{"id":399633,"date":"2026-10-24T11:00:12","date_gmt":"2026-10-24T05:30:12","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=399633"},"modified":"2026-10-24T11:18:34","modified_gmt":"2026-10-24T05:48:34","slug":"calcutta-high-court-admiralty-consent-decree-charterer-section-45-arbitration","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2026\/10\/24\/calcutta-high-court-admiralty-consent-decree-charterer-section-45-arbitration\/","title":{"rendered":"Consent decree in Admiralty suit binds Charterer; Calcutta HC rejects Section 45 Arbitration plea"},"content":{"rendered":"
\n

Calcutta High Court:<\/span> In a matter concerning an arbitration provision in a separate charter agreement, where a maritime claim was brought against a vessel following damage to cargo during transportation, a Single Judge Bench of Arindam Mukherjee, J.<\/span> allowed the execution application filed by the plaintiff, to the extent that the consent decree dated 9 September 2024 was held binding and executable against DAVA Pte Ltd. (Defendant 2).<\/p>\n

The Court emphasised distinction between actions in rem and contractual actions in personam, the importance of challenging a decree through legally recognised proceedings, and the limits of invoking foreign arbitration during execution proceedings when the Court has declined to treat an existing consent decree as non-binding upon the applicant.<\/p>\n

The Court dismissed the charterer’s Section 45 arbitration application, emphasising the action in rem, the subsisting decree, and the absence of proceedings to set it aside.<\/p>\n

Background<\/p>\n

The dispute originated from the transportation of bleached Hardwood Kraft Pulp from Indonesia to Haldia Port, India. The plaintiff, Emami Paper Mills Limited, required the cargo for its business and entered into an agreement dated 26 June 2024 with Defendant 2, for transporting the consignment. The agreement was described as a fixture note and contained an arbitration clause under Clause 27 which provided for arbitration in London under English law. The clause contemplated amicable resolution of disagreements through arbitration in London.<\/p>\n

The vessel employed for transporting the cargo was M.V. PH Giang Minh, owned by Pham Hai Trading Transport and Import Export Company Limited, Defendant 1. The vessel’s owners had entered into a separate charter party agreement with Defendant 2 on 28 February 2024. This agreement also contained an arbitration provision concerning disputes between the owners and charterers. Cargo claims between the owners and charterers were to be settled in accordance with the Inter-Club New York Produce Exchange Agreement, as amended in 1996.<\/p>\n

The plaintiff found that the cargo was damaged upon its arrival at Haldia Port. Consequently, Emami Paper Mills Limited instituted a suit on 4 August 2024, seeking relief in respect of the maritime claim against the vessel. On the same date, the Court passed an ex parte order for the arrest of the vessel. The proceedings were instituted as an action in rem against the vessel and the parties interested in it. The Defendant 1 got the said vessel released by entering into a settlement with the plaintiff by and under which on payment of ₹6,51,70,000, the plaintiff’s entire claim in the suit stood satisfied. The suit was decreed on consent on 9 September 2024. The Suit was instituted as an action in rem against the vessel M.V. PH Giang Minh and all parties interested in her for cargo damage caused during transit.<\/p>\n

The plaintiff contended that the suit was conclusively settled through mutually agreed terms of settlement dated 29 August 2024, resulting in a consent decree passed on 9 September 2024 under Order 23 Rule 3 Civil Procedure Code (CPC). As the terms of settlement was signed by the Defendant 1 and the plaintiff, it formed the basis of the consent decree, binding on all parties to the suit, was an action in rem. The conversion of the suit in rem into an action in personam necessitates submission to the jurisdiction of the Court by appearing and depositing security for the release of the ship. Since no security was furnished for the release of the ship, the suit remained an action in rem.<\/p>\n

Relying on the terms of settlement, specifically on Clause 1(viii<\/span>) which was also incorporated into the consent decree, the plaintiff argue that it clearly states that the Head Owners, Charterers, Disponent Owners, and any party interested in the vessel are explicitly barred from raising or pursuing any claim, grievance, or cause of action against the plaintiff in any jurisdiction in the world. Thus, the decree not only prevents the head owners but also the charterers, disponent owners and any party interested in the vessel, which includes Defendant 2 from pursuing any claims against the Plaintiff. It maintained that the decree was binding upon Defendant 2 because the original admiralty action remained an action in rem when the decree was passed.<\/p>\n

The plaintiff contended that the consent decree dated 9 September 2024 extinguished the fixture note claims, rendering the arbitration clause unenforceable. The execution court cannot reopen the final decree, and Defendant 2’s Section 45 application constitutes an impermissible collateral challenge. Having participated in settlement-related activities and benefited from the vessel’s release, Defendant 2 barred under principles of estoppel from disputing the settlement or pursuing parallel arbitration.<\/p>\n

