the buildings in question were constructed in violation of the sanctioned plans and that the flat buyers do not have the locus to complain against the action taken by the Corporation under Section 351 of 1888 Act. Both, the trial Court and the High Court have assigned detailed reasons for declining the petitioners' prayer for temporary injunction and we do not find any valid ground or justification to take a different view in the matter. 17. The submission of Dr. Abhishek Manu Singhvi that the constructed area should be measured with reference to the total area of the plot cannot be accepted for the simple reason that the State Government had sanctioned change of land use only in respect of 13049.45 sq. meters. 18. In view of the above, we may have dismissed the special leave petitions and allowed the Corporation to take action in furtherance of notices dated 19.11.2005 and orders dated 3/8.12.2005, but keeping in view the fact that the flat buyers and their families are residing in the buildings in question for the last

1 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION SPECIAL LEAVE PETITION (CIVIL) NO. 33471 OF 2011 Esha Ekta Appartments CHS Ltd. and others ... Petitioners Versus The Municipal Corporation of Mumbai and another ... Respondents With SLP(C) No.33601 of 2011 SLP(C) No.33940 of 2011 SLP(C) No.35324 of 2011 SLP(C) No.35402 of 2011 O R D E R 1. Having failed to convince the trial Court and the High Court to entertain their prayer for restraining respondent no. 1 - Municipal Corporation of Mumbai (for short, `the Corporation') from demolishing the buildings constructed on Plot No. 9, Scheme 58, Worli, Mumbai, the petitioners have filed these petitions under Article 136 of the Constitution. 2 2. The petitioners are the Cooperative House Building Societies (for short, `the societies') and their members, who are said to have purchased flats in the buildings constructed by the developers on the plot in question. Their grievance is that even though the flats were purchased under a bona fide belief that the buildings have been constructed in accordance with law, the trial Court and the High Court did not injunct the Corporation from demolishing the same on the ground that the latter had taken action in furtherance of the orders passed in Writ Petition Nos. 2040/1999, 2402/1999, 2403/1999, 2904/1999, 2949/1999 and 1808/2000. 3. The Corporation leased out the plot in question, of which the total area is 17907.60 sq. meters to M/s. Pure Drinks Pvt. Ltd. on 17.1.1962 for general industrial use. After 18 years and about 11 months, the State Government issued order dated 1.12.1980 under Section 37(2) of the Maharashtra Regional and Town Planning Act, 1966 and sanctioned the change of use in respect of 13049.45 sq. meters land from industrial to residential. Between 1980 and 1982, M/s. Pure Drinks transferred that portion of land to the developers for construction of residential buildings. The building plans submitted by the developers for construction of 6 buildings comprising of basement, ground and 5 upper floors were sanctioned by the competent authority on 8.6.1981. The amended building plans submitted by the developers for construction of 9 3 buildings with ground and 5 upper floors were also sanctioned by the competent authority. 4. In 1984, the developers submitted new building plans proposing construction of two buildings on stilts with 24 and 16 upper floors respectively, additional 6th and 7th floors in building no. 2 and additional 6th floor on a portion of building no. 3. The new plans were rejected by the competent authority on 6.9.1984. Notwithstanding this, the developers continued the construction and did not stop their activity despite the stop work notice dated 12.11.1984 issued by the Corporation. 5. After the purchasers of flats formed societies, they along with the societies filed writ petitions for issue of a direction to the Corporation to provide water connections. During the pendency of those petitions, the Division Bench of the High Court took cognizance of the fact that the buildings had been constructed in violation of the sanctioned plans and passed order dated 11.10.2005 and directed the Additional Commissioner of the Corporation to appear in person to explain the reason for not taking action against the illegal construction. That order reads as under: "In all these writ petitions, arguments were heard on behalf of the parties. None appeared for respondent no.4 in Writ Petition No.2904-99, for respondent No.4 in Writ Petition No.2403-99, for respondent Nos.4 and 5 in Writ Petition No.2402-99, for respondent nos.4 and 5 in Writ Petition No.1808-2000. Shri 4 N.V. Patil, Sub-Engineer Building and Proposal (City) was present in Court to assist the Advocate for the Corporation. 2. In the course of the argument, it was revealed by the Advocate for the Corporation on taking instructions that original licence for construction was granted in favour of four persons viz. Shri Manjit Singh Madanjit Singh, Power of Attorney Holder of S. Karanjit Singh, Chief Executive Officer of Pure Drink Pvt. Ltd., Shri Ishwarsingh Chawla of PSD Construction Pvt. Ltd., Shri D.K.Gupta of D.Y. Builders Pvt. Ltd. and Abdula Yusuf Patel. Pursuant to the illegality in construction having been found, notices were issued under Section 53-1 of the M.R.T.P. Act on 20th February, 2002 to all the four persons mentioned above. Thereafter, sanction was granted for prosecution of all the four persons and decision in that regard was taken on 19th May, 2003 by the Executive Engineer (Building Proposal), CT/1 of the Corporation. Meanwhile, the panchanama of the illegal construction was carried out on 13th November, 2002. Besides, the prosecution was launched against builder, developer and all the occupants of the building and they were convicted on admission of guilt and sentenced by way of imposition of fine from Rs.600/- to Rs.2000/- imposed by the Magistrate. Apart from the above actions, no other action has been taken by the Corporation in relation to the illegal construction. The affidavit-in-reply filed on behalf of the Corporation before issuance of rule in the petition by Shri Kurmi Deonath Sitaram, Executive Engineer, DP(City)(I) discloses that initial approval was granted for six wings consisting of ground plus five upper floors and it was issued on 9th June, 1981 and Commencement Certificate was granted on 10th June, 1981. The amendment plans were approved for nine wings of ground plus five upper floors on 2nd February, 1983. Thereafter, amendment plans proposing stilt plus twenty-four floors and stilt plus sixteen floors with additional sixth and seventh floor to building nos.2 and 4 and additional sixth floor for the part of building no.3 were submitted but they were refused on 6th September, 1984. In spite of that, the constructive activities continued and the work beyond the approved plans was carried out, and therefore Stop Work notice was issued under Section 353-A of the MMC Act on 12th November, 1984. However, the work continued. Again 5 new architect submitted further plan with a fresh notice under Section 337. The same was rejected by the Corporation. 3. The affidavit also discloses the various illegalities committed in the course of construction of the buildings which include construction of additional floors without approval, increase in the height of the building and carrying of construction beyond the permissible limits of FSI, apart from other illegalities. The affidavit, however, does not disclose as to what action, if any, for prohibiting the developer and the owner from proceeding with the construction, was taken as wall as what action was taken after illegal construction having been carried out, apart from launching prosecution and issuance of notices. Even in the course of the argument, learned Advocate appearing for the Corporation could not satisfy us about any concrete action having been taken by the Corporation for stoppage of illegal construction or demolition of illegal construction. In fact, the arguments in the matter were heard partly on 27th September and again yesterday and as well as today. On the very first day of the argument, it was orally informed by the learned Advocate for the Corporation that he would ensure the presence of the officer of the Corporation to assist him in order to enable him to give correct detail information in the matter. In spite the officer being present, we are not able to get the detail information regarding the action taken by the Corporation as also the detail description of the illegalities committed by the builder and any other persons on his behalf in the matter. It is to be noted that undisputedly the records disclose some illegalities in the matter of construction carried out since the year 1984 onwards. In spite of affidavit having been filed in the year 2000, the Corporation has not explained the reason for failure on its part to take appropriate action against the illegal construction and even today. Apart from being assisted by the officer of the Corporation, the Advocate appearing for the Corporation is unable to disclose the reason for the same. We find it necessary to issue notice to the Additional Commissioner to appear in person before us on Friday i.e. 14th October, 2005 at 11.00 a.m. to explain the same along with all records in the matter, as it is informed by the Advocate for the Corporation that Commissioner is out of India. 6 4. The Registrar General is required to fax the copy of this order to the Corporation apart from the fact that of the same is being noted by the Advocate for the Corporation. At the request of the learned Advocate for the Corporation, Registrar need not send copy of this order by fax as learned Advocate for the Corporation undertakes to the Court that he through the officer present in Court will assure intimation of this order to the Additional Commissioner and consequently, his presence before the Court on 14th October, 2005 at 11.00 a.m." 6. The Commissioner of the Corporation appeared before the High Court on 14.10.2005 and gave an assurance that necessary steps would be taken in accordance with law within a period of two months in relation to the illegal constructions. Thereafter, the Corporation issued notices dated 19.11.2005 to respondent no. 2, the societies and their members under Section 351 of the Mumbai Municipal Corporation Act, 1888 (for short, `the 1888 Act') requiring them to show cause as to why the unauthorized constructions may not be pulled down and the buildings be brought in tune with the sanctioned plans. In the notices it was also stipulated that if the noticees fail to show sufficient cause, then the Corporation will pull down the illegal construction and also take action under Section 475A of the 1888 Act. The societies and their members sent reply dated 28.11.2005 through their advocate and pleaded that they were in no way responsible for the unauthorized constructions. Deputy Chief Engineer, Building Proposals (City) did not accept the reply sent by the advocate of the societies and their members and passed orders dated 3.12.2005 and 8.12.2005 7 and directed the petitioners to remove the illegal constructions. Thereupon, the petitioners filed Long Cause Suits for declaring notices dated 19.11.2005 and orders dated 3/8.12.2005 to be illegal. They further prayed for grant of permanent injunction restraining the Corporation, its servants, agents and representatives from taking any action demolishing the buildings. The petitioners also filed notices of motion for grant of temporary injunction. On 17.12.2005, the trial Court passed ad-interim orders and directed the parties to maintain status quo in respect of the suit structures. 7. In the detailed written statement filed on behalf of the Corporation, several objections were taken to the maintainability of the suits. On merits, it was pleaded that the buildings were constructed in violation of the sanctioned plans and the developers did not stop the construction activity despite stop work notice. It was further pleaded that action taken under Section 351 of the 1888 Act was legal and justified because the buildings had been constructed in gross violation of the sanctioned plans. It was then averred that those who purchased the flats knowing fully well that the buildings were being/had been constructed in violation of the sanctioned plans are not entitled to complain against the action taken by the Corporation for removal of the illegal/unauthorized constructions. 8 8. After hearing the counsel for the parties, the trial Court passed orders dated 23.3.2010 and rejected the petitioners' prayer for temporary injunction. For the sake of reference paragraphs 36 to 39 of the order passed in the case of the petitioners, who have filed SLP(C) No. 33471 of 2011 are extracted below: "36. In so far as claim of the plaintiffs that they are bona fide purchasers of their respective flats and they were not aware about illegal construction raised by the building/Developer is concerned, it is submitted by both the counsels of the defendant no. 2 that the fact of illegal construction itself mentioned in the agreement in between the plaintiffs and developers. In this respect while perusing the agreement produced by the plaintiffs on record revising plans for putting up multi-storied building submitted to the Corporation and for sanction. It means on that day it was made known to the purchaser the revised plan has been submitted. In short on that date the upper floor construction was not sanctioned by the Corporation. 