1. This Application is filed by the Plaintiff in the Admiralty Suit.

The Applicant/Plaintiff is a foreign company incorporated in the United Kingdom, having its registered Office there.

2. This Application is filed under Section 5 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (hereinafter referred to as ‘the Admiralty Act’). The prayer in the Application is to order arrest of the Respondent No.1 Vessel “CATAMARAN TYPE PASSENGER FERRY “APOLLO/SOLAR BOAT” (IRS IR No.76585) until security is furnished for the Plaint claim of USD 11,56,253.53 and GBP 1,89,568.01 along with further interest at the rate of 12% per annum in this Court or until further orders.

3. The Respondent No.1 appeared through Counsel and contended that the above Admiralty Suit is not maintainable under the provisions of the Admiralty Act.

4. I heard the learned Senior Counsel, Sri. Bharucha Zarir Pesi, instructed by Adv. Sri. Pranoy K. Kottaram, for the Applicant and the learned Senior Counsel, Sri. Santhosh Mathew, instructed by Adv. Sri. Parvathy Kottol, for the Respondent No.1.

5. Since this Court entertained a doubt as to whether the claim in the Admiralty Suit could be made in foreign currencies, the learned Senior Counsel for the Applicant addressed arguments on the said question. Learned Senior Counsel cited the Division Bench decision of this Court in Nortrans Marine Services (P) Ltd. v. Cargo Care International [2020:KER:40716] in which this Court considered two Regular First Appeals filed by the Defendant Nos.1 & 2 in a Suit filed before the Sub Court, Kochi, challenging the Judgment and Decree in favour of the Plaintiff therein. It is not a decision under the Admiralty Act. In the said Suit, the Plaintiff made a claim of USD 1,42,081.00 equivalent to Rs.62,44,459/-. The Trial Court decreed the Suit directing the Defendants to pay Rs.62,44,459/- with interest. This Court considered the claim of the Plaintiff in USD and disallowed certain claims and decreed the Suit allowing the Plaintiff to recover USD 94,605 at the applicable rate of exchange when realized from the Defendants with interest at the rate of 6% per annum from the date of the Suit till the date of realization with proportionate costs. Learned Senior Counsel cited the Judgment of the Division Bench of the Madras High Court in Banque Cantonale De Geneve v. Owners and Parties Interested in the Vessel M.V. Polaris Galaxy [Judgment dated 30.04.2021 in O.S.A. No.207/2021] in which the Madras High Court ordered to furnish bank guarantee for the Plaint claim and interest in USD to allow the Vessel to sail. Learned Senior Counsel cited the Order of the Calcutta High Court in Commodity Culture PTE Ltd. v. M.T. Sea Gull 9 [Order dated 18.07.2022 in I.A. No.GA/1/2022 in T/26/2022]. In the said case, the Calcutta High Court had ordered the arrest of the Defendant Vessel permitting the Defendant to deposit the Plaint claim in USD as security with the Registrar of the High Court in order to enable the Defendant Vessel to sail. When the learned Counsel for the Defendant pointed out the practical difficulty in furnishing security in USD before the Registrar of the High Court, the Calcutta High Court had permitted the Defendant Vessel to put the security in Indian currency. In the said case, the learned Counsel for the Plaintiff prayed for ordering replacement of the security amount in Indian currency with a bank guarantee in USD citing the risk that may be caused to the Plaintiff in view of possible currency fluctuations from the date of furnishing the security till the final decree is passed. The Calcutta High Court found that the claim of the Plaintiff ought to have been more appropriately secured in USD and accordingly directed the Defendant Vessel to furnish the security with a suitable Bank Guarantee in USD or in any other form of security where the Plaintiff can be secured in USD. In the said Order, a direction was issued to the Registrar of the High Court to take necessary steps to open an FCNB Account or any appropriate account wherein deposits and payments may be made in USD to be maintained by the Court. Learned Senior Counsel cited the decision of the Bombay High Court in Slovesnov Vadym and Others v. OSV Beas Dolphin [Order dated 29.11.2022 in I.A.(L) No.9499 of 2020 in Comm. Admiralty Suit No.30 of 2022]. In the said case, the Admiralty Suit instituted by the Plaintiff was decreed for a sum of USD 1,08,810 along with interest at the rate of 8% per annum and a cost of USD 15,000. The Applications considered by the Bombay High Court in the said Order were to release payment in terms of the decree out of the sale proceeds of the Defendant Vessel. The Bombay High Court relied on the decision of the Hon'ble Supreme Court in Forasol v. Oil and Natural Gas Commission [1984 Supp SCC 263] in which the Hon’ble Supreme Court found that it would be convenient to set out the practice, which ought to be followed in Suits in which a sum of money expressed in a foreign currency can legitimately be claimed by the Plaintiff and decreed by the Court. It is held that in such a Suit, the Plaintiff, who has not received the amount due to him in a foreign currency and, therefore, desires to seek the assistance of the Court to recover that amount, has two courses open to him; that he can either claim the amount due to him in Indian currency or in the foreign currency in which it was payable; that if he chooses the first alternative, he can only sue for that amount as converted into Indian rupees and his prayer in the Plaint can only be for a sum in Indian currency; and that the Plaintiff may, however, choose the second course open to him and claim in foreign currency the amount due to him. The Bombay High Court in Slovesnov Vadym (supra) held that Forasol (supra) lays down in clear and explicit terms that where money is expressed to be payable in foreign currency, the Plaintiff has the option to claim the amount either in Indian currency or foreign currency in which it was payable. The Bombay High Court referred to Section 134 of the Merchant Shipping Act, 1958, which provides that, notwithstanding anything in the agreement between the owner or master of ship and the seaman, if the seaman has agreed to receive the wages in a specified currency, the seaman shall be entitled to payment at the rate of exchange for the time being current at the place and where the payment is made. In the said case, the Application was allowed ordering payment in Indian currency which corresponds to the principal amount in USD and interest from the date of the Suit, from the sale proceeds of the Defendant Vessel. Learned Senior Counsel cited the decision of the Gujarat High Court in EMC Gas Corporation v. M.V. SYMI [Order dated 21.11.2024 in R/Admiralty Suit No.46/2024], the security in lieu of arrest of the Vessel was ordered in USD.

