The plaintiff, Zatrix Ltd, applied to have the defendant vessel arrested at the port of Dahej. The Single Bench issued an arrest warrant and ordered the defendant to deposit money into Court for the release of the vessel. The defendant applied to set aside the arrest, contending that the plaintiff had obtained the arrest order by suppressing important, relevant and material facts. The Single Bench allowed the application, holding that the plaintiff had suppressed material facts, particularly about the express consent given by the plaintiff for the sale of the vessel. The Court also held that no maritime claim existed in favour of the plaintiff on either the date of filing of the suit or of the arrest of the vessel. The Court set aside the arrest order and directed the Registry to return the defendant's security. The plaintiff appealed.

Held: Appeal dismissed.

An order of arrest is akin to an order of injunction, and the remedy of injunction being an equitable remedy, the principles of equity are applicable when an order of arrest is sought. It cannot be gainsaid that the party seeking an injunction is obliged to bring to the notice of the Court all relevant facts and materials necessary for the determination of its right to that injunction and has to come to the Court with clean hands. If the plaintiff had failed to do so, and obtained an ex parte order suppressing any material fact, the Court would not hesitate in vacating the ex parte injunction without even entering into the merits of the case. In this case, the plaintiff has conveniently suppressed the material fact that it had entered into a settlement agreement with the previous owners of the vessel and had withdrawn its objections to the sale of the vessel to its new owner, Poseidon Navigation Corp. By withholding vital documents and not disclosing the correct facts in its application, the plaintiff suppressed material facts from the Court and has also committed fraud on the Court and on the other side.

The present proceedings have been initiated by the plaintiff by filing an Admiralty Suit on the ground that the plaintiff has a maritime claim over the defendant vessel. In this regard, it would be relevant to refer to the provisions contained in the International Convention on Arrest of Ships 1999 (the Arrest Convention 1999) as applicable at the relevant time of filing of the suit. Of course, in the meantime the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017 (the Act) has come into force with effect from 1 April 2018. The provisions of the Convention and of the Act are in pari materia. The Supreme Court in Chrisomar Corp v MJR Steels Pte Ltd (CMI149) has succinctly dealt with the history of admiralty law while considering the issue as to when a maritime claim could be enforced, whether at the stage of institution of the suit or at the stage of arrest of the vessel. The Court held that the latter was the relevant time, on the basis of art 3.1.a of the Arrest Convention 1999, which provides that '[a]rrest is permissible of any ship in respect of which a maritime claim is asserted if: (a) the person who owned the ship at the time when the maritime claim arose is liable for the claim and is owner of the ship when the arrest is effected'. The Court held that, although India is not a signatory to the Convention, following The MV Elisabeth MANU/SC/0685/1993; AIR 1993 SC 1014 (CMI883), the Convention became part of Indian national law and must, therefore, be followed by the Court. Article 3.1.a is in two parts. First, arrest is only permissible of any ship if a maritime claim is asserted against the person who owned the ship at a time when the maritime claim arose for which the owner is liable, and second, that the same ship owner should be the owner of the ship when the arrest is effected. Thus, art 3.1.a sets the controversy at rest because a maritime claim can be asserted only at the time the arrest is effected and not at the time of the institution of the suit.

The High Court may therefore order the arrest of any vessel which is within its jurisdiction for the purpose of providing security for a maritime claim in admiralty proceedings, where the Court has reason to believe that the person who owned the vessel at the time when the maritime claim arose, is liable for the claim and is the owner of the vessel when the arrest is effected, or where the Court has reason to believe that the claim is based on a mortgage or a charge of similar nature on the vessel. In the present case, Poseidon Navigation Corp had become the owner of the vessel one year prior to institution of the suit, with the knowledge of the plaintiff, and no maritime claim as contemplated in the Arrest Convention 1999 or in s 4 of the Act existed either at the time of the filing of the suit or the arrest of the vessel. There was also no mortgage or charge of a similar nature on the vessel on which the plaintiff could have based its claim.