37. Not only this it is appeared from the letter of Jayant Chitnis, Architect who specifically mentioned in his letter that he already addressed a letter dated 5.1.1990 and informed to the concerned developer about the show cause notice issued by the Corporation about the construction of upper floors which were not sanctioned. This letter also addressed to the said society by the said Architect. It means the Architect made aware to the societies as well as the Developer when show cause notice has been issued by the Corporation when Corporation noticed the construction of illegal upper floors. From this fact it is clear that even on the date of purchase the respective flat owners were aware that the construction of upper floors which is mentioned in the 351 notice were illegal and unauthorized. Till then by adopting the risk of demolition they have purchased the same. 38. From the documentary evidence as well as direction given by the Hon'ble High Court in the abovesaid writ petitions it is clear that on the buildings of the plaintiffs there are certain illegal constructions of upper floors as mentioned in the notice 9 under Section 351. Therefore, at this prima-facie stage plaintiffs have not made out any case to protect their illegal construction. 39. Not only this as per the direction of the Hon'ble High Court the MMC has issued notices and after receiving the reply from the respective societies, the AMC passed order of demolition of such illegal upper floors. Prima facie in the order I found no illegalities carried out by the AMC in passing the same. Considering all the documents and submissions I found no any three cardinal principles available with the plaintiffs for granting ad-interim injunction. Therefore, I answer above points in the negative. Hence, I proceed to pass the following order. ORDER 1) Notices of Motion No. 4807/2005 is hereby dismissed. 2) Cost in cause. 3) Notices of Motion No. 4807/2005 is disposed of accordingly." 9. The appeals filed by the petitioners were dismissed by the learned Single Judge of the High Court who, after examining the documents filed by the parties, agreed with the trial Court that the constructions made in violation of the sanctioned building plans were illegal and the Corporation did not commit any error by ordering demolition of the unauthorized portions of the buildings. The reasons assigned by the High Court for negating the petitioners challenge to the order of the trial Court are contained in paragraphs 12 to 15 of the impugned which are extracted below: 10 "12. It may be mentioned that for immovable properties authorized construction can be shown only by documentary evidence. No party can contend orally that the construction is authorized without showing documentary evidence. In a case such as this, where flats have been constructed in the building and have been sold under agreements to flat purchasers in a proposed co-operative society under the provisions of MOFA, the documentary evidence must be present to the mind of the flat purchasers upon taking inspection of the plans and specifications statutorily required to be shown and inspected. Consequently in such a case the only documentary evidence would be expected to be with the flat purchasers who, under the specific statutory mandate, would require to inspect the title contained in the sanctioned plan and the specifications. If that is shown in reply to the notice, of course, the notice would not proceed. That essential document which would be only to the knowledge of the party receiving the notice and the party purchasing the flat would have to be shown by that party alone and not by the MMC just because the party orders or directs the MMC to produce the plans which never were. 13. The fact that the flat purchasers purchased flats which are shown not to have been specifically under sanctioned plans shows that they are not bonafide purchasers. The fact that the regularization application has been made itself shows that the admitted position that the structure was illegal which required regularization. No party can apply for regularization of a regular structure. Consequently it is self-contradictory to state that the structure is authorized and yet apply for regularization. 14. In fact a preposterous argument is that the lease of the lessees is not terminated by the MMC who is the lessor and the lessees have malafide sought to complain and get the impugned notice enforced. 15. It is gratifying to note that the learned Judge has passed a legal order upon seeing a blatant defiance of law and the legal procedure throwing to the winds all legal requirements and mandates of construction under the supervision of the planning authority obviously upon the conviction and expectation that such extensive construction, however illegal, would not be demolished." 11 10. Before proceeding further, we deem it appropriate to mention that in January 2002, Corporation had decided to demolish the buildings constructed in violation of the sanctioned plans. On coming to know of this, the flat buyers made applications through their architect for regularization of the buildings and gave out that they were prepared to pay concessional penalty. Their applications were rejected by the Corporation. The appeals filed against the orders of the Corporation were dismissed by the State Government and the petitioners have challenged both the orders by filing separate writ petitions. 11. Dr. Abhishek Manu Singhvi, Shri Mukul Rohatgi, Shri Shyam Divan, Senior Advocates and Shri Santosh Paul and Shri Abhimanyu Bhandari, learned counsel for the petitioners argued that the impugned order is liable to be set aside because if the disputed constructions are demolished, the suits will become infructuous and the members of the societies and their families will suffer irreparable loss inasmuch as they will become roofless. Dr. Singhvi, placed before the Court satellite map of the site and argued that if the total constructed area is measured with reference to the area of the plot which was leased out by the Corporation to M/s. Pure Drinks Pvt. Ltd., the construction made by the developers cannot be said to be excessive and the trial Court and the High Court committed serious error in recording a finding that the construction of buildings with 24 and 16 floors is illegal. Learned counsel then 12 referred to the agreements entered into between the flat buyers and the developers to show that the former had purchased the flats under a bona fide belief that the developers will be able to persuade the Corporation to sanction the revised building plans and they should not be made to suffer on account of the wrong, if any, committed by the developers. Learned counsel also pointed out that the writ petitions filed by the petitioners for issue of a mandamus to the Corporation to regularize the illegal/unauthorized construction are pending before the High Court and submitted that till the disposal of those petitions the Corporation should not be allowed to demolish the buildings or the constructions which are said to have been made in violation of the sanctioned plans. In support of this submission, Shri Mukul Rohatgi placed before this Court xerox copies of the order sheets of Writ Petition No. 6550 of 2010. Learned counsel for the petitioners lastly submitted that the Court may consider the desirability of transferring the writ petitions filed by the petitioners for regularization of the construction to this Court so that the issue of regularization may be finally decided and 200 families which are residing in the flats allegedly constructed in violation of the sanctioned plan may not be rendered homeless. 12. Shri Pallav Shishodia, learned senior counsel appearing for the Corporation argued that the action taken under Section 351 of the 1888 Act is perfectly legal because the buildings in question were constructed despite 13 rejection of the revised building plans and the issue of stop work notice. Learned senior counsel emphasized that the Corporation had taken belated action for removing the illegal construction in the light of the observations made by the Division Bench of the High Court on 11.10.2005 and, therefore, notices dated 19.11.2005 and orders dated 3/8.12.2005 cannot be faulted. 13. Shri Harish N. Salve, learned senior counsel appearing for respondent no. 2 argued that total area of Plot No. 9 cannot be taken into consideration for the purpose of deciding whether the buildings have been constructed in violation of the sanctioned plan because the State Government had allowed change on land use only in respect of 13049.45 sq. meters. Learned senior counsel submitted that the members of the societies who purchased the flats knowing fully well that the buildings had been constructed in violation of the sanctioned plans cannot claim any equity or complain against the action taken by the Corporation for demolition of the illegal/unauthorized structures. 14. We have considered the respective submissions and carefully scrutinized the record. The scope of the appellate Court's power to interfere with an interim order passed by the Court of first instance has been considered by this Court in several cases. In Wander Ltd. v. Antox India (P) Ltd 1990 Supp SCC 727, the Court was called upon to consider the correctness of an order of injunction passed by the Division Bench of the High Court which had reversed the order 14 of the learned Single Judge declining the respondent's prayer for interim relief. This Court set aside the order of the Division Bench and made the following observations: "In such appeals, the appellate court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by that court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion." 15. In Skyline Education Institute (India) Pvt. Ltd. v. S.L. Vaswani (2010) 2 SCC 142, the 3-Judge Bench considered a somewhat similar question in the context of the refusal of the trial Court and the High Court to pass an order of temporary injunction, referred to the judgments in Wander Ltd. v. Antox India (P) Ltd (supra), N.R. Dongre v. Whirlpool Corpn. (1996) 5 SCC 714 and observed: "The ratio of the abovenoted judgments is that once the court of first instance exercises its discretion to grant or refuse to grant 15 relief of temporary injunction and the said exercise of discretion is based upon objective consideration of the material placed before the court and is supported by cogent reasons, the appellate court will be loath to interfere simply because on a de novo consideration of the matter it is possible for the appellate court to form a different opinion on the issues of prima facie case, balance of convenience, irreparable injury and equity." 16. In these cases, the trial Court and the High Court have, after threadbare analysis of the pleadings of the parties and the documents filed by them concurrently held that the buildings in question were constructed in violation of the sanctioned plans and that the flat buyers do not have the locus to complain against the action taken by the Corporation under Section 351 of 1888 Act. Both, the trial Court and the High Court have assigned detailed reasons for declining the petitioners' prayer for temporary injunction and we do not find any valid ground or justification to take a different view in the matter. 17. The submission of Dr. Abhishek Manu Singhvi that the constructed area should be measured with reference to the total area of the plot cannot be accepted for the simple reason that the State Government had sanctioned change of land use only in respect of 13049.45 sq. meters. 18. In view of the above, we may have dismissed the special leave petitions and allowed the Corporation to take action in furtherance of notices dated 19.11.2005 and orders dated 3/8.12.2005, but keeping in view the fact that the flat buyers and their families are residing in the buildings in question for the last 16 more than one decade, we feel that it will be in the interest of justice that the issue relating to the petitioners' plea for regularization should be considered by this Court at the earliest so that they may finally know their fate. 19. We, therefore, direct the petitioners to furnish the particulars of the writ petitions filed for regularization of the construction which are pending before the High Court. The needful be done within a period of two weeks from today. Within this period of two weeks, the petitioners shall also furnish the particulars and details of the developers from whom the members of the societies had purchased the flats. List the cases on 16th March, 2012 (Friday). 20. If the petitioners fail to comply the aforesaid directions, the special leave petitions shall stand automatically dismissed. .......................................................J. (G.S. SINGHVI) .......................................................J. New Delhi; (SUDHANSU JYOTI MUKHOPADHAYA) February 29, 2012.

