Owners and Parties Interested in M.V. Nereus Progress v. Om Freight Forwarders Ltd.

2026 INSC 1055 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. ________ OF 2026 (Arising out of SLP (C) No. 23834 OF 2026)

Owners and Parties Interested in M.V. Nereus Progress … Appellant

Versus

Om Freight Forwarders Ltd. … Respondent

JUDGMENT

SURYA KANT, CJI

Leave granted.

2. The instant appeal preferred by the registered owner of the vessel

M.V. Nereus Progress is directed against the Judgment dated

30.04.2026 (Impugned Judgment) passed by a Division Bench of

the High Court of Madras (High Court) whereby the Order dated

06.02.2026 passed by a learned Single Judge of the High Court (SJ

Order) was affirmed and the arrest of the Appellant’s vessel, M.V. Signature Not Verified

Digitally signed by SATISH KUMAR YADAV Date: 2026.09.25 Nereus Progress (the Vessel) has been sustained. 12:05:38 IST Reason:

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3. The fulcrum of the dispute herein lies in respect of the continued

arrest of the Vessel, effected at the instance of the Respondent, in

exercise of the admiralty jurisdiction of the High Court. Before

adverting to the respective contentions of the parties, we deem it

appropriate to briefly narrate the factual background leading to the

present appeal.

A. FACTUAL MATRIX

4. The instant controversy arises out of conflicting claims pertaining

to the Vessel between the Appellant — the registered owner of the

Vessel, and the Respondent — a creditor of Nereides Marine Services

(Nereides). Nereides was the erstwhile demise charterer of the

Vessel under a charterparty with the Appellant.

4.1 By way of a Bareboat Charterparty dated 03.10.2024 (BBC),

executed on the BIMCO BARECON 2017 Form, the Appellant let

out the Vessel on demise charter1 to Nereides, a UAE-based

shipping operator. Contemporaneously, and independent of the

aforesaid transaction, the Respondent, under a separate Bareboat

Charterparty dated 24.07.2024 (Respondent’s BBC), had also let

out its own vessel, M.V. Bharadwaj, to Nereides.

1 A Demise Charter is a legal agreement where a shipowner leases an empty vessel to a charterer, who assumes full possession, operational control, and financial responsibility for the ship during the period of the agreement.

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4.2 It appears that Nereides repeatedly failed to discharge its payment

obligations towards the Appellant under the BBC. This led to the

issuance of a series of demand notices by the Appellant between

22.09.2025 and 27.10.2025, calling upon Nereides to clear the

outstanding dues.

4.3 The defaults having continued, the Appellant issued the Anti-

Technicality Notice dated 06.11.2025, granting Nereides a three-

day grace period to regularise the default. Upon expiry of the said

period, the Appellant issued a Termination Notice dated

13.11.2025 (Termination Notice), invoking Clause 31 of the BBC

and calling upon Nereides to disclose the whereabouts of the Vessel

and to place it at the Appellant’s disposal. This was followed by a

Repossession Notice dated 19.11.2025, issued under Clause 32 of

the BBC, whereby the Appellant asserted its right to repossess the

Vessel upon its berthing at Colombo, Sri Lanka.

4.4 In the subsequent communications exchanged between the

Appellant and Nereides between 20.11.2025 to 28.11.2025, the

Appellant was informed that the Vessel was in the vicinity of the

Indian coast and was experiencing a technical issue with its engine.

Thereafter, on 02.12.2025, Nereides informed the Appellant that

the Vessel had reached Tuticorin, and sought instructions

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regarding redelivery at the V.O. Chidambaranar Port, Tuticorin

(Tuticorin Port), within the next three to four days.

4.5 Parallelly, it appears that Nereides had also defaulted in the

payment of hire due to the Respondent under their Bareboat

Charterparty dated 24.07.2024. This led the Respondent to

institute Commercial Suit No. 314/2025 before the High Court,

invoking Section 5(1)(b) read with Section 5(2) of the Admiralty

(Jurisdiction and Settlement of Maritime Claims) Act, 2017

(Admiralty Act). The Respondent, whose maritime claim had

arisen from Nereides’ default under a separate charter of M.V.

Bharadwaj, sought arrest of the Vessel on the footing that Nereides

continued to be its demise charterer as well, rendering the Vessel

liable in rem, by way of sister-ship arrest under Section 5(2) of the

Admiralty Act.

