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    Chrisomar Corp Vs MJR Steels

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    The Supreme Court overturned lower court rulings and held that the arrest of the vessel was not permissible as the ownership had changed hands between when the maritime claim arose and the date of arrest. While an out of court settlement was initially reached regarding payment for supplies to the vessel, no payment was made and the vessel was re-arrested under new ownership. The Supreme Court found that the original cause of action no longer subsisted due to a novation of the original agreement when ownership changed. Therefore, the new owner, MJR Steels, could not be pursued for the payment.

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    Chrisomar Corp Vs MJR Steels

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    NRLDC
    205 views3 pages
    The Supreme Court overturned lower court rulings and held that the arrest of the vessel was not permissible as the ownership had changed hands between when the maritime claim arose and the date of arrest. While an out of court settlement was initially reached regarding payment for supplies to the vessel, no payment was made and the vessel was re-arrested under new ownership. The Supreme Court found that the original cause of action no longer subsisted due to a novation of the original agreement when ownership changed. Therefore, the new owner, MJR Steels, could not be pursued for the payment.

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    Chrisomar Corp vs MJR Steels

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    The Supreme Court overturned lower court rulings and held that the arrest of the vessel was not permissible as the ownership had changed hands between when the maritime claim arose and the date of arrest. While an out of court settlement was initially reached regarding payment for supplies to the vessel, no payment was made and the vessel was re-arrested under new ownership. The Supreme Court found that the original cause of action no longer subsisted due to a novation of the original agreement when ownership changed. Therefore, the new owner, MJR Steels, could not be pursued for the payment.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    205 views3 pages

    Chrisomar Corp Vs MJR Steels

    Uploaded by

    NRLDC
    The Supreme Court overturned lower court rulings and held that the arrest of the vessel was not permissible as the ownership had changed hands between when the maritime claim arose and the date of arrest. While an out of court settlement was initially reached regarding payment for supplies to the vessel, no payment was made and the vessel was re-arrested under new ownership. The Supreme Court found that the original cause of action no longer subsisted due to a novation of the original agreement when ownership changed. Therefore, the new owner, MJR Steels, could not be pursued for the payment.

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     The judgment of the Supreme Court in Chrisomar Corporation v. MJR Steels Private Ltd.

    holds that the arrest of a foreign ship for a maritime claim is permissible only if there is
    no change of ownership between the date when claim arose and the date of arrest of ship.
     The invoices related to the payment for necessary supplies were not honoured by the ship
    owner.
     The plaintiff filed a suit (suit no 1), praying for the arrest of the vessel. By the order, the
    vessel was arrested but then nobody came to claim it. Later, the plaintiff approached the jury
    not to proceed with the application of arrest.
     An out of court settlement was reached and the application was dismissed for non-
    prosecution.
     The settlement agreement stated that the defendant would pay the liable charges with the
    proceeds of the consideration received from intended charterers of the vessel upon its voyage
    to Bangkok.
     The terms and conditions were laid out.
     However, the vessel continued to be docked in port of Calcutta until May and no payment
    was made against the claim, leading to its re-arrest. Upon its re-arrest,it was learnt that the
    ownership had changed hands from Third Element Enterprises to MGR Steels.
     The re-arrest was a bone of contention and the new respondent , MGR Steels and the seller,
    Fairsteel Corp.
     In another suit,the respondent no 1, MJR Steels prayed for decree of rescission of the
    agreement for sale dated 21.1.2000.Also,the cancellation of the agreement was prayed
    for,along with perpetual injunction restraining Fairsteel from claiming any money under letter
    of credit.
     But,the single judge held the view that the fact that ownership changed hands in April 2000
    was not proved conclusively. The judge cited the suit filed by MJR against Fairsteel on
    9.5.2000 in which respondent (MJR Steel prayed for a decree of rescission of the agreement
    for sale dated 21.1.2000.And that, the same suit was dismissed.
     The respondent again made an appeal to the Division Bench and succeeded. The bench
    overturned the judgement on the grounds that ownership changed hands and that respondent
    was the owner.The bench went on to apply Sec 62 of the Contract Act that as there was a
    novation of the original agreement(out of court settlement),the original cause of action
    pleaded in suit 1 no longer subsisted.
     The counsel on behalf of appellant argued that the agreement would not amount to novation
    of the original agreement.
     The counsel, on behalf of respondent countered the submissions on the ground that the
    present case was the case of enforcement of maritime claims, and that no maritime lien
    existed for necessaries supplied to the vessel. The counsel also furnished the papers of
    transfer of ownerships of the vessel and held the fact that the amount can’t be recovered from
    his client.