6. The aforesaid decisions cited by the learned Senior Counsel for the Applicant reveal the practice followed by various High Courts in the country, including this Court, entertaining the suit claims in foreign currencies and decreeing the same, having regard to the currency used in the relevant contract. In such cases, the deposit of cash or furnishing security in lieu of the arrest of the Vessel under the Admiralty Act can be ordered to be made in foreign currencies. It can safely be concluded that it is the option of a foreign Plaintiff in an Admiralty Suit to raise the Plaint claim in an Admiralty Suit either in the foreign currency used in the relevant contract or in the Indian currency. When the Plaint claim is made in a foreign currency, the Plaint claim is to be secured in the same currency. When the Plaint claim is made in a foreign currency, the Defendant has to make the security in lieu of the arrest of the Vessel also in the foreign currency in which the claim is made by the Plaintiff.

7. Since there is no appropriate account opened by the Registry of this Court to accept the deposits and payments in foreign currency, a direction is issued to the Registrar of this Court to open an FCNB Account or any other appropriate bank account wherein the deposits and payments can be accepted by this Court in foreign currencies.

8. Since it is not practically feasible for this Court to accept deposits in foreign currency as of now, for the time being, the Respondent No.1 can be directed to furnish the deposit or security for the Plaint claim in Indian currency in lieu of arrest of the Vessel, if this Court orders arrest of the Vessel. The corresponding value of the Plaint claim in Indian currency declared by the Plaintiff in the Plaint is Rs.13,36,06,491.06. Hence, the Respondent No.1 can be permitted to deposit or furnish security for the said amount in lieu of the arrest of the Respondent No.1 Vessel if this Court finds that the aforesaid Vessel is liable to be arrested for the Plaint claim.

9. Though the learned Senior Counsel for the Respondent No.1 raised a question of maintainability of the Suit, the learned Senior Counsel for the Applicant objected to the hearing of the Respondent No.1 in this Application contending that the Respondent No.1 can be heard opposing the prayer for ordering the arrest of the Vessel only in case the Respondent No.1 had filed a Caveat against the arrest of the Vessel under Rule 14 of the Kerala High Court Admiralty (Jurisdiction and Settlement of Maritime) Rules, 2019; and that even if a Caveat is filed, the Caveator is bound to furnish a security for the Plaint claim within four days from the filing of the Plaint. It is true that Rule 14 of the aforesaid Rules provides for Caveat against the arrest of the Vessel for giving the opportunity to the Caveator to provide the security for the Plaint claim to avoid the arrest. But the said provision does not fetter the discretion of this Court to hear the Vessel or its Owner when they appear while considering the Application for arrest, to ascertain whether the Plaintiff is having a reasonably arguable best case to secure an order of arrest of the Vessel on the basis of the averments in the Plaint and documents produced along with it. Hence, this Court deemed it fit to hear the learned Senior Counsel for the Respondent No.1 at this stage.