CENTRAL EXCISE DUTY - BARRED BY LIMITATION - NO FRAUD - it is not in dispute that alleged suppression of payment of duty by the respondent-company was brought to the notice of the authority on 25th October, 1996, when the Superintendent of Central Excise had inspected the premises of the respondent-assessee, whereas the show cause notice was issued on 26th June, 2000. The department could not establish that there was any suppression of facts or a fraud on the part of the respondent-assessee.

                                       1



                                                          NON-REPORTABLE


                 IN THE SUPREME COURT OF INDIA


                 CIVIL APPELLATE JURISDICTION


                  CIVIL APPEAL NO.  6058 OF 2011

            (Arising out of S.L.P.(C) No.13594 of 2009)




 C.C.E., Mangalore                                        .....Appellant.




                                    Versus


M/s. Pals Microsystems Ltd., Mangalore     .....Respondents





                            J U D G M E N T


ANIL R. DAVE, J.





  1. Delay condoned.


  2. Leave granted.


  3.              Being aggrieved by the judgement and order dated 1st  July,


  2008 delivered in the CEA No. 59/2007 by the High Court of Karnataka


  at Bangalore, this appeal has been filed by the Revenue.


                                            2



4.              The   respondent,   a   limited   company,   is   a   holder   of   Central


Excise   Registration   and   is   a   manufacturer   of   data   processing   machines


and   is   also   availing   benefits   under   Modvat   Scheme.   On   25.10.1996,


Superintendent   of   Central   Excise   visited   the   factory   premises   of   the


respondent-assessee   for   verification   of   the   stock   of   inputs   on   which


Modvat credit was availed. It was noticed that there was a vast difference


between   physical   stocks   available   and   that   shown   in   RG23A   Part   1


Register.   The   Managing   Director   of   the   respondent-assessee,     in   his


statement   dated   25.10.1996   given   before   the   Superintendent   of   Central


Excise, West Range, Mangalore, admitted that the actual physical stock


of inputs and entries in the RG23A Part 1 Register did not tally because


the respondent-assessee had removed the Modvatable inputs for sales and


warranty   replacements.       The   Managing   Director   of   the   respondent-


assessee also admitted the discrepancy i.e. shortage in the stock of inputs


and stated that their office assistant, who was maintaining their books of


accounts,   was   only   a   matriculate   and   being   a   non   technical   person,


committed mistakes. He again stated that the mistake was also due to the


clubbing of different Modvat inputs coming under the same heading. The


correct figure was shown in his letter dated 21.1.1997 with all the details,


admitting     liability   of   Rs.51,   111/-     due   to   the   said   lapses.     He   also


conceded that, due to the aforestated mistakes, the figure of RG23A Part


I   did   not   reflect   the   actual   quantity   in   stocks   and   enclosed   a   detailed


worksheet showing monthly figures of opening balance, receipts, issues


and closing balance for the past years.


                                          3



5.               On   26.06.2000,   a   show   cause   notice   was   issued   to   the


respondent-assessee   calling   upon   it   to   show   cause   as   to   why   Central


Excise Duty of Rs. 1,91,537, equivalent to the Modvat credit availed on


the   shortage   of   physical   stock   of   Modvatable   inputs   should   not   be


recovered from it and penalty under Section 11AC of the Central Excise


Act, 1944 (hereinafter referred to as `the Act')  read with Rule 173Q and


Rule 210 of the Central Excise Rules, 1944 be not imposed and interest


thereon should not be recovered from it under Section 11AB of the Act.





6.               After   considering   the   reply   and   upon   hearing   a


representative   of   the   respondent-assessee,   the   Joint   Commissioner   of


Central   Excise   vide   his   order   in   original   Sl.   No.   14/2000   dated


09.08.2000,   dropped   further   proceedings   in   the   matter   after   giving   a


warning to the respondent-assessee.







 7.              Aggrieved by the order of the Joint Commissioner of Central


Excise,   the   Department   filed   an   appeal   before   the   Commissioner


(Appeals), Bangalore. The Commissioner (Appeals), by the virtue of the


order in appeal No. 591/2002 dated 04.10.2002, allowed the appeal.





 8.      Being   aggrieved   by   the   order   of   Commissioner(Appeals),   the


respondent-assessee   filed   an   appeal   before   CESTAT,   Bangalore.   The


CESTAT, Bangalore, by the order No. 1017/2005 dated 28.6.2005, held


that   the   second   statement   of   the   Managing   Director   which   was   given


                                                 4



before issuance of Show Cause Notice, accepting the discrepancies and


admitting   the   liability   to   an   extent   of   Rs.   51,111/-   was   not   taken   into


consideration            by         the         Joint         Commissioner         and         the


Commissioner(Appeals).   They   had   proceeded   only   on   the   basis   of   the


first   statement   recorded.     The   CESTAT   did   not   agree   with   the   reasons


assigned   by   the   Commissioner(Appeals)   for   allowing   the   appeal   and


remanded   the   matter   to   the   original   authority,   for   verification   of   the


assessee's   contention   and   for   passing   a   detailed,   considered   order   after


taking into consideration the entire evidence on record.





9.               In   pursuance   of   the   aforestated   order,   after   hearing   the


parties,     the   Joint   Commissioner   vide   his   order   dated   25.10.2005


confirmed   the   duty   demand   of   Rs.1,91,537/-   under   Rule   57   I   of   the


Central Excise Rules, 1944, read with proviso to Section 11A(1) of the


Act.   Out of the said amount,   Rs.76,111/- already paid by the assessee


had been appropriated. Further, a penalty of Rs.1,91,537/- was imposed


u/s 11AC of the Act  and interest u/s 11AB of the Act was made payable


by the respondent-assessee.





 10.        Aggrieved by the said order dated 25.10.2005, the respondent-


assessee   filed   an   appeal   before   the   Commissioner(Appeals)   but   the


Commissioner(Appeals)   dismissed   the   appeal,   vide   order   dated


23.1.2006.


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11.            On   appeal   to   the   CESTAT,   the   Tribunal,   relying   on   the


judgement of this Hon'ble Court in  Nizam Sugar Factory  v.  CCE, A.P.


2006 (11) SCC 573  allowed the appeal, vide its order dated 20.12.2006,


holding   that   the   show   cause   notice   was   issued   belatedly   and   that   too


without   prior   permission   of   the   Commissioner   as   per   the   provisions   of


Section 11A of the Act.





12.            On   appeal   before   the   High   Court   of   Karnataka,   the   High


Court dismissed the appeal of the Revenue by holding that the Tribunal


had rightly recorded a finding of fact stating that initiation of proceedings


against the respondent-assessee was barred by limitation.





13.            Aggrieved by the aforesaid judgment of the High Court, the


Appellant-Revenue has filed this appeal before this Court.





14.     The Learned Counsel for the Appellant-Revenue submitted that the


decision of this Court in  Nizam Sugars    (supra),   has no application to


the facts and circumstances of the instant case. Moreover, he contended


that   the   permission   of   Commissioner   for   invoking   the   provisions   of


Section  11A of the Act, by the Joint Commissioner  was not necessary.


Thus   he   submitted   that   the   judgment   delivered   by   the   High   Court


deserves to be quashed.


                                            6



15.             On the other  hand, the learned  counsel  for the respondent-


assessee supported the reasons given by the High Court.   Moreover, he


elucidated   the   application   of   the   judgement   of   this   Court   in  Nizam


Sugars  (supra), by stating that the Superintendent of Central Excise had


visited the premises on 25.10.1996 and the show cause notice was issued


on 26.06.2000, which was barred by limitation as laid down in the above


mentioned case.





16.     Upon   hearing   the   counsel   appearing   for   both   sides   and   upon


perusal of the judgment of the High Court and other orders passed by the


authorities, we are of the view that the impugned judgment does not need


any interference.





17.             We have carefully gone through the facts as ascertained by


the   Tribunal.     Upon   perusal   of   the   order   of   the   tribunal   as   well   the


judgment  delivered   by   the   High   Court,   it   is   not   in   dispute   that   alleged


suppression of payment of duty by the respondent-company was brought


to   the   notice   of   the   authority   on   25th  October,   1996,   when   the


Superintendent   of   Central   Excise   had   inspected   the   premises   of   the


respondent-assessee,   whereas the show cause notice was issued on 26th


June,   2000.     The   department   could   not   establish   that   there   was   any


suppression   of   facts   or   a   fraud   on   the   part   of   the   respondent-assessee.


                                            7



We   find   that   the   honest   mistake   committed   in   maintenance   of   stock


register   etc.   was   frankly   admitted   by   the   Managing   Director   of   the


respondent-assessee.     There  is  no finding  to  the  effect  that  there  was a


fraud  or willful  mis-statement  or suppression of facts.    Thus,  it is very


clear that the notice was issued after expiry of the period of limitation.


In the  set  of facts,  the  judgment  delivered  in  the case   of  Nizam  sugar


(supra)  would squarely be applicable.   In view of the aforestated facts,


we are of the view that the judgment delivered by the High Court cannot


be interfered.





18.             In our opinion, the appellant  has failed to make out a case


that proviso   to Section 11A of the Act was applicable.   In view of the


fact that no case was made out for invoking proviso under Section 11A of


the Act,  in our opinion,  the judgment delivered by the High Court is just


and proper and it deserves to be affirmed.





19.             For the aforestated reasons, we do not see any substance in


this   appeal   and,   therefore,   the   appeal   is   dismissed   with   no   order   as   to


costs.


                                                                           8





                                                                                ..................................................J.

                                                                                (Dr. MUKUNDAKAM SHARMA)





                                                                                 .................................................J.

                                                                                (ANIL R. DAVE)

            New Delhi

            July  29,  2011.

WHAT IS ARRIVED SHIP, WHAT IS LAY TIME. WHEN DAMAGE ARISE = the Charterers had accepted the responsibility for the failure of the vessel to discharge her cargo at Vadinar and had agreed to bear all the expenses for the delay in diversion of the vessel from Vadinar to Mumbai, including the time spent at 51 Vadinar port and the expenses incurred towards pilotage, tugs and other port expenses. 49. Apart from the above, Clause 4(1) of Part II of the Charter Party specifically provides that extra expenses incurred on account of any change in loading or discharging ports, has to be paid by the Charterers, and any time thereby lost to the vessel shall count as used lay time. We are not inclined to accept Mr. Gupta's submission that the aforesaid clause has to be read in the context of Clauses 4(a) and 4(b) which refer to ports other than Indian Ports in a different context.

