INS Vindhyagiri - MV Nordlake Collision | Liability Can Be Limited At Interim Stage Before Completion Of Trial: Bombay High Court

Ruling that the liability of a vessel owner for an accident can be limited at the interim stage before the completion of the trial, the Bombay High Court limited the liability of German company M.V. Nordlake Gmbh for the 2011 MV Nordlake – INS Vindhyagiri collision in Mumbai.

“Once the suit is instituted, it is not imperative that the order to limit liability can only be after a full fledged trial. The Court is not precluded from passing a decree at an intermediate stage without the trial running its full course…there is no embargo either under the provisions of the Code (CPC) or Rules 1980 (Bombay High Court (Original Side) Rules) to entertain the application for limitation of the liability”, Justice N. J. Jamadar held while deciding a Notice of Motion for limitation of liability.

Plaintiff, a German company, is the owner of merchant vessel M. V. Nordlake. The Defendant is Union of India. On January 30, 2011, Navy Warship INS Vindhyagiri collided with plaintiff’s ship which was exiting the Mumbai port. INS Vindhyagiri was part of a convoy of 14 Naval ships entering the harbour. The plaintiff claimed that the collision occurred due to confusion caused by passage of another vessel which was also entering the harbour. INS Vindhyagiri was berthed at the port and sank the next day.

The defendant claimed Rs. 1397.76 Crores from the plaintiff for loss and damages resulting from the collision. The plaintiff filed a suit seeking to limit its liability and took out the current Notice of Motion in the suit.

Section 352A of the Merchant Shipping Act, 1958 (Act, 1958) provides for limitation of liability for damages in respect of certain claims.

Article 4 of the Convention on Limitation of Liability for Maritime Claims, 1976 (Convention, 1976) provides for “conduct barring limitation” i.e., a person has the right to limit liability unless the loss resulted from his personal act or omission committed with the intention to cause the loss.

Article 6 provides for the method of calculation of the limits of liability. The convention was amended by Protocol 1996 and amended Article 6 increasing the limit on liability.

Part XA of the Act, 1958, which contains section 352A, was amended in 2002. Before the amendment, section 352A created an exception to the right to limit liability by providing that liability may be limited unless the incident resulted from actual fault of the owner. After the amendment, this exception has been omitted in the section.

The defendant argued that Article 4 of the Convention, 1976 must be deemed to be incorporated in the Act, 1958 and hence there is no absolute right to limit the liability. Further, if the plaintiff’s liability is limited then the defendant would be deprived of the opportunity to show that the plaintiff’s reckless act with was with the intent to cause loss.

The court relied on Murmansk Shipping Company v. Adani Power Rajasthan Ltd. and observed that the Indian Parliament consciously omitted the exception to the right to limit liability on the vessel owner.

“Neither the Court can loose sight of the conscious omission of the provisions of ‘breaking of limitation’, while amending Part XA by the Amendment Act 63 of 2002. Nor the Court can import the provisions contained in Article 4 of the Convention of 1976 providing for ‘Conduct barring limitation’, as it would amount to supplanting the legislation”, the court held.

Thus, the court held that the right to limit liability is absolute and without reference to the question of fault on the part of the person who is liable and seeks to limit the liability.

The court said that since the right to limit liability is absolute, the inquiry would be restricted to whether the conditions for limitation of liability under section 352A are satisfied and the amount to which the liability should be limited as per section 352B of the Act, 1958.

The defendant had disputed that the vessel’s tonnage is 16,202 tons as claimed by the plaintiff. However, the court noted that the defendant in its own plaint in the suit for arrest of the vessel admitted that the tonnage of the vessel is 16,202 tons. Observing that an admission in pleadings stands on higher footing than evidentiary admission, the court said that the factual dispute is resolved by the defendant’s own admission.

The defendant argued that the amended Article 6 of the Convention, 1976, which provides for enhanced limit of liability, must govern the calculation of liability.

The court reiterated that International Protocols and Conventions do not become effective on their own unless brought into force by domestic legislation or executive instructions.

The Protocol 1996 came into force in India on June 21, 2011 i.e., six months after the collision. “It would be contradiction in terms if the definition of ‘Convention’ under Section 352 is read to mean Convention 1976 as amended from time to time, irrespective of its acceptance and enforcement by India in the manner known to law”, the court held.

Therefore, the court held that the limit of liability has to be calculated according to Article 6 of the Convention, 1976, prior to its amendment in 1996.

Senior Advocate Atul Rajyadhayksha with Advocates Sunip Sen, Ashwini Sinha, Adil Patel and Sanika Kulkarni represented MV Nordlake.

Senior Advocate Rahul Narichania with Advocates Ashish Mehta, Aarya More, Shiny Rey, and Komal Bhail represented the Union of India.

Case no. – Notice of Motion No. 41 of 2017 In Comm. Admiralty Suit No. 14 of 2014

Case Title – Ms. M. V. Nordlake GmbH v. Union of India

Citation: 2023 LiveLaw (Bom) 112

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