On 7 August 2010, the MV MSC Chitra collided with the MV Khalijia-III in the port of Mumbai. The fuel tanks of the MSC Chitra were ruptured, spilling bunker fuel, and containers carrying dangerous cargo fell overboard. The vessel was towed outside the exclusive economic zone of India, where it sank.

On 17 August 2013, the State of Maharashtra brought a suit in a parens patriae capacity on behalf of the affected fishers, claiming INR 8.05 crores for pollution damage. The first defendant, the MV MSC Clementina, alleged to be a sister ship of the MSC Chitra, was arrested. It was released when the second defendant, MSC Mediterranean Shipping Co SA, the demise charterer of both vessels, deposited security of INR 8.13 crores.

The second defendant applied for rejection of the plaint under O 7, r 11 of the Code of Civil Procedure 1908 and the return of the security, arguing that the plaintiff had no locus standi and no prima facie case, that the claim was time-barred, and that the first defendant was not the sister ship of the MSC Chitra. The plaintiff conceded that art 3.2 of the Arrest Convention 1999 permits the arrest of another vessel only where it is owned by the person liable, and the two vessels were owned by separate registered owners whose corporate veil could not be pierced absent fraud. The plaintiff relied on art 1.1.d of the Convention, contending that its claim for environmental damage was a maritime claim justifying arrest and security.

Held: Notice of motion dismissed. The security is to be continued, and the second, fourth, and fifth defendants are to disclose on oath their annual reports, shareholding patterns, and assets within three months.

On an application under O 7, r 11, the averments in the plaint must be taken to be correct. Limitation, as a mixed question of law and fact, can be decided only at trial. The plaint discloses a maritime claim within art 1.1.d of the Arrest Convention 1999, which provides that a claimant has a maritime claim for 'damage or threat of damage caused by the ship to the environment, coast line or related interest; measures taken to prevent, minimise or remove such damages; compensation for such damage; cost of reasonable measures of reinstatement of the environment actually undertaken or to be undertaken; loss incurred or likely to be incurred by third party in connection with damage; damage caused or loss of a similar nature'.

The plaintiffs have made out a prima facie or reasonably arguable best case for arrest and security (Videsh Sanchar Nigam Ltd v MV Kapitan Kud (1996) 7 SCC 127), the second defendant having admitted that containers broke loose, fuel tanks were ruptured, and toxic cargo washed ashore. As demise charterer, the second defendant is the party liable: 'During the period of charter party, the owner is under no liability to third parties and those persons must look only to the charterer who has stepped into the shoes of the owner.'

Whether the corporate veil of the one-ship registered owners may be pierced so as to render the first defendant and the MSC Chitra sister ships 'can be done only in the trial'. Since the second defendant owns no vessel calling in India, returning the security would leave 'no asset whatsoever' against which the plaintiffs could execute a decree; the balance of convenience favours its continuation.