                                               REPORTABLE





              IN THE SUPREME COURT OF INDIA



                  CIVIL APPELLATE JURISDICTION



      SPECIAL LEAVE PETITION (C) No.19461 of 2006





SHIPPING CORPORATION       OF INDIA LTD. ... PETITIONER(s)





           VS.





MARE SHIPPING INC.                         ... RESPONDENT(s)





                      J U D G M E N T





ALTAMAS KABIR, J.




1.    The   Special   Leave   Petition   arises   out   of   the



Judgment   and   Order   dated   24.10.2005   passed   by   the



learned   Single   Judge   of   the   Bombay   High   Court   in


                                               2





A.P.No.531   of   2003   affirming   the   Award   of   the



Arbitral   Tribunal   dated   8.9.2005,   and   the   judgment



and   order   dated   20.1.2006   passed   by   the   Division



Bench   dismissing   A.N.No.1158   of   2005   filed   by   the



Petitioners herein.





2.    On         9.11.1999              the          Petitioners             and          the



Respondent(s)   entered   into   a   Charter   Party   in



respect          of         the         Respondents'                 vessel,         "m.t.



Prestige",   for   carriage   of   minimum   8150   metric



tonnes of crude oil from the Egyptian Red Sea port



of          Ras             Sukheir                  to         one/two                   safe



anchorage(s)/lighterage   points/SBM(s)/one/two   safe



port(s)one/two   safe   berth(s)   anywhere   in   India.



The   vessel   was   described   in   Clause   41   of   the



Charter  Party  as  being  fitted  with  "AK  Tongue  Type



Bow Chain Stopper of min SWL 2000 Mts."





3.    Clause   9   of   the   Charter   Party   provided   for



settlement   of   all   disputes   arising   out   of   the


                                3





Charter   Party   by   arbitration   under   the   Arbitration



&   Conciliation   Act,   1996,   and   the   Maritime



Arbitration   Rules   of   the   Indian   Council   of



Arbitration (ICA).





4.    The vessel arrived at Ras Sukheir at 4.00 a.m.



on   19.11.1999   and   tendered   Notice   of   Readiness



(NOR).   The   loading   commenced   at   10   p.m.   on



20.11.1999   and   was   completed   by   3.15   p.m.   on



21.11.1999.        The   total   lay   time   provided   for



loading   and   discharge   of   cargo   was   72   running



hours.     Out   of   the   said   lay   time   hours,   the   lay



time   used   at   Ras   Sukheir   was   37   hours   and   30



minutes.     On   account   of   a   mishap   involving   the



vessel's   anchor   and   the   submarine   pipe-lines,   the



vessel was delayed at Ras Sukheir for fourteen days



and   could   leave   the   port   only   on   4.12.1999.     On



6.12.1999   while   the   vessel   was   sailing,   the



Respondents   nominated   Vadinar   Single   Berth   Mooring



(SBM)   for   discharge   of   the   cargo.            Port   of


                                4





discharge   had   not   been   nominated   earlier.     The



vessel   arrived   at   Vadinar   and   the   Master   tendered



NOR at 8 p.m. on 15.12.1999.   Since the vessel had



only   one   chain   stopper/Bow   Panama   Chock,   which   had



been   specified   in   the   Charter   Party,   the   vessel



could   not   be   safely   moored   at   the   SBM   and   the



Master   was   asked   by   the   Receiver,   Indian   Oil



Corporation   on   21.12.1999   to   take   away   the   vessel



from the Vadinar SBM.





5.    On   21.12.1999   a   message   was   sent   to   the



Petitioners'   Agents,   M/s.   J.M.   Baxi   &   Co.   by   the



Manager of the Respondents drawing attention to the



fact   that   the   vessel   could   not   be   berthed   at   the



SBM and requesting that immediate steps be taken to



berth   the   vessel.     In   the   absence   of   any   positive



response   to   the   said   letter,   the   Respondents'



lawyer, Mr. Prashant Pratap, sent a legal notice to



the   Petitioners   on   24.12.1999   indicating   that   the



vessel   continued   to   await   discharge   incurring


                                           5





demurrage   for   which   the   Petitioners   were   held



responsible.     The   Petitioners   were   also   informed



that   on   account   of   the   detention   of   the   vessel   at



Vadinar,   there   was   a   serious   possibility   of   the



vessel missing its next engagement.





6.     Finally a decision was arrived at on 28.12.1999



and   Addendum   No.1   to   the   Charter   Party   dated



9.11.1999 was drawn up and signed by the Owners and



the   Charterers   containing   the   following   further



conditions agreed upon, namely,





      a)    m.t.   Prestige   will   be   diverted   by   the



      Charterers   from   Vadinar   to   L.P.O.   Mumbai   for



      discharge.





      b)    Charterers   will   pay   freight   basis   Ras



      Sukheir/LPO   Mumbai   where   cargo   will   be



      discharged         into         a         daughter         vessel         and



      Charterers   will   pay   all   the   expenses   of   the



      daughter vessel, M.T. Maharaja Agrasen.


                                   6





      (c)  Charterers will bear the cost of deviation



      of   m.t.   Prestige   basis   Ras   Sukheir/LPO   Mumbai



      v/s   Ras   Sukheir/Vadinar/LOP   Mumbai   which



      included time at the demurrage rate.





      d)     The   extra   cost   of   bunkers   incurred   as   a



      result of the deviation will be on Charterers'



      account,   subject   to   the   Owners   submitting



      documentary evidence.





      (e)    All direct expenses incurred by the Owners



      at   Vadinar   towards   pilotage,   tugs   and   other



      port expenses and Agency fees, will be settled



      by the Charterers.





      (f)    Demurrage   to   be   settled   as   per   Charter



      Party terms.





7.     Pursuant   to   the   above   arrangement,   m.t.



Prestige   sailed   from   Vadinar   at   1   a.m.   on



29.12.1999   and   arrived   at   Mumbai   Lighterage   point


                                                 7





on 30.12.1999 at 2 p.m.  The vessel tendered Notice



of  Readiness  at  2  p.m.  on  30.12.1999  and  completed



discharge              at         3.30          p.m.         on         1.1.2000.            The



Respondents/Owners submitted their demurrage claims



along   with   supporting   documents   to   the   Charterers



on   3.2.2000.     As   the   said   claim   was   disputed,



arbitration   was   invoked   by   the   parties   under   the



provisions   of   the   Arbitration   &   Conciliation   Act,



1996,   hereinafter   referred   to   as   "the   1996   Act".



Both   the   parties   appointed   their   Arbitrators   and



the   two   Arbitrators   appointed   a   third   as   the



Presiding   Arbitrator.     The   Arbitrators   made   and



published their Award dated 26.8.2003 by which they



allowed   the   Respondents'   demurrage   claim   in   full.



Certain   other   amounts   payable   under   the   Addendum



dated 28.12.1999 were also awarded in favour of the



Claimants/Respondents.





8.    The         said            Award         was          challenged           by         the



Petitioners/Charterers   in   the   Bombay   High   Court   on


                              8





the ground that the Respondents had not proved that



the   Notice   of   Readiness   had   been   tendered   at



Vadinar   and   consequently   the   Respondents   were   not



entitled   to   demurrage   for   the   period   that   m.t.



Prestige   was   detained   at   Vadinar.     The   learned



Single   Judge   of   the   High   Court   accepted   the



submission   made   on   the   Petitioners'   behalf   and   by



his   order   dated   25.4.2005   remitted   the   matter   to



the   Arbitration   for   a   proper   finding   in   this



regard,   with   leave   to   the   Respondents/owners   to



lead   evidence   to   prove   tender   of   the   Notice   of



Readiness to the Petitioners/Charterers.





9.    After   remand,   the   Arbitrators   passed   another



Award   on   8.9.2005   after   admitting   fresh   evidence,



including   documentary   evidence,   holding   that   the



service of the Notice of Readiness by the Master of



the   vessel   on   the   Agents   of   the   Petitioners   at



Jamnagar   had   been   duly   proved   in   view   of   the



evidence   of   the   Petitioners'   witness,   Mr.   Sunil


                                            9





D'Souza  that  he  had  asked  Captain  Jude  D'Souza  for



a   copy   of   the   Notice   of   Readiness   sent   by   the



Master to the Petitioners' Agents at Jamnagar.  The



said   fact   was   also   confirmed   by   Mr.   S.J.   Joshi



during   his   evidence   before   the   Tribunal.                                The



Arbitrators   also   noted   that   no   attempt   had   been



made by the Charterers to rebut Mr. Sunil D'Souza's



evidence by producing Captain Jude D'Souza.





10.    The         Tribunal         accordingly           held          that         the



Respondents/Owners                  were         entitled         to         receive



demurrage   in   the   amount   of   U.S.   $220376.48,



together with interest and costs, as awarded in the



earlier Award of 26.8.2003.





11.    On   receiving   a   copy   of   the   Award   of   the



Tribunal   dated   8.9.2005,   the   Petitioners   applied



for   amendment   of   the   Petition   under   Section   34   of



the   1996   Act.     However,   by   order   dated   24.10.2005



the   learned   Single   Judge   dismissed   the   Arbitration


                                               10





Petition  No.531  of  2003.    An  appeal,  being  No.1158



of   2005,   was   filed   by   the   Petitioners   before   the



Division   Bench   of   the   Bombay   High   Court   which



dismissed the same on 20.1.2006.





12.    The   present   Special   Leave   Petition   has   been



filed   against   the   said   Award   of   the   Arbitration



dated 8.9.2005, as well as the judgments and orders



dated   24.10.2005   and   20.1.2006   passed   by   the



learned  Single  Judge  and  the  Division  Bench  of  the



Bombay High Court confirming the Award.





13.    Mr. Bhaskar Gupta, learned Senior Advocate, who



appeared         for          the         Petitioners,         focused            his



submissions             on         the          sustainability         of         the



Respondents'   claim   for   demurrage.     Urging   that   a



claim for demurrage can only arise after the expiry



of   the   "lay   days",   namely,   the   time   specified   for



loading   or   discharging   the   cargo   from   the   vessel,



Mr. Gupta submitted that the all-important question


                                  11





in respect of such a claim is when do the lay days



commence   and   when   are   they   used   up.     Mr.   Gupta



submitted that the commencement of lay days depends



on three factors :-





       a)    Firstly,   the   ship   must   be   an   "arrived



             ship"   in   order   to   give   Notice   of



             Readiness.



       b)    Secondly,   she   must   have   given   the



             prescribed         notice         to         load         or



             discharge, as the case may be.



       c)    Thirdly,   she   must   be   ready   to   load   or



             discharge, as the case may be.