4.6 Before the Appellant could complete the taking of physical

possession of the Vessel at Tuticorin, in terms of its communication

dated 02.12.2025 with Nereides, the Respondent, on 04.12.2025,

obtained an ex-parte interim order of arrest of the Vessel, lying at

Tuticorin Port, on the assertion that Nereides continued to be the

demise charterer of the Vessel.

4.7 Upon learning of the arrest, the Appellant preferred an application

before the High Court seeking recall of the Order dated 04.12.2025.

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After hearing the parties, the learned Single Judge, by way of the

SJ Order, dismissed the application, sustained the arrest and held

that the Respondent had made out a prima facie case for the

continuation of the arrest. In doing so, reliance was placed on the

decisions of the Singapore High Court in The Chem Orchid2 and

the Sri Lankan Court of Appeal in Navi-Bunkering Corp v. M.V.

Evangeli3 (Navi-Bunkering Corp), holding that a demise

charterer’s status under the bareboat charter does not stand

extinguished merely upon issuance of a termination or

repossession notice, and continues until actual physical

repossession of the vessel is handed over to the owner.

4.8 The aggrieved Appellant preferred an appeal before the Division

Bench of the High Court. Vide the Impugned Judgment, the

Division Bench dismissed the appeal and refused to vacate the

arrest, reiterating the findings in the SJ Order that ordinarily a

demise charter does not cease to operate immediately upon its

contractual termination, and as such physical re-delivery is

generally required to bring that status to an end.

4.9 It is in these circumstances that the Appellant has approached this

Court by way of the instant appeal.

2 [2015] SGHC 50 3 CA Case No. CA/REM/02/2018

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B. CONTENTIONS ON BEHALF OF THE APPELLANT

5. Shri Atmaram Nadkarni and Shri Shikhil Suri, learned Senior

Counsel, appearing on behalf of the Appellant, submitted that the

Impugned Judgment proceeds on a fundamentally erroneous

premise that the Respondent has an enforceable maritime claim

against the Vessel in view of the fact that Nereides continued to be

the demise charterer of the Vessel. The arrest of the Vessel,

sustained on such a misguided foundation, is consequently

unsustainable in law.

6. The following submissions were advanced on behalf of the

Appellant to assail the Impugned Judgment:

a. The Appellant was neither impleaded as a party to the suit nor

issued any notice or afforded an opportunity of hearing before

the learned Single Judge passed the order for arrest of the

Vessel.

b. The Respondent does not possess any maritime claim, either

against the Vessel or against the Appellant. The arrest was

founded on the misconceived notion that Nereides continued

to be the demise charterer of the Vessel, and that the

Respondent consequently held a maritime claim enforceable

against the Vessel.

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c. Section 5(1)(b) of the Admiralty Act imposes a twin requirement

for a valid arrest: (i) the demise charterer must be liable for the

claim; and (ii) it must continue to be the demise charterer of

the vessel when the arrest is effected. In the instant case, the

second limb stood unfulfilled, as the demise charterparty

between the Appellant and Nereides had already been

terminated before the arrest was effected on 04.12.2025.

d. The BBC between the Appellant and Nereides, executed on the

BIMCO BARECON 2017 form, under Clause 31 expressly

entitled the Appellant to terminate the charter upon default in

payment of hire. Clause 32 further provided that after such

termination and pending physical repossession, the charterer

would hold the Vessel only as a gratuitous bailee for the owner,

and not as a demise charterer.

e. The Appellant had invoked Clause 31 as early as 13.11.2025,

while contemporaneously following up with Nereides regarding

the Vessel’s whereabouts. This was followed by the issuance of

a repossession notice dated 19.11.2025, wherein the Appellant

sought repossession of the Vessel upon its berthing at

Colombo. The Vessel, however, did not arrive at Colombo;

instead, the Appellant was informed of the Vessel’s arrival at

Tuticorin Port on 02.12.2025. Thereafter, within less than 48

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hours thereof, i.e. on 04.12.2025, the Respondent obtained the

ex-parte order of arrest even before the Appellant could

complete the process of physical repossession already set in

motion.

f. The High Court failed to consider that at no stage did the

Appellant permit Nereides to ply the Vessel commercially after

the termination, and the Appellant acted with due promptitude

upon the default having occurred.

g. The judgment of the Federal Court of Australia in

Programmed Total Marine Services Pty Ltd. v. The Ships

Hako Fortress, Hako Endeavour, Hako Excel and Hako

Esteem4 (The Hako Fortress), squarely applies to the facts at

hand, wherein it was held that a termination clause of this

nature is capable of operating of its own force, independent of

the owner’s physical repossession of the vessel. Reliance was

also placed on the judgment of the Court of First Instance,

Hong Kong in Gulf Marine and Industrial Supplies Inc v.

