Gujarat HC orders arrest of cargo ship in Kandla after parboiled rice exporter claims $1.4 million loss due to shipment delay

The Gujarat High Court, in an interim order, ordered customs authorities to “arrest” a cargo ship at the Deendayal port in Kandla, which is in Indian territorial waters, after an entity filed a suit legal action to the admiralty, claiming that the delay in shipping its cargo – 2000 tonnes of parboiled rice, caused it a financial loss of 1.4 million US dollars.

A single judge bench composed of Justice Mauna M Bhatt in his order of October 10, it was said: “The Port Officer and Customs Authorities at Deendayal Port (Kandla) are directed to arrest the respondent vessel, namely MV SW SOUTH WIND I, currently stationed at Deendayal Port (Kandla), within Indian territorial waters, and to keep the defendant vessel under arrest until further orders of this Court. It is further ordered that the Port Officer and Customs Officer of Deendayal Port (Kandla) shall also convey this order to the Master/Chief Engineer of the defendant vessel and execute the warrant of arrest against the defendant vessel by email.“.

After reading the contents of the plea, the High Court observed in its order: “On reading the complaint and the attachments, it appears prima facie that the claim in the complaint is in the nature of a maritime claim since the plaintiff’s claim arises out of loss or damage caused to or in relationship with goods.“.

The High Court further ordered that in the event the defendant vessel or those interested in securing or satisfying the plaintiff’s claim of US$1,437,794 with simple interest at 12% per annum “from the date of the suit “until payment and/or completion”, if filed in court, the arrest warrant would not be executed against the vessel.

He further directed his registry to send the order to the port and customs authorities at Deendayal Port (Kandla). Issuing notice in the suit, the High Court directed the Deendayal Port (Kandla) authorities to act on the electronic copy of the court order and take the defendant vessel.

Listing the case on October 24, the High Court said: “It is clear that it will be open to the defendants to approach this Court even before the date of return with sufficient notice to the plaintiff.“.

Background

The complainant Farmart Service Private Limited had entered into a sales contract with ATC (ATC Trading SARL), a company in Benin, West Africa, to export “2,000 tonnes of” parboiled rice. To transport the cargo, Farmart entered into a separate agreement with OK International Logistics LLC – the owner of the vessel MV SW South Wind I – for a voyage charter of the defendant vessel for export of the cargo to ATC.

The plaintiff stated that its cargo “constituted a small part of the total cargo” shipped on board the defendant vessel. The complainant said he issued a commercial invoice and packing list in June this year, confirming the shipping details. By the end of July, Farmart had finished packing 40,000 bags of rice and loaded the cargo onto the ship at Deendayal Port in Kandla. Clearance of the rice was obtained and the cargo was fully loaded on July 27. The complainant said that on August 9, the vessel was ready to depart with the necessary bills of lading issued.

However, the vessel did not leave the port and the complainant received a letter on September 9 from a company Commodity Care Shipping Pte Ltd., claiming to be the owner of the vessel. The email said the ship was detained by Kandla Customs due to “lack of cargo clearance.” The plaintiff’s lawyer further argued that its cargo met all export standards and that was not the reason for the detention, but that the vessel was detained due to the presence of other cargo prohibited on board. The applicant’s cargo is not prohibited by customs regulations and the applicant. is now facing significant financial losses due to the “negligence” of the ship’s owners, agents or crew.

The plaintiff further stated that he received an email on October 6 from the buyer informing him that the contract of sale had been canceled due to the failure of the defendant vessel to depart and deliver the cargo on time.

The lawyer argued that almost two months have passed since the cargo was loaded, with no word on whether the ship will sail or the cargo will be unloaded at Kandla port. As a result of this detention, the plaintiff faces financial losses and reputational damage, risking default by its buyers, he added. The plaintiff claimed that the vessel is responsible for these losses, amounting to US$1,437,794, even though the plaintiff is not at fault. The lawyer also pointed out that the cargo is not prohibited by government regulations and the plaintiff’s claim is considered a valid maritime claim under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 for loss or damage related to the goods.

Case Title: Farmart Service Private Ltd. against MV SW South Wind I

Click here to read/download the order