14.    Mr. Gupta submitted that whether the ship is an



"arrived   ship"   or   not   depends   on   the   point



designated   as   the   destination   in   the   mutual



understanding   of   the   parties   in   the   Charter   Party



itself   or   the   terms   thereof   -   the   degree   of



precision   being   a   matter   of   agreement   between   the


                                12





parties.     Mr.   Gupta   urged   that   in   practice,   the



destination   is   usually   a   part   or   a   specified   area



within the port such as a basin, a dock, or a buoy



at a certain distance from the shore or a river.  A



still more precise point would be where the loading



or   discharge   is   to   take   place,   e.g.,   a   particular



quay,  pier,  wharf  or  mooring.    Mr.  Gupta  submitted



that   a   ship   is   said   to   be   an   "arrived   ship"   only



when   she   has   reached   the   particular   point   and   has



moored   there.        Mr.   Gupta   urged   that   the   said



propositions   are   well-established   and   have   been



laid  down  in  (1)  Leonis  Steamship  Company  Ltd.  Vs.



Rank  Limited  (1908)  1  K.B.  499;  (2)  Armament  Adolf



Deppe  Vs.  John   Robinson   &   Company   Ltd.  [1917]  2



K.B.   204;   and   (3)  Owners   of   S.S.   Plata  Vs.  Ford   &



Co.  (1917)   2   K.B.   593.     We   shall   have   recourse   to



refer   to   the   aforesaid   decisions   later   in   this



judgment.


                                         13





15.    Mr.   Gupta   submitted   that   Clause   `D'   of   the



Charter          Party          dated                  9.11.1999,         specifies



"discharging               port"                  as           one/two               safe



anchorage(s)/lighterage   point(s)/SBM(s),   1/2   safe



Ports, 1/2 safe Berth(s) and full India.  Mr. Gupta



also submitted that the Charter Party provides that



on  arrival  of  the  vessel  for  discharge  at  Vadinar,



the vessel was to maintain 70% of her deadweight on



board for safe mooring at a SBM.





16.    Mr.   Gupta   urged   that   by   a   communication   dated



6.12.1999,   the   Petitioners/Charterers   designated



Vadinar   SBM   as   the   destination   and   not   a   `Port'.



The   destination   was,   therefore,   a   specific   point



and   not   a   large   area   like   a   Port.     Vadinar   SBM,



therefore,            became          the              destination             as         if



incorporated   in   the   Charter   Party   itself.     Mr.



Gupta submitted that inspite of the best efforts of



the   Terminal   Authorities,   IOC,   who   were   also   the



receivers of the cargo, m.t. Prestige was unable to


                                 14





moor   at   the   Vadinar   Single   Berth   Mooring   (SBM)   on



account of the fact that it had only one bow chain.



It   may   be   of   interest   to   note   that   Vadinar   is   the



only   SBM   in   the   whole   of   India.     Mr.   Gupta   urged



that   inspite   of   the   various   attempts   of   the   Port



Authorities, the vessel could not be berthed at the



Vadinar SBM and was asked to move away.   Mr. Gupta



contended that since the vessel could not be moored



at Vadinar, it was not an "arrived vessel' and "lay



time"   could   not   be   said   to   have   commenced   running



on   15.12.1999.     The   Notice   of   Readiness   given   by



the Petitioners could not, therefore, be treated as



valid and the period spent at Vadinar could not be



taken into consideration while computing the number



of lay days utilized.





17.    In   support   of   his   aforesaid   contention,   Mr.



Gupta referred to and relied on the decision of the



House   of   Lords   in   the   case   of  Johanna   Oldendorff,



(1973)  11  LLR  285,  in  which  Viscount  Dilhorne  laid


                                         15





down   ten   tests   for   determining   when   a   ship   is   an



arrived ship.   Mr. Gupta referred to the first and



fifth   tests   as   being   relevant   in   the   context   of



this case and the same are extracted hereinbelow :





     (i)     That   under   a   port   Charter   Party   to



             be an "arrived ship", that is to say



             a   ship   at   a   place   where   a   valid



             Notice   of   Readiness   to   load   or



             discharge   can   be   given,   she   must



             have   ended   her   voyage   at   the   port



             named; and





     (ii)    A vessel has not reached her port of



             destination   until   it   has   ended   its



             voyage within the port, either in its



             legal,   or   if   it   differs,   in   its



             commercial   sense.     If   it   is   refused



             permission            and              ordered                to         wait



             outside         the         port              by         the             Port


                               16





            Authority,   it   is   not   an   "arrived



            ship".





18.    Mr. Gupta submitted that the mere fact that the



vessel   had   arrived   near   the   SBM   and   had   anchored



there  would  not  make  the  vessel  an  "arrived  ship",



because   the   destination   was   the   SBM   and   not   the



port and the vessel could end her voyage only when



she   was   moored   at   the   SBM,   which   the   vessel   was



unable   to   do.        Mr.   Gupta   submitted   that   the



decision   in     Johanna   Oldendorff's   case   was   an



affirmation of the Kings Bench decision in the case



of  Leonis   Steamship   Company   Ltd.  Vs.  Rank   Limited



(1908) 1 K.B. 499.  Mr. Gupta urged that not having



been allowed to berth at the SBM, the vessel could



not   be   categorized   as   an   "arrived   ship"   for   the



purpose   of   issuing   Notice   of   Readiness,   which   Mr.



Gupta   submitted   had   not   been   served   on   the



Petitioners in the first place.


                                17





19.    By   way   of   an   alternative   argument,   Mr.   Gupta



submitted   that   under   Clause   6   Part   II   of   the



Charter   Party,   the   delay   at   Vadinar   could   not   be



counted   as   lay   time,   because   it   was   the   receivers



(I.O.C.)   and   not   the   Charterers   who   declared   that



safe   berthing   of   the   vessel   at   Vadinar   was   not



possible   because   of   infra-structural   deficiencies



and   not   because   of   any   fault   on   behalf   of   the



Petitioners   since   the   Petitioners   had   no   control



over   the   situation.     Accordingly,   the   entire   time



from   the   tender   of   the   Notice   of   Readiness   on



15.12.1999,   if   at   all   tendered,   till   the   vessel



started  discharge  in  Bombay,  had  to  be  excluded  in



calculating lay time.





20.    Mr. Gupta submitted that service of the Notice



of Readiness had not been proved even after remand,



as   the   only   evidence   tendered   was   that   of   Sunil



D'Souza which, in any event, did not prove anything



beyond   the   fact   that   he   had   been   asked   to   get   a


                                     18





copy   of   the   Notice   of   Readiness   from   the   Agent.



Furthermore,   the   entire   evidence   of   Sunil   D'Souza



was hearsay.





21.    On   the   question   of   Safe   Port   Warranty,   Mr.



Gupta   contended   that   only   after   all   attempts   had



been   made   to   berth   the   vessel   at   the   SBM   that   it



was   asked   to   move   away   from   the   mooring.



Consequently,          even         if         the         finding         of         the



Arbitrators   that   the   Petitioners   had   failed   to



designate   a   safe   port   was   accepted,   at   best   the



ship   owners   could   be   entitled   to   damages   and   not



demurrage   and   would   be   subject   to   the   ordinary



rules   as   to   remoteness,   mitigation   etc.,   as



available   under   Section   73   of   the   Contract   Act.



Mr.   Gupta   submitted   that   the   Respondents   had



claimed damages before the learned Arbitrators who,



however,   allowed   demurrage   in   their   Award   on   the



ground   that   demurrage   is   a   genuine   pre-estimate   of



damages.     Mr.   Gupta   submitted   that   even   if   there


                               19





was  a  breach  of  warranty  on  the  Petitioners'  part,



the same would give rise to a claim for damages and



not   demurrage   within   the   scope   of   Sections   73   and



74 of the Contract Act.





22.    Mr. Gupta submitted that in the Addendum dated



28.12.1999   to   the   Charter   Party   dated   9.11.1999



since the Charterers had agreed to bear the cost of



deviation   basis     Ras   Sukheir/LPO   Mumbai   vs   Ras



Sukheir/Vadinar/LPO   Mumbai,   which   included   time   at



the   demurrage   rate,   there   could   not   be   a   separate



claim  for  demurrage  as  that  would  amount  to  double



jeopardy.   Mr. Gupta submitted that it is the said



provision   contained   in   Clause   (f)   of   the   aforesaid



Addendum   which   has   given   rise   to   this   arbitration.



Mr.   Gupta   submitted   that   although   the   Award   has



relied   on   Clause   4(1)   of   Part   II   of   the   Charter



Party,   which   provides   that   extra   expenses   incurred



in   connection   with   any   change   in   loading   or



discharging   ports,   has   to   be   paid   by   the


                                20





Charterers, and any time thereby lost to the vessel



shall count as used lay time, the said clause would



have to be read in the context of Clauses 4(a) and



4(b)   where   certain   ports,   other   than   any   Indian



Port, have been named.





23.    On   the   question   of   mitigation   of   damages,   Mr.



Gupta   urged   that   the   Petitioners/Owners   had   done



everything  in  its  power  to  safely  berth  the  vessel



at the SBM Vadinar, which was perhaps the only SBM



in operation in India at the relevant point of time



and   would   otherwise   have   been   ideal   for   discharge



of   the   cargo   of   crude   oil.     Mr.   Gupta   contended



that it was IOC, the receiver, who had taken almost



two   weeks   to   decide   to   redirect   the   vessel   from



Vadinar to Mumbai. Mr. Gupta submitted that it was,



in   effect,   the   Respondents   who   did   not   take   any



steps to mitigate the damages.


                               21





24.    On   the   quantum   of   demurrage   or   damages,   Mr.



Gupta   submitted   that   since   the   demurrage   rate   was



fixed at US $16000 per day and the same has really



a   genuine   pre-estimate   of   damages,   the   Tribunal



should   have   awarded   damages   at   a   reasonable   rate,



instead of making its Award on the consideration of



damage   as   fixed   in   the   Charter   Party.     Mr.   Gupta



urged   that   the   Tribunal   had   gone   completely   wrong



in giving a go-bye to the provisions of Sections 73



and 74 of the Contract Act in awarding compensation



in   keeping   with   the   provisions   for   fixed   demurrage



in the Charter Party, particularly when all the lay



days had not been used up.