Demise Charterers of the Ship or Vessel Mv ‘Trident

Dawn’5 (Mv ‘Trident Dawn’), wherein the Court categorically

4 [2013] FCAFC 21 5 [1992] HKEC 460

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noted that the recovery of possession from the charterer is not

crucial to the termination of the charterparty.

h. The High Court, in the Impugned Judgment, neither

considered nor distinguished the aforesaid judgment, nor

furnished any independent reasoning in support of the

contrary view it adopted. A substantial body of case law from

various common law jurisdictions, supporting the Appellant’s

position that a termination clause may operate independently

of physical repossession, was placed before the High Court,

which it failed to deal with altogether.

i. In any event, the decisions relied upon by the High Court,

namely The Chem Orchid (Supra) and Navi-Bunkering Corp

(Supra), arose on materially different facts and were, therefore,

not applicable to the dispute at hand.

j. The continued arrest of the Vessel, being unsustainable in law

for the reasons aforestated, is causing grave and irreparable

loss to the Appellant, who is being kept out of the use and

disposal of its own property.

C. CONTENTIONS ON BEHALF OF THE RESPONDENT

7. Per contra, Shri Ashwin Shanker, learned counsel appearing on

behalf of the Respondent, opposed the Appellant’s submissions and

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contended that the Impugned Judgment does not warrant any

interference.

8. Shri Shanker canvassed the following submissions in support of

the Impugned Judgment:

a. At the outset, the Appellant is not a necessary or proper party

to the proceedings before the High Court. The right to arrest a

vessel under the Admiralty Act is a statutory right in rem, and

in enforcing that right, the Respondent was not obligated to

implead the owner or the bareboat charterer of the vessel as a

party to the suit. The arresting party’s claim is against the

vessel, and it is not concerned with the arrangement inter se

between the owner and the charterer.

b. The BBC between the Appellant and Nereides was never

terminated. Nereides continued, at all material times, to

exercise firm control over the Vessel and to employ it

commercially. Hence, the conduct of the parties is wholly

inconsistent with the Appellant’s claim of termination and

repossession.

c. On the merits, the Respondent has made out a prima facie and

reasonably arguable case for the arrest of the Vessel. Under

Section 5(1)(b) of the Admiralty Act, an order of arrest may be

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made where the Court has reasons to believe that the demise

charterer is liable for the claim when the maritime claim arose

and remains either the demise charterer or the owner when the

arrest is effected.

d. In the present case, the learned Single Judge was called upon

only to determine, prima facie, whether Nereides was the

demise charterer, or whether the Appellant had resumed the

status of owner in possession, at the time of the arrest. Upon

appreciating the documents, correspondence and conduct of

the parties, the High Court correctly rejected the Appellant’s

contention that Nereides was holding the Vessel merely in the

capacity of a gratuitous bailee.

e. In any event, whether Nereides held the Vessel as a gratuitous

bailee, as opposed to a demise charterer, at the relevant time

is a mixed question of fact and is subject to trial. Such issues

ought not to be resolved in summary proceedings for recall of

the arrest order.

f. The High Court correctly held that physical re-delivery and

repossession are essential to the termination of a bareboat

charterparty, and rightly placed reliance on The Chem Orchid

(Supra) and Navi-Bunkering Corp (Supra) for that

proposition.

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g. Even assuming, without admitting, that physical repossession

is not a precondition for termination, the burden lay upon the

Appellant to establish both that the Bareboat Charter stood

terminated and that Nereides was holding the Vessel only as a

gratuitous bailee. The Appellant has failed to discharge this

burden on either count.

D. ISSUES FOR CONSIDERATION

9. Having regard to the rival submissions, we find that the following

principal issues arise for our consideration:

(a) Whether the termination of the BBC by the Appellant vide the

Termination Notice dated 13.11.2025 was proper and valid?

