The appellant is an association incorporated under the laws of the United Kingdom. It is a mutual association of ship owners. It offers insurance cover in respect of the vessels entered with it for diverse third party risks associated with the operation and trading of vessels. According to the appellant, no vessel operates without a Protection & Indemnity (P&I) cover and this has been made compulsory to allow a ship to enter major ports in India.

The Sea Ranger and the Sea Glory are sister ships of the first respondent vessel and are allegedly owned by the second respondent. The first two vessels entered into a contract with the appellant's association for the years 1998-1999 and 1999-2000 but have not paid their insurance premiums for various P&I risks for which they had been insured. The appellant arrested the first respondent vessel in Mumbai for these unpaid insurance premiums. The vessel was released on security provided by the second respondent. The respondents protested jurisdiction on the basis that the claim for unpaid insurance premiums was not a 'necessary' within the meaning of s 5 of the Admiralty Courts Act 1861 (UK). The Single Judge of the High Court referred the question to a Division Bench. The Division Bench decided in favour of the appellant on the issue of whether arrears of insurance premiums fell within the definition of 'necessities', but found against the appellant on other issues. Both parties appealed.

Held: The judgment under challenge is set aside and the matter is sent back to the High Court.

MV Elisabeth v Harwan Investment & Trading Pvt Ltd (CMI883) is authority for the proposition that the changing global scenario should be kept in mind having regard to the fact that there is no primary Act in India touching on the subject. In the absence of any domestic legislation to the contrary, if the Arrest Convention 1952 has been applied, although India is not a signatory thereto, there is obviously no reason as to why the Arrest Convention 1999 should not be applied. It is not correct to contend that this Court, having regard to the decision in MV Elisabeth, must follow the law which is currently prevalent in UK and confine itself only to the Arrest Convention 1952 in Indian admiralty jurisprudence. Once the Court opines that insurance is needed to keep the ship going, it has to be construed as 'necessaries'. The jurisdiction of the Courts in India, in view of the decision of this Court in MV Elisabeth, is akin to the jurisdiction of the English Courts but this does not mean that the Indian High Courts are not free to take a different view from those of the English courts.

The term 'necessary' is a term of art but the same cannot be used in a limited context of mandatory claims made for goods or services supplied to a particular ship for its physical necessity as opposed to its commercial operation and maintenance. Physical necessity and practicality would be a relevant factor for determination of the question. Taking insurance cover would not only be a commercial prudence but almost a must in the present day context. Third party insurance may not be compulsory in certain jurisdictions but having regard to the present day scenario, insurance cover must be held to be intrinsically connected with the operation of a ship.

Having regard to the changing scenario and keeping in tune with the changes in both domestic and international law as well as the statutes adopted by several countries, a stand, however, bold, may have to be taken that unpaid insurance premiums of a P&I Club would come within the purview of the expression 'necessaries supplied to any ship'. Other types of insurance may not amount to a 'necessary'. We are not called upon to answer that question at present. We, therefore, in agreement with the judgment of the Bombay High Court, hold that an unpaid insurance premium, being a maritime claim, would be enforceable in India.