10. The contention of the learned Senior Counsel for the Respondent No.1 is that the averments in the Plaint and the documents produced by the Plaintiff along with the Suit will reveal that the specific case of the Plaintiff is that the Respondent No.1 Vessel is an Inland Vessel. In view of the First Proviso to Section 1(2) of the Admiralty Act, the said Act is not applicable to an Inland Vessel defined in clause (a) of Sub-Section (1) of Section 2 of the Inland Vessels Act, 1917, or a Vessel under construction that has not been launched unless it is notified by the Central Government to be a Vessel for the purpose of the said Act. Learned Senior Counsel cited the decision of the Bombay High Court in M.V. Lima V. and Others v. Coastal Marine Construction and Engineering Ltd. [Judgment dated 28.02.2023 in I.A. No.105/2022 in Com. Admiralty Suit No.82/2021] in support of his contention. On the other hand, the learned Senior Counsel for the Applicant contended that it is the definition of ‘Inland Vessel’ under Section 3(q) of the Inland Vessels Act, 2021, which is relevant, as the Inland Vessels Act, 2021, repeals the erstwhile Inland Vessels Act, 1917, referred to in the First Proviso to Section 1(2) of the Admiralty Act. It is further contended that in order to exclude the Inland Vessel from the operation of the Admiralty Act, the Inland Vessel must be registered and plying on inland waters in view of the definition under Section 3(q) of the Inland Vessels Act, 2021. Since the Defendant Vessel is not registered as an Inland Vessel and it is not plying on inland waters, the Respondent No.1 Vessel is not excluded from the application of the Admiralty Act. Learned Senior Counsel for the Respondent No.1 contended that the provision referred to in the First Proviso to Section 1(2) of the Admiralty Act is Section 2(1)(a) of the Inland Vessels Act, 1917, and not Section 3(q) of the Inland Vessels Act, 2021. There is no requirement for the registration of the Vessel to include the same in the definition of ‘Inland Vessel’ under Section 2(1)(a) of the Inland Vessels Act, 1917. Hence, it is clear that the subject Inland Vessel comes within the definition of ‘Inland Vessel’ in Section 2(1)(a) of the Inland Vessels Act, 1917, which is excluded from the application of the Admiralty Act in view of the First Proviso to Section 1(2) therein. Learned Senior Counsel for the Applicant invited my attention to Section 8(1) of the General Clauses Act, 1897, and contended that when reference is made to any enactment which is repealed, it has to be construed as reference to the provision which is re-enacted by the new legislation. Hence, any reference to the provisions of the repealed Inland Vessels Act, 1917, has to be construed as reference to the corresponding provision in the new enactment, the Inland Vessels Act, 2021, which replaced the repealed Inland Vessels Act, 1917. Learned Counsel relied on the decision of the Supreme Court in State of Uttar Pradesh v. M.P. Singh [AIR 1960 SC 569] in support of his contention.

11. The relevant provision under Section 1 of the Admiralty Act is extracted hereunder for easy reference:

                  “1. Short title, application and commencement.–

                  (1) This Act may be called the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017.

                  (2) It shall apply to every vessel, irrespective of the place of residence or domicile of the owner:

                  Provided that this Act shall not apply to an inland vessel defined in clause (a) of sub-section (1) of Section 2 of the Inland Vessels Act, 1917 (1 of 1917), or a vessel under construction that has not been launched unless it is notified by the Central Government to be a vessel for the purposes of this Act:”

12. The First Proviso to Section 1(2) of the Admiralty Act excludes Inland Vessel defined under Section 2(1)(a) of the Inland Vessels Act, 1917, from the operation of the Admiralty Act. The definition of ‘Inland Vessels’ under Section 2(1)(a) of the Inland Vessels Act, 1917, is extracted hereunder for easy reference:

                  “2. Definitions.– (1) In this Act, unless there is anything repugnant in the subject or context,–

                  (a) “inland vessel” or “inland mechanically propelled vessel” means a mechanically propelled vessel which ordinarily plies on inland water, but does not include fishing vessel and ship registered under the Merchant Shipping Act, 1958;”

13. Going by the definition of ‘Inland Vessel’ under Section 2(1)(a) of the Inland Vessels Act, 1917, the Vessel shall ordinarily ply on inland water to come under the definition.