(b) If so, whether Nereides continued to be the demise charterer of

the Vessel as on the date of the arrest, i.e., 04.12.2025, sans

physical repossession of the Vessel by the Appellant?

E. ANALYSIS

E.1. Whether the termination of the BBC by the Appellant vide the

Termination Notice dated 13.11.2025 was proper and valid?

10. It was contended on behalf of the Appellant that Nereides was in

continuing default of payment of hire under the BBC. Repeated

demand notices were issued calling upon Nereides to clear the

outstanding dues, including Notices dated 22.09.2025, 24.09.2025

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and 27.10.2025, but no payment was made pursuant to any of

them.

11. Having exhausted the remedial measures, the Appellant issued the

Anti-Technicality Notice dated 06.11.2025, granting Nereides a

further grace period of three (3) banking days to regularise the

default. It was only upon expiry of the said grace period that the

Appellant issued the Termination Notice on 13.11.2025 invoking

Clause 31(a)(i) of the BBC. Thus, according to the Appellant, the

termination was preceded by due compliance with every

contractual pre-condition and was, in the circumstances, entirely

proper and valid.

12. Contrarily, the Respondent, although not disputing the existence of

a contractual right of the Appellant to terminate its BBC with

Nereides, submitted that the Termination Notice itself could not be

treated as a clean and final termination. The Respondent relied on

the conduct of the parties to contend that Nereides continued to

exercise firm control over the Vessel and to use it commercially,

which is wholly inconsistent with the Appellant’s claim of

termination and repossession.

13. Before we proceed to analyse the rival contentions urged on this

issue, it would be apposite to briefly note the nature of the

contractual instrument under which the Vessel came to be

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chartered. The BBC dated 03.10.2024 was executed on the BIMCO

BARECON 2017 form, a standard form bareboat charterparty

published by the Baltic and International Maritime Council

(BIMCO). The BIMCO BARECON 2017 form is widely adopted in

the shipping industry for the demise chartering of vessels, which

incorporates standardised clauses governing hire, default,

termination and repossession, besides such special provisions as

the parties may append thereto by way of rider clauses.

14. It is on the strength of this contractual framework that the

Appellant terminated the charter vide the Termination Notice.

Clause 31(a) of the BBC, insofar as relevant, reads as under:

“31. Termination (a) Charterers’ Default The Owners shall be entitled to terminate this Charter Party by written notice to the Charterers under the following circumstances and to claim damages including, but not limited to, for the loss of the remainder of the Charter Party: (i) Non-payment of hire (see Clause 15(Hire)) …” [Emphasis Supplied]

15. We have also perused the earlier correspondence exchanged

between the Appellant and Nereides, which bears out a clear and

continuing default in payment of hire. By its formal demand notices

dated 22.09.2025 and 24.09.2025, the Appellant called upon

Nereides to clear arrears aggregating to USD 696,500, expressly

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reserving its right to terminate the BBC in the event of continued

default. Despite a phased repayment proposal made by Nereides on

24.09.2025, no actual payment was forthcoming, prompting the

Appellant to reiterate its demand on 27.10.2025, and placing

Nereides on express notice of its continuing right to terminate.

16. Upon this persisting default, the Appellant, on 06.11.2025, issued

the Anti-Technicality Notice granting Nereides a grace period of

three (3) banking days to rectify the breach of the BBC and to

regularise the payment, failing which the Appellant would exercise

its right to withdraw the Vessel and terminate the Charterparty.

17. It is not in dispute that no payment was made by Nereides within

the grace period so afforded. Upon the expiry of the said period, the

Appellant issued the Termination Notice expressly invoking Clause

31(a)(i) of the BBC for non-payment of hire, and, in the alternative,

treating Nereides’ conduct as repudiatory of the BBC. The sequence

borne out by the record thus establishes that the Appellant did not

resort to termination abruptly or without notice, but only after

affording Nereides successive opportunities, spanning nearly two

months, to cure the admitted default.

18. Significantly, at no stage in its correspondence did Nereides dispute

the factum of its default in payment of hire, nor did it contend that

the Anti-Technicality Notice or the grace period thereunder was in

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any manner non-compliant with the terms of the BBC. In fact, in

its communication dated 14.11.2025, Nereides candidly

acknowledged the notice of termination, and sought a further

extension of one month, expressly assuring that, failing payment

within the extended period, it would “accept and abide by the

owners’ decision regarding termination” and arrange for an orderly

handover of the Vessel. In our view, this unequivocal

acknowledgement forecloses any serious challenge to the validity of

the termination on facts.

