The appellant is involved in the business of exporting minerals. The appellant entered into an agreement with a Taiwanese mining company to export feldspar. The appellant subsequently entered into an agreement with Taiyo Senpaku Kaisha Ltd, allegedly the disponent owner of the vessel Won Fu, to export the cargo of feldspar from Tuticorin harbour to Taiwan. This agreement is said to be evidenced in a fixture note dated 20 October 1995. The appellant contended that the contract was complete on the signing of the fixture note and the appellant suffered loss due to a deliberate act of default to ship the cargo on the vessel.

The trial Judge dismissed the claim on the basis that it did not fall within the admiralty jurisdiction and that the fixture note was between the plaintiff and Taiyo Senpaku Kaisha Ltd. The Judge held that no contract had been entered into between the appellant and the respondent, the owner of the vessel Won Fu. The appellant appealed to the Division Bench which upheld the trial Judge's ruling. The appellant sought and was granted leave to appeal to the Supreme Court.

Held: Appeal dismissed, without prejudice to the appellant's ability to initiate a further action in personam.

The Supreme Court saw the principal issue as being whether the fixture note gave rise to a maritime lien, or alternatively a right in rem thereby enabling the plaintiff to initiate proceedings under the admiralty jurisdiction of the High Court at Madras.

After reviewing the concept of maritime liens, the Court noted that the International Convention for Unification of Certain Rules relating to Maritime Liens and Mortgages at Brussels in 1967 (the MLM Convention 1967) defined maritime liens as follows:

a. wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel;

b. port, canal and other waterways and pilotage dues;

c. claims against the owner in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel;

d. claims against the owner based on tort and not capable of being based on contract, in respect of loss of or damage to property occurring, whether on land or on water in direct connection with the operation of the vessel;

e. claims for salvage, wreck removal and contribution in general average.

The Admiralty Court Act 1861 (UK), read with the International Convention for Unification of Certain Rules relating to Maritime Liens and Mortgages, Brussels, 1926 (the MLM Convention 1926), read with the Arrest Convention 1952 and the MLM Convention 1967 clearly indicate that a claim arising out of an agreement relating to the use and/or hire of the ship, although a maritime claim, will not be liable to be classified as a maritime lien.

On the facts, apart from the fixture note, no other documentary support is available as to whether ownership arose through a charter by demise and possession and control of the vessel has already been given to the disponent owner. The facts disclose that the disponent owner was an intending charterer of the vessel from the owner and it is on the expectation of such a contract that the fixture note was issued. There was, as a matter of fact, no charterparty or agreement with the charterer and some eventuality in future is stated to be the basis of the cause of action. Even upon assumption of the appellant's case at its highest, no credence can be attached thereto. The disponent owner was not a demise charterer but it is on the happening of such an event in futuro that such a fixture note has been issued. There is insufficient evidence available as regards the action in rem making the vessel liable in the contract said to have been entered into, as recorded in the fixture note.