What did the court decide?

A summary judgment and decree in favour of the plaintiff against the sale proceeds of MV Karnika for US$ 14,25,921.93 with 8% p.a. interest and costs of Rs. 5,00,000/-.

Sembcorp Marine Repairs and Upgrade Pte. Ltd. Vs M. v. Karnika (Imo No. 8521220) — Bombay HC (2022) — LawSathi Research

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19-IA4650-2022INCOMA27-2021.DOC

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sSantosh

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ADMIRALTY AND VICE ADMIRALTY JURISDICTION

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IN ITS COMMERCIAL DIVISION

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INTERIM APPLICATION NO. 4650 OF 2022

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SANTOSH SUBHASH KULKARNI

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Digitally signed by SANTOSH SUBHASH KULKARNI Date: 2022.12.09 18:36:29 +0530

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COMM ADMIRALTY SUIT NO. 27 OF 2021

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Sembcorp Marine Repairs & Upgrades Pte. Ltd.

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...Applicant

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In the matter between

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Sembcorp Marine Repairs & Upgrades Pte. Ltd.

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...Plaintiff

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Versus

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Sale Proceeds of M. V. Karnika (IMO No. 8521220) …Defendant

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Mr. Ram Jay Narayan, i/b Shweta Sadanandan, for the Applicant/Plaintiff.

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CORAM: N. J. JAMADAR, J. DATED : 6^th DECEMBER, 2022

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ORDER:-

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This is an application for summary judgment under Order

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XIII-A read with Order XII Rule 6 of the Code of Civil Procedure,

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1908 (“the Code”).

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The plaintiff is a company incorporated under the laws of Singapore. The plaintiff is engaged in the business of, inter alia, ship repair and refurbishment yard. The vessel, MV Karnika (IMO No.8521220) was flying the flag of Bahamas. Jalesh Cruises Mauritius Ltd. (“Jalesh”) was the registered owner of MV

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Karnika. Pursuant to orders passed by this Court on 7^th October, 2020 and 28^th October, 2020 in Admiralty Suit No.53 of 2020, MV Karnika was sold and the sale proceeds stand deposited with the Prothonotary and Senior Master of this Court. Pursuant to further order dated 22^nd December, 2020 in Commercial Admiralty Suit (L) No.4374 of 2020 a notice inviting claims was published by the Sheriff of Mumbai. In response thereto, the plaintiff, who claims to have a maritime claim against the defendant – vessel has instituted this suit.

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The plaintiff avers that on 1^st March, 2019 Jalesh and plaintiff concluded a Ship Refurbishment Contract for repairs and refurbishment of MV Karnika for the value of US$ 50,00,000. The value was subsequently revised to US$ 40,60,165. The contract provided for, inter alia, payment of interest at the rate of 18% p.a. (i.e. 1.5% per month) on the outstanding amount receivable by the plaintiff beyond the credit period.

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During period from 12^th March, 2019 to 7^th April, 2019, the plaintiff repaired and refurbished MV Karnika at its yard in Singapore. Invoices were raised for an aggregate amount of US$ 40,60,165. Jalesh made a lumpsum payment US$ 30,00,000 on 5^th April, 2019. The said amount was adjusted

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19-IA4650-2022INCOMA27-2021.DOC

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against the first three invoices. An amount of US$ 10,60,165 covered by the last invoice dated 6^th April, 2019, remained outstanding. Jalesh confirmed the correctness of the outstanding amount under the final invoice dated 6^th April, 2019.

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Correspondence ensued between the parties. Vide Confirmation (Exhibit-J), Jalesh acknowledged the outstanding amount of US$ 144,851.43 as of 6^th February, 2020. Jalesh also acknowledged liability to pay interest at the rate of 1.5% per month on the said amount. In addition thereto, Jalesh admitted liability in subsequent communications dated 28^th July, 27^th August and 28^th September, 2020. Jalesh however failed to pay the outstanding amount.

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In the meanwhile, Jalesh has gone into liquidation in Mauritius. The plaintiff asserts it has not received any amount in the said liquidation proceedings. As the plaintiff has a maritime claim within the meaning of Section 4(1)(m) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (“the Admiralty Act”), the plaintiff is entitled to enforce the same against the defendant – vessel, in rem. Hence this action against the sale proceeds of the defendant.