19. At this stage, it would also be pertinent to note that this Court, in

M/s Tomorrowland Limited v. Housing and Urban Development

Corporation Limited & Anr.,6 through one of us (Surya Kant, J.),

has held that it is imperative to maintain the sanctity of the terms

of the agreement entered into between the parties. It is thus a

settled position of law that a commercial document must be

interpreted in a manner that gives full effect to the original

intention of the parties. Courts must be astute to give commercial

efficacy to the terms of the contract as the parties themselves

understood and intended them. Where the language employed by

the parties is clear and their conduct consistent with such

6 2025 INSC 207

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language, the court’s task is to give effect to the bargain struck, not

to rewrite it.

20. Keeping the contractual arrangement between the Appellant and

Nereides in view, the undisputed series of events and the settled

position of law, we find that the termination of the BBC by the

Appellant, vide Notice dated 13.11.2025, was preceded by due

compliance with the contractual pre-conditions prescribed under

Clause 31(a) read with the anti-technicality mechanism

incorporated in the BBC. We accordingly hold that the termination

of the BBC was proper and valid.

E.2. Whether Nereides continued to be the demise charterer of the

Vessel as on the date of the arrest, i.e., 04.12.2025, sans physical

repossession of the Vessel by the Appellant?

21. Having held that the termination of the BBC by the Appellant was

proper and valid, we now proceed to answer the more substantial

question, namely, whether Nereides continued to be the demise

charterer of the Vessel as on the date of the arrest, i.e. 04.12.2025,

on the ground that physical repossession of the Vessel had not been

taken by the Appellant.

22. It was contended on behalf of the Appellant that the decisions of

the Federal Court of Australia in The Hako Fortress (Supra) and

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the Court of First Instance, Hong Kong in Mv ‘Trident Dawn’

(Supra), squarely apply to the facts at hand wherein the courts

have held that a termination clause of the present nature is capable

of operating on its own force upon service of notice and independent

of the owner’s physical repossession of the vessel. It was also

emphasised that Clause 32 of the BBC itself contemplates that

upon termination of the charter, the charterer holds the vessel only

as a gratuitous bailee and not as a demise charterer.

23. On the other hand, the Respondent contended that the decisions

of the Singapore High Court in The Chem Orchid (Supra) and Sri

Lankan Court of Appeal in Navi-Bunkering Corp (Supra) correctly

lay down that a demise charterer’s status does not stand

extinguished merely upon issuance of a notice of termination, and

that such status continues until physical possession of the vessel

is actually restored to the owner. It was further urged that for all

practical purposes, Nereides continued to have firm control of the

Vessel and, as such, the Impugned Judgment has rightly followed

this line of authority.

24. At the outset, we may note that the precise question, i.e., whether

physical repossession of a vessel is a prerequisite for the effective

termination of a demise charter, or whether a notice of termination

validly issued under the charterparty is sufficient, does not appear

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to have been authoritatively settled by an Indian court. In aid of

their respective persuasive submissions, both sides have drawn

upon the jurisprudence of foreign courts.

25. The Singapore High Court in The Chem Orchid (Supra) and the

Sri Lankan Court of Appeal in Navi-Bunkering Corp (Supra) have

taken the view that a demise charterer’s status under a bareboat

charter is not extinguished by the mere issuance of a notice of

termination or of repossession, and that such status subsists until

actual physical possession of the vessel is handed over to the

owner. According to this line of authority, the demise charterer

continues to bear the liabilities attached to that status for so long

as it remains in physical control of the vessel, notwithstanding any

notice purporting to terminate the charter.

26. On the other hand, the Federal Court of Australia in The Hako

Fortress case (Supra) and the Court of First Instance, Hong Kong

in Mv ‘Trident Dawn’ (Supra) have taken the contrary view,

holding that a termination clause of this nature is capable of

operating of its own force upon the happening of the stipulated

default and the service of notice. According to this approach,

termination and repossession are treated as distinct incidents

wherein the former is complete upon service of notice, and the latter

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is merely the mechanism by which the owner thereafter recovers

physical control.