14. The averments in the Plaint is to the effect that the Plaintiff placed an order to construct a sea-going Vessel but the Respondent No.1 Vessel is constructed as an Inland Vessel and not a sea-going Vessel. The documents produced along with the Plaint would prima facie show that the subject Vessel is an Inland Vessel. But there is nothing on record that the Respondent No.1 Vessel is plied on inland water. Going by the Plaint averments and the documents produced, Respondent No.1 is intended for the operation of the Ministry of Environment, Climate Change and Technology, Maldives, to be supplied by the Applicant on getting delivery of the Respondent No.1 as per the Purchase Order placed by the Applicant with the Owner of the Respondent No.1. Hence, the Respondent No.1 Vessel could not be treated as one plying on inland water. In such a case, it will not come within the definition of ‘Inland Vessel’ under Section 2(1)(a) of the Inland Vessels Act, 1917, to exclude it from the application of the Admiralty Act.

15. The Inland Vessels Act, 1917, is repealed and replaced by the Inland Vessels Act, 2021. In view of Section 8(1) of the General Clauses Act, 1897, when reference is made to a provision in any enactment which is repealed, it has to be construed as reference to the provision which is re-enacted by the new legislation. Section 8(1) of the General Clauses Act, 1897, is extracted hereunder for easy reference.

                  "8. Construction of references to repealed enactments.–

                  (1) Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals and re-enacts; with or without modification any provisions of a former enactment, the references in any other enactment or in any instrument to the provision so repealed shall, unless a different intention appears, be construed as references to the provision so re-enacted.”

16. The provision in the Inland Vessels Act, 2021, corresponding to Section 2(1)(a) of the repealed Inland Vessels Act, 1917 is Section 3(q). In view of Section 8(1) of the General Clauses Act, the reference to Section 2(1)(a) of the Inland Vessels Act, 1917, in the First Proviso to Section 1(2) shall be construed as reference to Section 3(q) of the Inland Vessels Act, 2021.

17. The definition of Inland Vessel under Section 3(q) of the Inland Vessels Act, 1921 is extracted hereunder for easy reference.

                  “3. Definitions.–

                  (q) “inland vessel” includes any mechanically propelled inland vessel or non-mechanically propelled inland vessel which is registered and plying in inland waters, but does not include –

                  (i) a fishing vessel registered under the Merchant Shipping Act, 1958 (44 of 1958) or the Marine Products Export Development Authority Act, 1972 (13 of 1972); and

                  (ii) any vessel that are specified as not to be inland vessels by notification by the Central Government.

                  Explanation.– For the purposes of this clause, it is clarified that a vessel registered under the Merchant Shipping Act, 1958 (44 of 1958) and plying within the inland waters shall be deemed to be an inland vessel registered under this Act;”

18. In M.P. Singh (supra), the Hon’ble Supreme Court held that reference to the provisions of the repealed Factories Act, 1934 in the United Provinces Shop and Commercial Establishment Act, 1947, must be construed as reference to the provisions of the re-enacted Factories Act, 1948, by virtue of Section 8 of the General Clauses Act, 1897.

19. In order to come under the definition of ‘Inland Vessel’ under Section 3(q) of the Inland Vessels Act, 2021, the Vessel shall be registered and shall be plying in inland waters. Section 17 of the Inland Vessels Act, 2021, provides for the registration of Inland Vessels. The Respondent No.1 Vessel is not the one registered under the said provision. As found earlier, it is not plying on inland waters. Hence, the Respondent No.1 Vessel does not come within the definition of ‘Inland Vessel’ under Section 3(q) of the Inland Vessels Act, 2021, to exclude it from the application of the Admiralty Act. The decision of the Bombay High Court in M.V. Lima V. (supra) cited by the learned Senior Counsel for the Respondent No.1 is of little help to the Respondent No.1, as it is rendered under Section 2(1)(a) of the Inland Vessels Act, 1917, holding that even when a Vessel is registered under the Inland Vessels Act, 1917, the applicability of the Admiralty Act cannot be questioned unless it can be shown that the Vessel ordinarily plied on inland waters.