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19-IA4650-2022INCOMA27-2021.DOC

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In the application, it is averred that the claim of the plaintiff represents an admitted liability. There are clear and unequivocal acknowledgments. Despite service of the writ of summons, none appeared for Jalesh. In view of the clear and explicit admissions of liability, there is no real prospect of the claim of the plaintiff being successfully defended. Hence, this application.

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I have heard Mr. Narayan, the learned Counsel for the applicant – plaintiff. I have perused the averments in the plaint, application and documents annexed thereto.

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The ship repair and refurbishment contract executed on 1^st March, 2019 evidences the transaction between the plaintiff and Jalesh. The terms of the contract, inter alia, provided for payment of full amount of the invoices within seven days and payment of interest at the rate of 1.5% per month for the delayed period. The plaintiff has placed on record documents which indicate that the plaintiff did provide repair and refurbishment services to MV Karnika. The invoices (Exhibits-F to F3) evidence the services rendered by the plaintiff to the MV Karnika. The invoice dated 6^th April, 2019 (Exhibit-F3) records part payment of US$ 30,00,000 and the outstanding amount of US$ 10,60,165. The said invoice also contains the term of

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payment and charge of interest at the rate of 1.5% per month for the delayed payment. The material on record thus establishes beyond the pale of controversy that the applicant had rendered repair and refurbishment services to MV Karnika.

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The claim of the plaintiff that Jalesh had confirmed the outstanding balance by executing the balance confirmation is substantiated by the balance confirmation (Exhibit-J) dated 6^th February, 2020. Jalesh had thereunder acknowledged the liability in the sum of US$ 144,851.43. The liability to pay interest on the outstanding amount at the rate of 1.5% per month was also duly acknowledged. Jalesh agreed to repay the outstanding amount by 12^th April, 2019.

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It becomes evident that thereafter Jalesh faced financial constraints. Initially in response to the demand by the plaintiff, Jalesh assured the plaintiff that it was in the process of arranging the funds and the outstanding amount would be cleared soon. The communications dated 28^th July, 2020 (Exhibit-K), 27^th August, 2020 (Exhibit-K) and 28^th September, 2020 (Exhibit-L) clearly indicate that Jalesh assured to pay the outstanding amount. It does not appear that at any point of time Jalesh disputed the liability. In the weight of the circumstances which ensued in the wake of Covid-19 Pandemic,

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Jalesh seems to have imploded resulting in liquidation, arrest and sale of the defendant – vessel.

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In the totality of the circumstances, especially the clear and explicit acknowledgment of liability by executing balance confirmation and addressing letters assuring to clear the outstanding amount, coupled with indisputable rendering of services by the plaintiff to MV Karnika, for which a substantial part payment had already been made, there does not seem to be any real prospect of defendant successfully defending the suit.

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I find substance in the submission of Mr. Narayan, that the claim for repairs and refurbishment charges of the vessel constitutes a maritime claim under Section 4(1)(m) of the Admiralty Act.

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In view of the admitted liability and there being no compelling reason not to pass a decree without leading evidence, I do not find any impediment in allowing the application.

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Hence, the following order:

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: O R D E R :

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( i ) The application stands allowed.

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19-IA4650-2022INCOMA27-2021.DOC

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( ii ) There shall be a summary judgment and decree in favour of the applicant – plaintiff and against the sale proceeds of MV Karnika in the sum of US$ 14,25,921.93 along with further interest at the rate of 8% p.a. on the principal amount of US$ 10,60,165 from the date of the the suit till payment.

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( iii ) The plaintiff is also entitled to costs quantified at Rs.5,00,000/-.

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( iv ) The suit stands decreed in aforesaid terms.

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( v ) Decree be drawn accordingly.

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[ N. J. JAMADAR, J. ]

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Sembcorp Marine Repairs and Upgrade Pte. Ltd. v. M. v Karnika (Imo No. 8521220)

Case brief

What is this about?

What did the court decide?

Sembcorp Marine Repairs and Upgrade Pte. Ltd. v. M. v Karnika (Imo No. 8521220)

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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