27. We find ourselves confronted with two divergent streams of

persuasive authority, neither of which is binding on this Court. We

are of the view that in such a situation, the resolution of the issue

must turn upon the express language of the contract between the

parties and the facts relevant to the instant case, rather than upon

a mechanical importation of the ratio of one foreign precedent over

the other. The need for such an approach is particularly relevant

where the text of the charterparty considered in those decisions has

not been placed before us for comparison, and each was decided in

its own peculiar facts.

28. It would be useful, at this stage, to notice the reasoning of the

Division Bench of the High Court in the Impugned Judgment,

holding that ordinarily, a demise charter does not cease to operate

immediately upon its contractual termination. According to the

High Court, physical re-delivery is generally required to bring that

status to an end and restore possession and control of the vessel to

its owner. To buttress its ratio, the High Court has placed express

reliance on The Chem Orchid (Supra) and Navi-Bunkering Corp

(Supra) and treated the reasoning in those decisions as

determinative of the question.

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29. However, the High Court does not appear to have engaged with the

contrary view taken in The Hako Fortress (Supra) or Mv ‘Trident

Dawn’ (Supra). Nor did the High Court consider the specific

language of Clause 32 of the BBC, which directly addresses the

character in which a charterer holds a vessel after termination but

before the owner’s physical repossession. It may be apposite to note

that in Chem Orchid (Supra) and Navi-Bunkering Corp (Supra),

the foreign Courts were not dealing with a BIMCO BARECON

bareboat contract containing Clause 32, which unequivocally

states that upon the termination of the contract, the owner shall

have the right to repossess the vessel and, pending physical

repossession, the charterers shall hold the vessel as a gratuitous

bailee to the owner and not demise charterer. The High Court failed

to consider this vital distinguishing fact and incorrectly relied on

the aforesaid authorities to return an erroneous finding that the

Respondent continued to be the demise charterer of the Vessel at

the time of the arrest.

E.2.1. Maintainability of the Arrest of the Vessel in terms of the

Admiralty Act

30. We therefore consider it necessary to note the statutory provision

under which the arrest of the Vessel was sought and sustained. It

is relevant to mention that the maritime claim set up by the

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Respondent arose under the Respondent’s BBC with Nereides in

respect of M.V. Bharadwaj and not under any charter of the Vessel.

The Respondent, in seeking arrest of the Vessel, invoked Section

5(1)(b) read with Section 5(2) of the Admiralty Act, which reads as

under:

“5. Arrest of vessel in rem.—(1) The High Court may order arrest of any vessel which is within its jurisdiction for the purpose of providing security against a maritime claim which is the subject of an admiralty proceeding, where the court has reason to believe that:

(a) the person who owned the vessel at the time when the maritime claim arose is liable for the claim and is the owner of the vessel when the arrest is effected; or

(b) the demise charterer of the vessel at the time when the maritime claim arose is liable for the claim and is the demise charterer or the owner of the vessel when the arrest is effected; or

(2) The High Court may also order arrest of any other vessel for the purpose of providing security against a maritime claim, in lieu of the vessel against which a maritime claim has been made under this Act, subject to the provisions of sub- section (1): Provided that no vessel shall be arrested under this sub-section in respect of a maritime claim under clause (a) of sub-section (1) of section 4.” [Emphasis Supplied]

31. It may be seen that Section 5(1)(b) of the Admiralty Act permits

arrest of a vessel where “the demise charterer of the vessel at the

time when the maritime claim arose is liable for such claim and is

the demise charterer or the owner of the vessel when the arrest is

effected.” Section 5(2) extends this power to permit arrest of a sister

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vessel “in lieu of” the vessel against which the maritime claim has

actually arisen, but expressly makes this power subject to the

provisions of sub-section (1). The effect of this qualification is that

the jurisdictional pre-conditions of Section 5(1)(b) must be

independently satisfied qua the vessel sought to be arrested.

32. Applied to the case at hand, for the arrest of the Vessel to sustain

under Section 5(2) read with Section 5(1)(b), the Respondent was

required to demonstrate: (i) that Nereides was the demise charterer

of the Vessel, as distinct from M.V. Bharadwaj, at the time the

Respondent’s maritime claim arose; and (ii) that Nereides

continued to be the demise charterer of the Vessel on 04.12.2025,

the date on which the arrest was effected.