25.    Mr.   Gupta   submitted   that   the   scope   of   a



petition under Section 34 of the 1996 Act had been



considered by this Court in detail in Oil & Natural



Gas   Corporation   Ltd.  Vs.  Saw   Pipes   Ltd.  [(2003)   5



SCC 705], and it was indicated therein that if the



Award   passed   by   the   Arbitral   Tribunal   was   contrary


                                22





to   any   of   the   provisions   of   the   Act   or   the



substantive   law   governing   the   parties   or   was



against   the   terms   of   the   contract,   the   same   could



be   set   aside.     Mr.   Gupta   urged   that   even   in   the



instant   case,   the   law   had   been   misapplied   by   the



Arbitrators   who   had   missed   considering   the   all-



important   issue   that   no   valid   Notice   of   Readiness



could have been tendered by a ship which was not an



"arrived   ship".          In   such   circumstances,   the



petition   under   Section   34   of   the   1996   Act   was



clearly not maintainable.





26.    In conclusion, Mr. Gupta drew our attention to



the wording of Clause 6 of the Charter Party which



deals   with   Notice   of   Readiness   and   in   particular,



to the last sentence thereof where delay in getting



a   berth   for   a   vessel   after   giving   Notice   of



Readiness,   for   any   reason   over   which   the   Charterer



has   no   control,   shall   not   count   as   used   lay   time.



Mr.   Gupta   submitted   that   the   facts   of   the   case


                                  23





would   clearly   indicate   that   the   Arbitral   Tribunal



failed   to   take   into   consideration   the   facts   in



their true sequence and ended up in a "cart before



the   horse"   situation,   since   no   demurrage,   which   is



the consequence of using up all the lay time, could



have   been   awarded   without   a   correct   computation   of



the used "lay time".  





27.    Going to the heart of the matter, Mr. Prashant



Pratap,   learned   Advocate,   submitted   that   the   case



of   the   Petitioners/Charterers   of   the   vessel



depended   primarily   on   the   terms   and   conditions   of



the Charter Party on the basis whereof the Arbitral



Tribunal         had         awarded         demurrage         to         the



Respondents/Owners of the vessel.  As was also done



by   Mr.   Gupta,   special   emphasis   was   laid   by   Mr.



Prashant   Pratap   on   Clause   6   of   the   Charter   Party



relating   to   Notice   of   Readiness.     Learned   counsel



emphasized   the   fact   that   in   terms   of   the   said



clause, the Master of the vessel or his Agent would


                                24





give   the   Charterer   or   his   Agent   notice   by   letter,



telegraph, wireless or telephone that the vessel is



ready   to   load   or   discharge   cargo,   berth   or   no



berth,   and   lay   time   would   commence   upon   the



expiration of six hours from receipt of such notice



or  upon  the  vessel's  arrival  in  berth,  which  would



mean   finished   mooring   when   at   a   sea   loading   or



discharging   terminal   and   all   fast   when   loading   or



discharging   alongside   a   wharf          whichever   first



occurs.     Then   follows   the   rider   that,   however,



where   the   delay   is   caused   to   the   vessel   getting



into berth after giving Notice of Readiness for any



reason over which the Charterer has no control, the



delay caused could not be counted as used lay time.





28.    Mr. Prashant Pratap referred to Clauses 8 and 9



of   the   Charter   Party   dealing   with   Demurrage   and



Safe Berthing Shifting.  Clause 8 provides that the



Charterer   shall   pay   demurrage   per   running   hour   and



pro   rata   for   a   part   thereof   at   the   rate   specified


                                25





in   Part   I   for   all   the   time   taken   for   loading   and



discharging when the time taken for discharging the



cargo  exceeds  the  allowed  lay  time  specified.    If,



however,  delay  in  discharge  of  the  cargo  is  caused



at   the   port   of   loading   and/or   discharge   by   reason



of   fire   or   other   unavoidable   circumstances,   the



rate   of   demurrage   would   be   reduced   to   one-half   of



the amount stated in Part I per running hour or pro



rata for part of an hour for demurrage so incurred.



It was also stipulated that the Charterer would not



be liable for demurrage for delay caused by strike,



lockout,   stoppage   or   restraint   of   labour   for



master,  officers  and  crew  of  the  vessel  or  tugboat



or   pilots.     Mr.   Prashant   Pratap   also   pointed   out



that   Clause   9   of   the   Charter   Party   which   provides



for   Safe   Berthing   Shifting   indicates   that   the



vessel   shall   load   and   discharge   at   any   safe   place



or   wharf,   or   alongside   vessels   or   lighterage   point



reachable on her arrival, which shall be designated


                               26





and   procured   by   the   Charterer,   provided   the   vessel



could   proceed   thereto,   lie   at   and   depart   therefrom



always   safely   afloat.     Clause   9   also   enables   the



Charterer   to   shift   the   vessel   at   ports   of   loading



and/or  discharge  from  one  safe  berth  to  another  on



payment  of  towage  and  pilotage  for  shifting  to  the



next berth and other expenses and the time consumed



on account of such shifting would count as used lay



time, except as otherwise provided in Clause 15.





29.    Mr.   Prashant   Pratap   then   contended   that   the



question   as   to   whether   M/s.   m.t.   Prestige   was   an



"arrived   ship"   or   not   at   port   Vadinar,   had   never



been   raised   either   before   the   learned   Single   Judge



or the Division Bench of the High Court, nor was it



taken   as   a   ground   in   the   Special   Leave   Petition.



Learned   counsel   submitted   that   even   the   ground



taken  with  regard  to  the  Notice  of  Readiness  being



invalid,   as   the   vessel   was   allegedly   not   ready   in



all   respects   to   discharge   its   cargo,   was   neither


                                 27





argued   before   the   learned   Single   Judge   or   the



Division   Bench   nor   was   the   ground   taken   in   the



Special Leave Petition before this Court.





30.    Coming   to   the   question   as   to   what   constitutes



an   "arrived   ship",   Mr.   Prashant   Pratap   submitted



that   the   said   question   was   extensively   considered



by   the   House   of   Lords   in   the   case   of  Johanna



Oldendorff  (supra),   which   was   also   relied   upon   by



Mr. Gupta, where the House of Lords was of the view



that   the   vessel   should   have   reached   a   position   in



the   port   where   she   is   at   the   immediate   and



effective   disposition   of   the   Charterers   and   for



practical   purposes   it   is   so   much   easier   to



establish that if the ship is at the usual waiting



place   within   the   port   where   waiting   vessels   would



normally   lie   before   proceeding   to   the   berth



nominated by the Charterers for discharge of cargo.



If   the   vessel   is   at   such   a   place,   then   the   vessel



is considered to be an "arrived ship".   It is only


                                         28





thereafter   that   the   vessel   can   tender   Notice   of



Readiness.           Furthermore,   if   the   Charter   Party



provides   for   the   location   where   the   vessel   should



arrive  and  tender  Notice  of  Readiness,  then  if  the



vessel   has   reached   that   location,   the   vessel   is



considered   to   be   an   "arrived   ship".     Mr.   Prashant



Pratap submitted that in the present Charter Party,



the   parties   have   expressly   agreed   in   Clause   6   for



the   vessel   to   arrive   at                   customary   anchorage



(emphasis   supplied)   at   the   port   of   loading   or



discharge          and         tender          Notice         of         Readiness.



Accordingly,   once   the   vessel   arrived   at   anchorage



at   Vadinar,   it   became   an   arrived   ship   in   terms   of



Clause   6   of   the   Charter   Party   and   was   entitled   to



tender Notice of Readiness.





31.    Mr.   Prashant   Pratap   submitted   that   it   was   not



disputed   that   M/s.   m.t.   Presitge   was   at   customary



anchorage   at   Vadinar   Port   when   Notice   of   Readiness



was   tendered.     Mr.   Prashant   Pratap   also   placed


                                 29





emphasis   on   the   expression   "berth   or   no   berth",



included   in   Clause   6   of   the   Charter   Party   which



meant that even if a berth was not available or the



vessel   had   not   reached   the   berth,   the   vessel   is



entitled   to   tender   Notice   of   Readiness.                       Mr.



Prashant   Pratap   submitted   that   the   term   had   been



explained   in   the   case   of   the   NOTOs   where   dealing



with a clause identical to Clause 6 of the Charter



Party,   it   was   held   that   the   meaning   of   the   said



words   indicated   that   the   Notice   of   Readiness   could



be   given   upon   arrival   at   the   customary   anchorage



and   could   take   effect   whether   or   not   a   berth   was



then available or not for the vessel.





32.    Mr.   Prashant   Pratap   then   argued   that   the



submission          made         on         behalf         of          the



Petitioners/Charterers   that   since   the   destination



in   the   Charter   Party   had   been   shown   as   "SBM"   and



the   vessel   had   failed   to   be   moored   at   the   SBM,   no



demurrage could be claimed, was wholly erroneous on


                                           30





account   of   the   fact   that   such   notice   could   be



tendered   on   the   arrival   of   the   vessel   at   the



customary anchorage.  The vessel is not, therefore,



required   to   be   at   the   destination   within   the   port



for   the   purpose   of   becoming   an   "arrived   ship"   and



for tendering of Notice of Readiness.





33.        Referring   to   Mr.   Gupta's   submissions   that   for



the   purpose   of   tendering   Notice   of   Readiness,   the



vessel must be an arrived ship, Mr. Prashant Pratap



submitted   that   the   vessel,   therefore,   must   be   at



the   effective   disposal   of   the   Charterers   who   would



have   unrestricted   access   to   the   vessel's   cargo



tanks and the vessel pumps must be in working order



to   pump   out   the   cargo   upon   the   hoses   being



connected,   provided   that   the   Charterers   were   ready



to receive the cargo.  In this regard, Mr. Prashant



Pratap   referred   to   the   decision   in   the                            Leonis



Steamship   Co.   Ltd.  (supra),   where   it   was   observed



by         Lord         Justice         Kennedy         that         "the         ship's


                                31





obligations,   therefore,   under   such   a   Charter   Party



the   performance   of   which   much   precede   the



commencement  of  the  lay  days  (as  the  fixed  loading



period is commonly termed) are three : Firstly, the



ship must have arrived at her destination and so be



within   the   designation   of   an   arrived   ship.     Till



then   she   is   not   entitled   to   give   a   Notice   of



Readiness   to   load.     Secondly,   she   must   have   given



the   prescribed   Notice   of   Readiness   to   load.



Thirdly,   she   must,   in   fact,   be   so   far   as   she   is



concerned,   ready   to   load.     The   ship   owner   cannot



claim against the Charterer that the lay days begin



to count until the ship is an arrived ship; ..............."



