The Hon'ble Bombay High Court in United India Marine Services v M.V. Kumar1 ruled on the issue of maintainability of an Admiralty Suit filed by an unregistered partnership firm in the backdrop of the bar contained in Section 69(2) of the Partnership Act, 1932 ("The Act").
The Hon'ble Court held that the bar contained under Section 69(2) of the Act would not attract to a suit filed in exercise of a statutory right conferred under Admiralty Act, 2017 to arrest a vessel for enforcement of a maritime claim.
Brief Facts:
- United India Marine Services ("Plaintiff") delivered supplies and rendered technical services to M.V. Kumar ("Defendant Vessel") and her sister vessels at the instance of one Pragati Marine Services Pvt. Ltd. ("Owner") i.e., the registered owner of the said vessels. Despite acknowledging the services and benefiting from the same, the Owner failed to clear the rightful dues of the Plaintiff.
- After much persistence, the parties executed a Memorandum of Understanding ("MOU") which, inter alia, recorded the Owner's admission of liability and a payment schedule for clearance of dues. However, the Owner breached the MoU thereby compelling the Plaintiff to enforce its maritime claim by arresting the Defendant Vessel before the Hon'ble Court.
- Pursuant to furnishing security, the Owner filed an Application under Order VII Rule 11(d) of the Code of Civil Procedure, 1908 ("CPC") seeking inter alia dismissal of the suit, return of security and damages to the tune of Rs.20,00,000/- for wrongful arrest as the suit was barred under Section 69(2) of the Act as the Plaintiff was not a registered partnership firm and the claim did not qualify as a 'maritime claim' but rather a commercial dispute as it arose under the MoU. However, the Owner did not press the issue of 'maritime claim' during the course of the arguments.
- The Plaintiff opposed the Application as being unsubstantiated and untenable in law.
Issue:
Whether the bar under Section 69(2) of the Act operates and renders an Admiralty Suit legally infirm and therefore non-maintainable?
Arguments advanced by the parties concerned:
The Owner contended that the supplies and services were rendered under a contract between the parties. Therefore a suit by an unregistered partnership firm (such as the Plaintiff) to enforce a right arising out of the contract was untenable under Section 69(2) of the Act as it barred suits of all types, including an Admiralty Suit. The Plaintiff's right to sue arose under the Indian Contract Act, 1872 and the special remedy of arresting a vessel as provided under the Admiralty Act, 2017 would not change the character of the suit which, for all intents and purposes, would remain a commercial suit.
On the other hand, the Plaintiff contended that the Plaintiff had exercised its statutory right under the Admiralty Act, 2017 to arrest the Defendant Vessel for enforcement of its maritime claim, which also has genesis in common law and qualifies as a common law remedy. The undertone of this submission was that the bar contained in Section 69(2) of the Act would not attract applicability as the bar was restricted to suits filed to enforce the contractual obligations and not statutory or common law right. In the alternative, the Plaintiff contended that the issue whether the Plaintiff was an unregistered partnership firm was a triable issue and could not be decided in an application under Order VII Rule 11 of CPC as filed by the Owner.
The Court's findings:
The Hon'ble Court considered the averments contained in the Plaint, legislative intent of the respective statutes and ordered dismissal of the Application filed by the Owner on the ground that the bar contained in Section 69(2) of the Act would not attract applicability in the present case. The findings were as follows:
- Suit for enforcement of a statutory right or a common law right and the underlying contract constitutes a historical fact or the foundation of jural relationship by itself would not render the suit as one for enforcement of a right arising from contract;
- Once a claim satisfies the description of a maritime claim (arising out of delivery of supplies of rendering services to the vessel), the person becomes entitled to the right under the Admiralty Act, 2017 and the fact that such right arose out of an underlying contractual relationship pales in significance.
- The denial of protection under Admiralty Act, 2017 on account of the bar contained in Section 69(2) of the Act would render the right to arrest in rem nugatory.
- The enforcement of a maritime claim under Section 5 of the Admiralty Act, 2017 is in exercise of a statutory right created under the Admiralty Act, 2017;
- Arrest of a vessel in rem for enforcement of maritime claim against the vessel or its owner has its genesis in common law. Recognition of the said right and regulating the procedure for enforcement of the said right under the Admiralty Act, 2017, may not denude the right of arrest the character of common law right.
Renata Partners appeared for the successful Plaintiff and the team was led by Mr. Shiv Iyer, Managing Partner, and comprised of Ms. Prerna Verma, Senior Associate and Ms. Arpeeta Panvalkar, Associate.
Footnote
1 Commercial Admiralty Suit No.53 of 2022
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