33. As we proceed to examine, the Respondent’s claim falls short on

the second count for two reasons. First, as discussed in the

preceding part, the BBC between the Appellant and Nereides stood

validly terminated with effect from 13.11.2025, which is well before

the date of arrest. Second, independently of the question of

termination, Clause 32 of the BBC expressly provides that once the

Appellant sought repossession, Nereides would hold the Vessel only

as a gratuitous bailee pending physical repossession.

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E.2.2. Requirement of Repossession as a Condition Precedent to the

Termination

34. The Respondent has placed considerable reliance on the

completion of repossession as a precondition to termination of the

charterparty. We therefore deem it necessary to examine whether

the absence of such completion affirms the finding that Nereides

remained as the demise charterer of the vessel. It is in this context

that Clause 32 of the BBC falls for consideration, which reads as

under:

“32. Repossession

In the event of the early termination of this Charter Party in accordance with the applicable provisions of this Charter Party, the Owners shall have the right to repossess the Vessel from the Charterers at its current or next port of call, or at a port or place convenient to them without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel, the Charterers shall hold the Vessel as gratuitous Bailee only to the Owners. The Owners shall arrange for an authorized representative to board the Vessel as soon as reasonably practicable following the termination of this Charter Party. The Vessel shall be deemed to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the Owners’ representative. All arrangements and expenses relating to the settling of wages, disembarkation and repatriation of the Crew shall be the sole responsibility of the Charterers.” [Emphasis Supplied]

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35. The opening words of Clause 32, “in the event of the early

termination of this Charter Party”, make it clear that repossession

of the Vessel is treated by the parties as a consequence flowing from

a termination already accomplished, and not as an event upon

which the termination itself is dependent. Most pertinently, the

Clause expressly stipulates that, pending physical repossession,

the Charterers shall hold the Vessel “as gratuitous bailee only to

the Owners”; a characterisation which is manifestly inconsistent

with the continuance of demise charterer status.

36. This characterisation is not a matter of semantics, but goes to the

very nature of the possession held. A gratuitous bailee holds the

property of another without any right of use, control or commercial

employment of its own, whereas a demise charterer holds the vessel

as though it were the owner for the time being, with full possession,

control and the right to employ it commercially. Given this

fundamental distinction, Nereides could not have simultaneously

held the Vessel both as a ‘demise charterer’ and a ‘gratuitous

bailee’. There can be no doubt that once the charterparty

designates the charterers as ‘gratuitous bailees’ upon termination,

it necessarily displaces any continuing status as ‘demise charterer’.

37. Clauses 31 and 32 of the BBC, read together, unfold a coherent

and internally consistent contractual scheme in which each clause

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performs a distinct function while operating in tandem with the

other. Termination takes effect immediately upon service of notice

under Clause 31, and such termination then alters the legal

character of the charterers’ possession from that of a ‘demise

charterer’ to that of a ‘gratuitous bailee’. Clause 32 thereafter

regulates the practical mechanics by which the Owners recover

physical control of the Vessel from a bailee who, at that stage, has

no independent right of user left to assert.

38. The deeming provision that the Vessel shall be deemed repossessed

upon the boarding of the Owners’ representative merely fixes the

point from which the Owners resume operational responsibility for

the Vessel. It does not determine when the demise charter itself

comes to an end. To hold otherwise would permit a clause designed

to regulate the handover of an already-terminated charter to

instead dictate the survival of that very charter, a result the parties

could not have intended.

39. We also cannot lose sight of the practical consequences of treating

physical repossession as a pre-condition for termination, rather

than its consequence. Physical repossession of a vessel in the

control of a defaulting charterer may be delayed or frustrated for

reasons entirely outside the owner’s control. The vessel’s location

at any given time, genuine or contrived technical difficulties, non-

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cooperation of the charterer’s crew, and the practical exigencies of

berthing at a particular port are all matters that lie beyond the

owner’s hands. If a charterer’s demise status were held to continue

for as long as the charterer chooses or is able to withhold physical

possession, despite a validly issued termination notice, the owner’s

contractual right of termination would be held hostage to the very

default that occasioned its exercise. Such a construction, in our

opinion, cannot have been the intention of the parties to a

commercial instrument such as the underlying BBC.

