Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 25 September 2026

Case Overview

  • Parties: Appellant – Owners and Parties Interested in M.V. Nereus Progress (registered owner of the vessel). Respondent – Om Freight Forwarders Ltd.
  • Background: The vessel was chartered on a Bareboat Charterparty (BBC) dated 03‑Oct‑2024 to Nereides Marine Services (UAE‑based shipping operator) on BIMCO BARECON 2017 form. A separate BBC dated 24‑Jul‑2024 let Om Freight Forwarders Ltd.’s vessel M.V. Bharadwaj to Nereides.
  • Default: Nereides repeatedly failed to pay hire under the 03‑Oct‑2024 BBC. Demand notices were issued on 22‑Sep‑2025, 24‑Sep‑2025 and 27‑Oct‑2025. No payment was made; arrears amounted to USD 696,500.
  • Notice Timeline:
  • 06‑Nov‑2025: Anti‑Technicality Notice granting three banking days to cure default.
  • 13‑Nov‑2025: Termination Notice invoking Clause 31(a)(i) of the BBC.
  • 19‑Nov‑2025: Repossession Notice under Clause 32, seeking repossession at Colombo.
  • Vessel Movement: Nereides informed the owner that the vessel was near the Indian coast with engine trouble (20‑Nov‑2025 to 28‑Nov‑2025). On 02‑Dec‑2025 the vessel reached Tuticorin Port and sought redelivery instructions.
  • Respondent’s Claim: Under Commercial Suit No. 314/2025, the Respondent invoked Section 5(1)(b) & 5(2) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, seeking arrest of M.V. Nereus Progress on the basis of sister‑ship arrest, alleging Nereides remained the demise charterer.
  • Arrest Order: On 04‑Dec‑2025 an ex‑parte interim order of arrest was obtained by the Respondent while the vessel was at Tuticorin.
  • High Court Proceedings: The owner applied for recall; the Single Judge dismissed the application, upheld arrest, relying on The Chem Orchid (Singapore) and Navi‑Bunkering Corp (Sri Lanka) that termination does not end demise charter until physical repossession. The Division Bench affirmed this view.

Analysis

  • Validity of Termination: The Court examined the contractual framework (BIMCO BARECON 2017). Clause 31(a) permits termination for non‑payment of hire. The owner complied with all pre‑conditions: demand notices, anti‑technicality grace period, and issuance of Termination Notice on 13‑Nov‑2025. Nereides acknowledged the termination on 14‑Nov‑2025 and sought an extension, confirming the default.
  • Effect of Clause 32: Clause 32 states that after early termination, the charterer holds the vessel as a gratuitous bailee pending physical repossession. The Court held this clause makes the termination effective immediately; the bailee status precludes the charterer from being a demise charterer.
  • Statutory Requirement: Section 5(1)(b) of the Admiralty Act requires that the demise charterer be liable for the claim and remain the demise charterer (or owner) at the time of arrest. Since the BBC was validly terminated on 13‑Nov‑2025 and Clause 32 converted Nereides into a gratuitous bailee, the second limb was not satisfied.
  • Foreign Precedent: The Court noted divergent authorities – The Chem Orchid and Navi‑Bunkering (requiring physical repossession) versus The Hako Fortress (Australia) and Mv ‘Trident Dawn’ (Hong Kong) (termination effective upon notice). It emphasized that the express language of Clause 32 overrides the former line of authority.
  • Practical Considerations: Delay in repossession was attributable to Nereides (technical issues, change of port). The owner had actively pursued repossession through the Repossession Notice and follow‑up communications.

Final Outcome

  • The Supreme Court set aside the High Court’s Impugned Judgment.
  • It held the termination of the BBC on 13‑Nov‑2025 was proper and valid.
  • It concluded that a valid termination notice ends the demise charter; physical repossession is merely a procedural step.
  • Consequently, Nereides ceased to be the demise charterer before the arrest on 04‑Dec‑2025 and was only a gratuitous bailee.
  • The arrest order, based on an unsustainable premise, was vacated.
  • The appeal was allowed; pending interlocutory applications, if any, stand disposed of.

Topics: Vessel Arrest, Bareboat Charter Termination