Mr.   Prashant   Pratap   submitted   that   the   aforesaid



passage   made   it   clear   that   the   vessel   has   to   be



ready   to   load   or   discharge,   as   the   case   may   be.



The   Tribunal's   findings   are   that   the   vessel   was



ready, but the terminal was not.  The Tribunal held



that  the  vessel  was  at  the  immediate  and  effective


                                32





disposition   of   the   Charterers   when   Notice   of



Readiness was given.





34.    Mr.   Prashant   Pratap   then   urged   that   from   the



Charter   Party   it   is   quite   clear   that   the



responsibility   of   providing   a   berth   where   the



vessel could moor safely was that of the Charterers



and   the   same   would   be   clear   from   the   use   of   the



word   "safe"   in   Clause   D   of   Part   I   of   the   Charter



Party           which         precedes          the          words



"Ahchorage/Lighterage   Points/SBM".     Even   in   terms



of   Clause   9   of   the   Charter   Party,   the   place   of



discharge must be safe and has to be designated and



procured   by   the   Charterers.     Mr.   Prashant   Pratap



referred to various other judgments such as the Sea



Queen  [(1988)   Vol.1   KKR   500]   and  Fjordaas  [(1988)



Vol.1   LLR   336].     In   the   later   case,   it   has   been



indicated   that   "reachable"   or   "arrival"   are   well-



known   expressions   and   mean   precisely   what   they



say.     It   was   further   observed   that   if   the   berth


                                    33





cannot   be   reached   on   arrival,   the   warranty   is



broken,   unless   there   is   some   relevant   protecting



exception.  Such berth, in its term, is required to



have two characteristics: it has to be safe and it



also has to be reachable on arrival.  By nominating



SBM at Vadinar as the destination of the vessel and



also   the   place   for   discharge   of   the   cargo,   it   was



the   responsibility   of   the   Charterers   to   ascertain



as   to   whether   the   vessel   could   be   moored   there



safely and be in a position to discharge the cargo



safely.





35.    Apart   from   the   aforesaid   questions   regarding



the   vessel   being   an   arrived   ship,   Mr.   Prashant



Pratap   urged   that   service   of   the   Notice   of



Readiness   by   the   Master   on   the   Agents   of   the



Charterers   have   been   duly   proved   and   is   a   finding



based         on         appreciation         of         evidence         by         the



Arbitrators,   which   has   been   upheld   by   the   learned


                                    34





Single   Judge   and   the   Division   Bench,   whose   orders



were under challenge in the Special Leave Petition.





36.    Mr. Prashant Pratap urged that if the Notice of



Readiness was valid, as had been found not only by



the   Arbitral   Tribunal   but   also   by   the   learned



Single   Judge   and   the   Division   Bench   of   the   Bombay



High Court, then lay time commenced six hours after



the   tender   of   Notice   of   Readiness.     Accordingly,



lay   time   expired   on   17.12.1999,   and,   thereafter,



the   vessel   was   on   demurrage   all   throughout,   till



discharge   of   the   cargo   was   completed.       Since   in



the   instant   case,   the   Charterers   had   failed   to



nominate   a   safe   berth   at   which   the   vessel   could



safely   lie   and   discharge   the   cargo   and   failing   to



provide a berth which was reachable upon arrival of



the   vessel   at   Vadinar,   the   consequent   delay   in



berthing   and   discharge   of   the   cargo,   was   the



responsibility         of         the         Charterers         for         which



demurrage was payable by them.  Mr. Prashant Pratap


                               35





pointed   out   that   at   no   stage   did   the   Charterers



question   the   validity   of   the   Notice   of   Readiness



tendered   at   Vadinar   either   on   the   ground   that   the



vessel   was   not   an   arrived   ship,   or   on   the   ground



that   the   vessel   was   not   ready   to   discharge   the



cargo.    On  the  contrary,  the  Charterers  signed  the



Addendum   dated   28.12.1999   by   which   they   agreed   to



bear   all   the   expenses   incurred   by   the   vessel   at



Vadinar   and   also   agreed   to   pay   additional   freight



charges   for   discharge   of   cargo   at   Mumbai.



Significantly,   the   Charterers   also   agreed   that   the



time   taken   for   the   vessel   to   proceed   from   Vadinar



to   Mumbai   would   count   as   demurrage   time.     Mr.



Prashant Pratap urged that the Charterers would not



have   agreed   to   the   terms   and   conditions   of   the



Addendum if it was their contention that the vessel



was   not   an   arrived   ship   or   that   the   Notice   of



Readiness was invalid.


                                36





37.    Mr.   Prashant   Pratap   then   submitted   that   the



only requirement as far as the vessel was concerned



was that it had to maintain 70% of the dead weight



on board for safe mooring at the SBM at Vadinar and



it is nobody's case that the vessel did not conform



to such condition.





38.    On   the   question   of   designation   of   the   SBM   as



the   destination   point   within   Vadinar   Port   by   the



Charterers,   Mr.   Prashant   Pratap   contended   that   the



Charterers   had   been   put   on   notice   regarding   the



berthing   arrangement   both   in   the   Charter   Party   as



well   as   in   the   questionnaire   setting   out   the



vessel's   mooring   arrangements   provided   to   the



Charterers.     Learned   counsel   submitted   that   it   was



for   the   Charterers   to   check   the   vessel   equipment



vis-`-vis   facilities   available   at   the   Port   of



loading   and   discharge,   before   nominating   the   same.



Since   the   Charterers   had   failed   to   undertake   such



an exercise, there was a resultant problem faced at


                               37





Vadinar   whereby   the   vessel   could   not   discharge   its



cargo at Vadinar but had to be diverted to Mumbai.



Mr. Prashant Pratap also pointed out that while the



entire   Indian   coastline   was   available   to   the



Charterers to nominate a safe port for discharge of



the cargo, it made a conscious decision to nominate



the   SBM   at   Vadinar   which   ultimately   turned   out   to



be   unsafe   for   mooring   of   the   vessel,   given   the



equipment available on board the ship.





39.    Mr. Prashant Pratap submitted that it had been



agreed   on   behalf   of   the   Charterers   that   demurrage



is   a   genuine   pre-estimate   of   damages   and   even   if



the Charterers' argument is to be accepted that the



owners   are   entitled   to   damages   and   not   demurrage,



the   calculation   of   such   damages   would   have   to   be



the   demurrage   rate   in   the   facts   and   circumstances



of the case.


                                  38





40.    Mr.   Prashant   Pratap,   accordingly,     submitted



that  the  award  of  the  Arbitral  Tribunal,  as  upheld



both   by   the   learned   Single   Judge   and   the   Division



Bench of the Bombay High Court, did not warrant any



interference   and   the   Special   Leave   Petition   was



liable to be dismissed with appropriate costs.





41.    Having   gone   through   the   submissions   made   on



behalf   of   the   respective   parties   in   the   background



of the facts as disclosed, it is clear that we are



required   to   consider   two   basic   questions   for   the



purpose   of   deciding   the   present   Special   Leave



Petition, namely :-





(a)    Whether on arriving at anchorage point at Port



       Vadinar,   despite   the   destination   point   being



       the   SBM   mooring,   it   could   be   said   that   it   was



       an   arrived   ship   which   was   competent   under   the



       Charter   Party   dated   9.11.1999,   to   issue   Notice



       of Readiness of discharge of its cargo?


                                    39





(b)    If   the   finding   of   the   Arbitral   Tribunal   that



       the vessel was an arrived ship at Port Vadinar,



       as   upheld   by   the   learned   Single   Judge   and   the



       Division   Bench   of   the   Bombay   High   Court   is



       accepted,   would   the   Respondents/Owners   of   the



       vessel be entitled to damages or demurrage?





42.    Various   ancillary   questions   connected   with   the



aforesaid   two   questions   also   crop   up,   which   we



shall consider shortly.





43.    From   the   undisputed   facts,   the   position   that



emerges is as follows :-





(i)      The   Charter   Party   dated   9.11.1999   was   in



         respect   of   a   transaction   which   provided   for



         carriage   of   crude   oil   from   Ras   Sukheir   to   a



         safe   port   on   the   Indian   coastline.       The



         Charterers         were         given         the         choice         of


                                       40





         nominating   such   port   for   discharge   of   the



         aforesaid cargo of crude oil.





(ii)     In   the   absence   of   any   named   port   of



         destination   in   the   Charter   Party   itself,   it



         was   only   after   the   vessel   left   Ras   Sukheir



         that   an   intimation   was   given   by   the



         Charterers for discharge of the cargo at the



         SBM at Port Vadinar in Gujarat.





(iii)    That         the         aforesaid         nomination         was         a



         conscious   decision   on   the   part   of   the



         Charterers,   despite   having   knowledge   of   the



         equipment   available   on   board   the   vessel   for



         mooring   at   a   SBM,   and   in   keeping   with   such



         decision   m.t.   Prestige   set   its   course   from



         Ras Sukheir to Vadinar.





(iv)     The   fiasco   at   Vadinar   was   occasioned   by   the



         fact that no prior checking had been done to



         see   whether   with   the   mooring   equipment   on


                                           41





         board,   the   vessel   would   be   able   to   safely



         berth at the SBM for discharge of its cargo.





(v)      Who was responsible for the detention of the



         vessel   at   Vadinar   since   its   arrival   at   the



         anchorage point and its final departure from



         the         said         Port?               Whether         there         was



         contributory   negligence   on   the   part   of   both



         the parties in the cause of such delay?