40. We have further noticed the correspondence placed before us,

which bears out that the Appellant did not remain idle after

termination but pursued repossession of the Vessel with

persistence. The Termination Notice itself called upon Nereides to

disclose the Vessel’s location and place it at the Appellant’s

disposal. This was followed by the Repossession Notice dated

19.11.2025, issued under Clause 32 of BBC, and continuous

follow-up in the intervening period between 20.11.2025 and

02.12.2025, wherein the Appellant repeatedly sought updated

information regarding the Vessel’s location, expected time of arrival

and berthing particulars.

41. It is writ large that the delay in physical repossession was

attributable to Nereides, and not the Appellant. Nereides first cited

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an unresolved technical issue, then a revised time of arrival of the

Vessel to Colombo, and finally the Vessel’s presence at Tuticorin

Port without completion of repairs. In these circumstances, the

Appellant cannot be penalised for a state of affairs brought about

entirely by the party whose own default had forced the termination.

42. It may not be out of place to mention that Nereides’ own

communications further demonstrate that it did not regard itself as

continuing to be the demise charterer of the Vessel in its own right.

Nereides, in its communication dated 14.11.2025, acknowledged

the Termination Notice and undertook to arrange an “orderly

handover” of the Vessel if payment was not made within the

extension it had sought. Later, in its communication dated

03.12.2025, Nereides stated that the BBC “has not concluded by

efflux of time but has been terminated by the Head Owners”, and

asked where repossession was to take place. These statements were

made by Nereides of its own volition, without any compulsion or

coercion on the part of the Appellant. It thus illustrates that, with

effect from 13.11.2025, Nereides held the Vessel only as a

gratuitous bailee awaiting handover, and not as a demise charterer

with any independent right to retain or use the Vessel.

43. In light of these findings and analysis, we hold that a validly issued

notice of termination under Clause 31(a) of the BBC was sufficient

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to bring the demise charter to an end, and that physical

repossession thereafter operated only to complete the practical

transfer of control of the Vessel. The validity of the Termination

Notice, coupled with the demonstrably bona fide conduct of the

Appellant in pursuing repossession, is sufficient to establish that

Nereides had ceased to be the demise charterer of the Vessel well

before the date of arrest, i.e., 04.12.2025. This conclusion is further

reinforced by the absence of any assertion to the contrary by

Nereides itself, which held the Vessel only as a gratuitous bailee

under Clause 32.

44. It follows that the foundational premise on which the arrest of the

Vessel had proceeded at the behest of the Respondent, namely, that

Nereides continued to be the demise charterer of the Vessel on

04.12.2025, stands displaced. As a logical corollary, the order of

arrest resting on a contrary and unsustainable footing cannot be

sustained and is liable to be vacated.

F. CONCLUSION AND DIRECTIONS

45. For the reasons recorded above, we set aside the Impugned

Judgment of the High Court and allow this appeal in the following

terms:

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(i) The termination of the BBC by the Appellant, vide the

Termination Notice dated 13.11.2025, was preceded by due

compliance with the contractual pre-conditions prescribed

under Clause 31(a) read with the Anti-Technicality

mechanism incorporated in the BBC. The termination was

founded upon an admitted and continuing default in payment

of hire on the part of Nereides and is accordingly held to be

valid;

(ii) A validly issued notice of termination under Clause 31(a) of

the BBC was sufficient to bring the demise charter to an end,

and physical repossession thereafter operated only to

complete the practical transfer of control of the Vessel;

(iii) The validity of the Termination Notice, coupled with the

demonstrably bona fide conduct of the Appellant in pursuing

repossession, and the absence of any assertion by Nereides

itself to the contrary, is sufficient to establish that Nereides

had ceased to be the demise charterer of the Vessel well before

the date of arrest, i.e., 04.12.2025, and at that point in time

held the Vessel only as a gratuitous bailee under Clause 32

of the BBC;

(iv) The order of arrest, resting on a contrary and unsustainable

premise, cannot be sustained and is accordingly vacated;

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46. The appeal is allowed in the above terms. Pending interlocutory

applications, if any, shall stand disposed of.

47. Ordered accordingly.

….................................CJI. [SURYA KANT]

……..................................J. [JOYMALYA BAGCHI]

……..................................J. [V. MOHANA]

NEW DELHI DATED: 25.09.2026

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