    Facts
     Admiralty Court Act 1840 and 1861 states that these enactments continue as existing laws
    under Article 342 of the constitution.
     The high court shall have the jurisdiction to decide all claims and demands whosoever in the
    nature of matters seeking the salvage of service or the damage received by any vessel.
     Colonial Courts of Admiralty Act,1890
     Colonial Courts of Admiralty Act(India),1890

     Maritime Shipping Act,1958

     Maritime Insurance Act,1963

    Case Decisions or authority cited:


    The most common sources of authority cited are court decisions (cases), statutes,
    regulations, government documents, treaties, and scholarly writing.
     Bailey Petroleum Company vs Owners(Calcutta High Court):

    Action in Rem 5 filed in the admiralty court- With respect to the plaintiff’s claim of the price
    of bunkers supplied to the ship owners, the court held that the supply of necessities to a vessel
    does not create a maritime lien.

    “It is only necessary to refer to two authorities on the point to emphasize the fact that this
    Court does not base its conclusion on the concession made by the plaintiff’s counsel. It is not
    disputed that the jurisdiction of the court is governed by the Admiralty Court Act 1861.Sec 5
    of the Act provides: The High Court shall have the jurisdiction to…”

     Shell Oil Comp vs Ship Lastrigoni 3:

    The arguments before the court were that the supply of fuel itself created maritime lien to
    which the ship was the subject and which could be enforced by an action in rem in admiralty.
    The matter was again put to rest by the decision of the privy counsel, by which it was decided
    that no maritime lien attaches to a ship in respect of coals or other necessities supplied to it.

     Saba International Shipping:


    Definition of Lien vs Maritime Lien:
    Normally a lien is a limited right over someone else’s property. Normally you have a limited
    control over the belongings of your tenant, if your tenant removes his belongings to his
    friend’s house; you are left with no lien. Your lien is extinguished by the transfer of property.
    Hence, a normal lien is also called possessory lien.
    The doctrine of maritime lien is that a ship will be treated as a wrongdoer, not the owner,
    that the loss, damage or harm is caused by the maritime property, itself, and it has to make
    good for the loss. The attachment of maritime lien will start when the cause of action arises
    and will not be eliminated even by change of ownership in a good faith purchase.

     India is not a signatory to the International Convention on the Arrest of Ships,but this
    convention became a part of our law and hence must be followed by the court.

    The arrest is permissible only if 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.
    The same ship owner should be the owner of the ship when the ship is arrested.

     Section 62 and 63 of the Contract Act:


    Section 62: If the parties to a contract agree to substitute a new contract for it,or to rescind it
    or alter it, the original contract need not be performed.
    Section 63:Every promisee may dispense with or remit, wholly or in part,the performance of
    the promise made to him,or may extend the time for such performance,or may accept instead
    of it any satisfaction which he thinks fit.

    It is the appellant’s case that section 63 is attracted to the facts of the present case whereas it
    is the respondent’s case that section 62 is so attracted that the result being that the original
    statement is being substituted by a new statement,.

    The Supreme Court went on to overturn the decision made by the division bench and the high
    court.It held the views as follows:

    The original contract has been performed by one party only and not by the other.
    The second agreement is entered into so that the promise may accept, instead of the original
    performance, any satisfaction which he thinks fit.
    The agreement deals with one leg of the original transaction, the leg of payment which has
    not been made while keeping the transaction alive.

    Defendant No 1: Fairsteel Corp for taking any payments against the Letter of Credit
    Defendant No 2: Bank of Baroda for making any payments

    Respondent No 1: MJR Steels

    Single Judge-1/Division Bench-2 Judges/Full bench-3 judges

    The three players: The actor or plaintiff, who complains of an injury done; the reus or defendant,
    who is called upon to make satisfaction for it, and the judex or judicial power, which is to examine
    the truth of the fact, to determine the law arising upon that fact.

    Action in rem:5 A lawsuit against an item of property, not against persona, takes no notice of the
    owner of the property but determines the right to the property.

    Novation of the original agreement, as per Section 62 of the Contract Act...

    Will the South African courts have jurisdiction or not?

    The ship is a legal entity but the company is also a legal entity.

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