44.    The   concept   of   an   arrived   ship   in   shipping



terminology   requires   that   a   vessel   should   reach   a



destination   in   a   port   where   she   could   be   safely



berthed   and   thereupon   be   ready   to   either   discharge



or load cargo from and on to the vessel.  That is a



general   concept,   but   the   Charterers   and   the   Owners



of the vessel could in the Charter Party agree to a



specific destination point within the port area for



discharging   or   loading   of   cargo.     Once   the   vessel



arrived at the said spot and was ready to discharge


                                42





its   cargo,   it   could   be   described   as   an   "arrived



ship" with the authority to issue and tender Notice



of   Readiness.   In   the   instant   case,   the   nominated



port   for   the   arrival   of   the   vessel   was   Vadinar



Port,   but   the   destination   point   was   the   SBM   where



the   vessel   was   to   be   moored   and   was   to   discharge



its   cargo   of   crude   oil.   In   fact,   in   the   Charter



Party   dated   9.11.1999,   Clause   6   specifically



provided   for   arrival   of   the   vessel   at   the   port   of



loading   or   discharge   and   cast   an   obligation   upon



the   Master   or   his   Agent   to   give   the   Charterer   or



his   Agent   Notice   of   Readiness   in   relation   to



discharge of the cargo.  Since the decision in this



case   will   to   a   large   extent   depend   on   the



interpretation   of   Clause   6,   the   same   is   extracted



hereinbelow :





     "Clause 6 Notice of Readiness :



     Upon   arrival   at   customary   anchorage   at

     each   port   of   loading   or   discharge,   the

     Master   or   his   Agent   shall   give   the


                                 43





       charterer   or   his   Agent   notice   by   letter,

       telegraph,   wireless   or   telephone   that   the

       vessel is ready to load or discharge cargo

       berth   or   no   berth   and   lay   time   as

       hereinafter   provided   shall   commence   upon

       the   expiration   of   six   (6)   hours   after

       receipt   of   such   notice   or   upon   the   vessel

       arrival   in   berth   -   finished   mooring   when

       at   a   sea   loading   or   discharging   terminal

       and   all   fast   when   loading   or   discharging

       alongside a wharf which ever first occurs.

       However,   where   delay   is   caused   to   vessel

       getting   -   berth   after   giving   notice   of

       readiness   for   any   reason   over   which

       charterer has no control, such delay shall

       not count as used lay time."  



45.    As   will   be   evident   from   the   above   clause,   the



Master   of   the   vessel   was   under   an   obligation   to



give   Notice   of   Readiness   on   arrival   at   the



customary   anchorage   at   the   port   of   discharge.     It



is a possibility that since no specific port in the



Indian   coastline   had   been   mentioned   in   the   Charter



Party,   the   Master   of   the   vessel   or   his   Agent   was



required   to   give   Notice   of   Readiness   upon   the



vessel arriving at customary anchorage.  It is only



after   the   vessel   sailed   from   Ras   Sukheir   that   the



receiver,  IOC,  nominated  Vadinar  to  be  the  port  of


                              44





discharge with the specific destination point being



the SBM within the port.   In giving such Notice of



Readiness   upon   arrival   at   the   customary   anchorage



at  Vadinar,  the  Master  of  the  Vessel  duly  complied



with   the   conditions   of   Clause   6   of   the   Charter



Party   and   in   terms   of   the   aforesaid   clause



irrespective   of   whether   a   berth   was   available   or



not,   lay   time   commenced   upon   the   expiry   of   six



hours   after   receipt   of   such   notice.     That   the



vessel   could   not   be   moored   at   the   SBM   is   a



different   facet   of   the   story.     The   Charterers   had



full   knowledge   of   the   equipment   on   board   m.t.



Prestige   through   the   questionnaire   provided   by   the



Respondents/Owners   to   the   Petitioners/Charterers.



It   could   not   be   denied   that   despite   having   such



knowledge   the   IOC   nominated   the   SBM   as   the



destination   point   for   discharge   of   the   cargo.



Obviously, the parties to the Charter Party had not



made   any   attempt   to   verify   as   to   whether   the


                                45





equipment   on   board   the   vessel   was   sufficient   for



her to be safely moored at the SBM and to discharge



her   cargo   safely.     As   it   turned   out   later   on,   the



vessel   was   not   so   equipped   and   could   not,



therefore,   be   moored   at   the   SBM   and   had   to   be



requested   to   move   away   therefrom.     Although,   an



attempt   has   been   made   on   behalf   of   the   Charterers



to   convince   us   that   it   was   really   the   duty   and



responsibility  of  the  Owner  of  the  vessel  to  check



whether   the   vessel   could   be   safely   moored   at   the



SBM in Vadinar, we are unable to convince ourselves



that   such   a   duty   was   that   of   the   Owners   of   the



vessel and not the Charterers which had a choice of



all the ports in India for discharge of the cargo,



as   was   subsequently   done   in   Mumbai   port.     As   has



been held by the Arbitral Tribunal and subsequently



affirmed   both   by   the   learned   Single   Judge   and   the



Division   Bench   of   the   Bombay   High   Court,   the



responsibility  for  the  failure  of  the  ship  to  moor


                                46





at   the   SBM   in   Vadinar   must   lie   squarely   with   the



Charterers and the receiver as it was they who had



nominated   the   SBM   for   the   safe   mooring   of   the



vessel.     The   lay   time   must,   therefore,   be   held   to



have recommenced after the expiry of six hours from



the   tendering   of   the   Notice   of   Readiness   upon   the



vessel's   arrival   at   the   customary   anchorage   at



Vadinar   on   15.12.1999   in   keeping   with   the



provisions of Clause 6 of the Charter Party. It was



not the case of the Charterers that the failure of



the   vessel   to   discharge   its   cargo   at   the   SBM   at



Vadinar   was   for   reasons   beyond   their   control.     It



cannot   also   be   said   that   the   owners   of   the   vessel



contributed   in   any   way   to   such   failure   since   the



equipment   on   board   the   vessel   had   been   made   known



to   the   Charterers   when   the   Charter   Party   was



signed.





46.    In   the   face   of   the   specific   conditions



indicated   in   Clause   6   of   the   Charter   Party,   the


                               47





theoretical   and/or   academic   exercise   of   what



constitutes   an   "arrived   ship"   loses   much   of   its



relevance.   The   terms   of   the   Charter   Party   were



agreed   upon   by   the   parties   with   their   eyes   wide



open.     What   is   also   significant   and   cuts   at   the



root   of   the   submissions   advanced   on   behalf   of   the



Charterers is that even after the vessel was denied



mooring   at   the   SBM   for   safety   reasons   on



21.12.1999,   no   steps   were   taken   on   behalf   of   the



Petitioners to either arrange for an alternate safe



berthing   in   Vadinar   or   to   give   instructions   as   to



where the cargo was to be discharged.   In fact, on



behalf of the Respondents/Owners a legal notice was



addressed to the Petitioners on 24.12.1999 pointing



out   that   the   vessel   continued   to   await   discharge



incurring   demurrage.     It   is   only   thereafter   that



Addendum No.I to the Charter Party was drawn up and



signed   on   28.12.1999   by   the   Owners   and   the



Charterers,   whereby   m.t.   Prestige   was   diverted   by


                                     48





the   Charterers   from   Vadinar   to   a   Lighterage   point



at      Mumbai      port      for      discharge      and      it      was



specifically   agreed   that   the   Charterers   would   bear



all   the   costs   of   discharge,   including   freight



charges   and   the   expenses   of   the   daughter   vessel,



m.t.   Maharaja   Agrasen.     It   was   also   agreed   that



demurrage would be settled as per the terms of the



Charter  Party.    In  our  view,  the  various  decisions



cited   on   behalf   of   the   Petitioners/Charterers   do



not   help   them   in   the   facts   of   this   case.     We   do



not,   therefore,   think   it   necessary   to   consider   all



the   decisions   cited   on   behalf   of   the   respective



parties   and   those   referred   to   hereinbefore   are



sufficient   for   our   purpose.   The   decisions   relied



upon   by   the   parties   lay   down   certain   propositions



of   law   which   are   well-established   and   with   which



there   cannot   be   any   disagreement,   but   for   the



purposes of this case they are basically academic.


                               49





47.    Once   we   have   affirmed   the   finding   that   m.t.



Prestige   was   an   arrived   ship   on   reaching   the



customary   anchorage   at   Vadinar   port   and   once   we



have   also   held   that   it   was   the   Charterers   who



having the choice of a safe port, had selected the



SBM   at   Vadinar   as   the   discharge   point,   the



suggestion made on behalf of the Charterers that it



was  the  responsibility  of  the  Owners  of  the  vessel



to check whether the ship could be safely moored at



the   SBM,   is   untenable.     The   responsibility   of   the



Owners  of  the  vessel  ended  with  the  declaration  of



the   equipment   available   on   board   for   mooring   and



berthing for the purpose of discharge of its cargo.



Consequently,   all   the   other   ancillary   issues   which



arise   have   to   be   answered   in   favour   of   the



Respondents herein.  As indicated hereinbefore, the



fiasco   at   Vadinar   was   occasioned   by   the   fact   that



no   prior   checking   had   been   done   by   the   Charterers



to   ascertain   as   to   whether   with   the   mooring


                                 50





equipment on board the vessel she would be able to



moor safely at the SBM for discharge of her cargo.



Even   the   subsequent   deviation   of   the   vessel   from



Vadinar to Mumbai was not on account of any laches



on   the   part   of   the   Owners   of   the   vessel   who   were



awaiting   instructions   once   the   vessel   had   been



asked to move away from the SBM.   In fact, it took



a   notice   from   the   Owners   of   the   vessel   and   a   week



for   the   Charterers   to   galvanize   themselves   into



action,   which   ultimately   resulted   in   the   Addendum



No.1 dated 28.12.1999.





48.    Read   with   Clause   6   of   the   Charter   Party,   the



Addendum dated 28.12.1999 makes it abundantly clear



that the Charterers had accepted the responsibility



for   the   failure   of   the   vessel   to   discharge   her



cargo   at   Vadinar   and   had   agreed   to   bear   all   the



expenses   for   the   delay   in   diversion   of   the   vessel



from Vadinar to Mumbai, including the time spent at


                                51





Vadinar   port   and   the   expenses   incurred   towards



pilotage, tugs and other port expenses.





49.    Apart from the above, Clause 4(1) of Part II of



the   Charter   Party   specifically   provides   that   extra



expenses   incurred   on   account   of   any   change   in



loading or discharging ports, has to be paid by the



Charterers, and any time thereby lost to the vessel



shall   count   as   used   lay   time.   We   are   not   inclined



to accept Mr. Gupta's submission that the aforesaid



clause   has   to   be   read   in   the   context   of   Clauses



4(a)   and   4(b)   which   refer   to   ports   other   than



Indian Ports in a different context.





50.    We, therefore, see no reason to interfere with



the   Award   of   the   Arbitral   Tribunal   and   the



decisions, both of the learned Single Judge and the



Division   Bench,   confirming   the   Award   of   the



Arbitral   Tribunal   and,   accordingly,   dismiss   the



Special Leave Petition.   In the facts of the case,


                               52





the   parties   shall   bear   their   own   costs   as   far   as



these proceedings are concerned.            



     





                                          ................................................J.

                                              (ALTAMAS KABIR)





                                          ................................................J.

                                               (A.K. PATNAIK)

NEW DELHI

DATED:JULY 13, 2011