Orissa HC Orders Arrest Of Vessels 'Ocean Jade' & 'Ocean Morganite' At Paradeep Port After Owner's Failure To Execute Settlement Agreement

The Orissa High Court on Wednesday ordered arrest of vessels 'Ocean Jade' (IMO:9660750) and 'Ocean Morganite' (IMO:9676498) for failure on the part of its owner to execute the Memorandum of Agreements ('MoAs') by which it had agreed to sell the vessels to the plaintiff as part of a 'distressed deal'.Directing issuance of the letter of marshal, the Admiralty Judge Justice Murahari Sri Raman said –“This Court is prima facie satisfied that the claim is maintainable in this forum of admiralty against the aforesaid defendants-vessel, i.e., OCEAN JADE (IMO:9660750) and OCEAN MORGANITE (IMO:9676498). Unless the said two vessels are arrested, irreparable damage may ensue, thereby this Court is persuaded that the balance of convenience tilts in favour of the plaintiff.”Case BackgroundOn 25.01.2024, Alphard Maritime Pvt. Ltd. (the plaintiff) entered into a Memorandum of Understanding (MoU) for sale and purchase of seven vessels with Samson and two vessels with Underwater Services Company Limited. The defendant-vessels 1 and 2 were to be sold by Samson. Samson and Underwater breached this 2024 MoU as they failed to obtain the required approvals, NOCs and NECs.The plaintiff later on entered into a settlement agreement with Samson and Underwater. As per the agreement, 30 days were given to Samson and Underwater to inform their creditors of the fact that they had arrived at a distressed deal with the plaintiff to sell the aforesaid nine vessels to repay their debt to their creditors. Between October, 2024 to February, 2025, Samson and Underwater kept delaying the execution of the aforesaid agreement. Even though all material terms and conditions of these agreements were finalized and the agreements were even symbolically executed between the parties, Samson and Underwater kept on saying that the creditors were apprised of the deal and that they were about to formally execute the agreement.Despite of the above, they did not formally execute the MoAs. As such, the plaintiff claimed that they breached clause 3.1 of the settlement agreement and hence, are liable to indemnity it for its losses in terms of clause 3.3 of the agreement including for loss of revenue and profit.The plaintiff also quantified the losses as the difference between the current market price of the nine vessels and the intended distress-sale price at which the plaintiff would have purchased the vessels from Samson and Underwater, had the agreements been executed on time.The admiralty suit was filed seeking an order and decree for a sum of USD 49,268,902.45 along with interest (approximately Rs. 428 crores). It also sought arrest of the defendants-vessels towards its claim for indemnifying the loss suffered on account of breach of the settlement agreements. Senior Advocate Ashok Parija, appearing for the plaintiff, submitted that the plaintiff has invoked arbitration by a notice dated 20.02.2025 as amended on 08.03.2025. However, the present Admiralty Suit is against the defendant-vessels which constitutes a claim in rem and thus, the existence of an arbitration clause in the settlement agreement would not hinder the present suit.He further argued that the instant maritime claim can be adjudicated under Section 4(1)(r) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 and constitutes a claim “arising out of a contract for sale of the vessel”. He also argued that a claim for indemnity would also come under the purview of a maritime claim.Court's OrderThe Court went through the settlement agreement to hold that by virtue of Clause 3.1, the owner of the defendant-vessels was required to sell the vessels in question and formally execute the MoAs within thirty days from the date of the agreement. However, no such MoA has in fact been executed for purchase of the vessels stipulated in the settlement agreements.Giving thoughtful considerations to the plaint and the annexed documents, the Bench was prima facie satisfied that the claim is maintainable against the aforesaid defendant-vessels. Furthermore, it held that unless the said two vessels are arrested, severe damage may ensue.“Considering the submission and the averments made in the suit, coupled with documents enclosed to the suit, this Court feels a prima facie case is made out against the defendants-vessels. This Court is, therefore, of the considered opinion that unless order of arrest of defendants-vessel- OCEAN JADE (IMO:9660750) and OCEAN MORGANITE (IMO:9676498) is passed, relief claimed in the suit would be rendered infructuous,” it added.Resultantly, the Admiralty Judge passed order to arrest the defendant-vessels at Paradeep Port, within the territorial waters of India, by the Port Officer and Customs Authorities or any other Competent Authority and to keep the vessels under arrest until further orders of the Court.Case Title: ALPHARD MARITIME LTD. v. OCEAN JADE (IMO:9660750) & Anr.Case No: ADMLS No. 2 of 2025Date of Order: March 19, 2025Counsel for the Plaintiff: Mr....

Orissa HC Orders Arrest Of Vessels 'Ocean Jade' & 'Ocean Morganite' At Paradeep Port After Owner's Failure To Execute Settlement Agreement

Jyoti Prakash Dutta

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