20. In view of the discussion and findings in the preceding Paragraphs, I hold that the Admiralty Act is applicable to the Respondent No.1 Vessel.

21. The next question to be considered by this Court is whether the Applicant has made out a reasonably arguable best case to order the arrest of the Respondent No.1 Vessel.

22. The case of the Plaintiff in the Admiralty Suit is that on 17.11.2022 the Plaintiff agreed to design, build and supply a solar-powered battery-operating CATAMARAN Type Passenger Ferry Vessel to the Ministry of Environment, Climate Change and Technology, Maldives. The Plaintiff placed a Purchase Order with the Owner of the Defendant No.1 to design, commission and supply the said Vessel. As per the Purchase Order dated 28.12.2022, the Vessel had to be provided within ten months which was ultimately extended to 05.12.2024 by mutual agreement. The Purchase Order specifically provided that the Vessel must be constructed for operation as a sea-going Vessel, which is intended for operation in the sea. The Owner of the Defendant No.1 failed to construct the Vessel within the stipulated contract and the Defendant No.1 Vessel constructed is not a sea-going Vessel. It is only a Vessel intended for operation in inland waterways as per the Certificates obtained by the Owner of the Defendant No.1 from the Indian Register of Shipping and furnished to the Plaintiff. The Plaintiff paid a total sum of USD 6,97,888.13 to the Owner of the Defendant No.1 out of the total contract value of USD 7,27,000 which represents 96% of the total contract value. The Plaintiff engaged an expert Marine Engineer and sought an opinion on whether the Vessel is constructed in accordance with the technical requirements of the Purchase Order issued to the Owner of the Defendant No.1, and as per the Report of the Marine Engineer, the Vessel is not suitable for the services intended in the Purchase Order. The Plaintiff issued a formal Notice terminating the contract with the Owner of the Defendant No.1 as the Vessel did not meet the fundamental contractual requirement. The Plaintiff would have received USD 10,67,000 from the Ministry of Environment, Climate Change and Technology, Maldives, if the Owner of the Defendant No.1 had performed its obligation under the Purchase Order. The Plaintiff is liable to pay USD 1,06,700 towards the liquidated damages to the Ministry of Environment, Climate Change and Technology, Maldives, on account of the breach of the Purchase Order by the Owner of the Defendant No.1. The Plaintiff incurred GBP 1,62,864.64 towards the expenses for surveyors and legal fees, travel and bank charges in relation to the Purchase Order. Thus, the Plaintiff is entitled to get a total amount of USD 1,156,253.53 and GBP 1,89,568.01 from the Defendant No.1 with 12% interest from the date of filing of Suit till payment/realization which includes interest up to the date of the Suit and legal costs and court fee.

23. The claims made by the Plaintiff in the Plaint reveal maritime claims under clauses (m) and (r) of Section 4(1) of the Admiralty Act. The averments in the Plaint and the documents produced make out a reasonably best arguable case for the arrest of the Respondent No.1 Vessel. The Respondent No.1 Vessel is liable to be arrested for the Plaint claim under Section 5 of the Admiralty Act.

24. Accordingly, the following order is passed in this Application:

                  1) The Respondent No.1 Vessel CATAMARAN TYPE PASSENGER FERRY “APOLLO / SOLAR BOAT” (IRS IR

No.76585) along with her hull, tackle, engine, machinery spares, gear, apparel, paraphernalia, furniture, etc., is ordered to be arrested until Rs.13,36,06,491.06 is deposited by the Respondent No.1 in this Court or until security for the said amount is furnished by the Respondent No.1 to the satisfaction of this Court.

                  2) It is ordered that the Respondent No.2 in this Application shall execute the Warrant and effect the arrest, seizure, and detention of the said Vessel along with her hull, tackle, engine, machinery, boards, bunkers, equipment, peripherals, and other appurtenances as ordered above.

                  3) It is made clear that the Warrant of Arrest would be withdrawn and the conditional order of arrest would automatically be vacated once the above amount is deposited or security for the said amount is furnished by the Respondent No.1 in this Court, without any further order from this Court.

25. List the I.A. for further consideration on 09.10.2026.