Defendant 2 on the other hand, filed an application under Section 45, Arbitration and Conciliation Act, 1996, which mandates that the Court shall refer parties to arbitration unless the agreement is null, void, inoperative, or incapable of being performed. He contended that a valid, binding arbitration agreement exists under Clause 22 and Clause 27 of the Fixture Note dated 26 June 2024, providing for English law and LMAA London Arbitration. It was submitted that all the ingredients of Section 45 have been satisfied in the instant case and the dispute ought to be referred to arbitration. The defendant further submitted that it had neither signed nor participated in the settlement negotiations. It also disputed the allegation that it had received any benefit from the vessel’s release.<\/p>\n

The defendant relied on the doctrine of separability of arbitration agreements and argued that the arbitration clause survived the discharge of the underlying contract. The effect of the consent decree and the applicability of the settlement to a non-signatory should be determined by the arbitral tribunal rather than by the Court at the referral stage.<\/p>\n

The plaintiff stated that the decree had conclusively settled the dispute and that the underlying cause of action had merged into the judicial decree. The charterer was a party interested in the vessel and fell within the scope of Clause 1(viii<\/span>). The plaintiff also alleged that the defendant had knowledge of the arrest, participated in cargo surveys and facilitated arrangements concerning the damaged cargo. Hence, the defendant could not accept the commercial benefit of the vessel’s release and subsequently deny the binding effect of the decree.<\/p>\n

Decision and Analysis<\/p>\n

On a perusal of records, the Court observed that the suit was filed for determination of a maritime claim said to have arisen under the provisions of Section 5(1)(f<\/span>), Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 against the vessel. The determination of claim against the vessel was an action in rem. Whereas any action emanating from the aforesaid three agreements were action in personam.<\/p>\n

Referring to Booz Allen & Hamilton Inc.<\/span> v. SBI Home Finance Ltd.<\/span>, (2011) 5 SCC 532<\/a>, the Court observed that an action in rem is not arbitrable as it arises out of a maritime claim against the vessel and not against the owners or parties interested in the vessel. Any claim between the plaintiff and Defendant 1 or Defendant 2 arising out of the agreement or under the common law remedy are claim in personam and are arbitrable, if there exist an arbitration agreement between the parties.<\/p>\n

The Court then considered the circumstances in which an action in rem becomes an action in personam. Relying on OSV Crest Mercury<\/span> v. Vision Projects Technologies (P) Ltd.<\/span>, 2024 SCC OnLine Bom 1271<\/a>, a decision of the Bombay High Court, which identified three requirements: the defendant must enter an appearance, submit to the jurisdiction of the Court, and furnish security for the release of the vessel. Unless these conditions are fulfilled, the action in rem does not become an action in personam on that basis. Applying these principles, the Court held that Defendant 2 had not entered an appearance, submitted to the Court’s jurisdiction or furnished security for the vessel’s release. The vessel’s owners had settled the claim by paying the agreed amount, resulting in the consent decree. The Court therefore concluded that the admiralty action remained an action in rem against the vessel when the decree was passed.<\/p>\n

The Court emphasised on a well-settled proposition that the executing Court cannot go beyond the decree save an except under Section 47 CPC and as such there was no necessity of going into the factual dispute regarding the notice, knowledge and involvement of Defendant 2 at that stage. The fact remained that the three conditions required to convert an action in rem to an action in personam had not been fulfilled by the Defendant 2 and as such the action as in the suit remained an action in rem against Defendant 2, till the consent decree was passed. The action in the suit could have become an action in personam when Defendant 1 entered appearance in the suit and submitting to the jurisdiction of this Court but the said Defendant 1 did not put in the security for release of the vessel to convert the suit in an action in personam from one in rem. It paid the money as part of the settlement pursuant to which the consent decree was passed.<\/p>\n

The Court held that Defendant 2, in its capacity as charterer, fell within the category of persons interested in the vessel. Relying on Chrisomar Corpn.<\/span> v. MJR Steels (P) Ltd.<\/span>, (2018) 16 SCC 117<\/a>, the Court recognised the relevance of the charterer’s interest in the vessel. It additionally considered the contractual arrangement under which the vessel’s master was required to act on the charterer’s instructions. The Court reasoned that the arrest order served upon the master ought to have brought the arrest to the charterer’s attention, although the defendant disputed its participation in the settlement.<\/p>\n

The Court acknowledged the general proposition that a person who did not sign the terms of settlement and was absent from the settlement proceedings would not ordinarily be bound by a compromise merely because it had been executed by other parties. It held that the decree could not be treated as non-binding upon Defendant 2 in the pending execution proceedings. The Court on considering the Judgment from Inderjit Singh Grewal<\/span> v. State of Punjab<\/span>, (2011) 12 SCC 588<\/a>, emphasised that an executing court cannot ordinarily go behind a decree and that a decree alleged to be void or otherwise legally defective must be challenged before a competent court through appropriate proceedings. The defendant had not sought to set aside the decree under Order 9 Rule 13 of the CPC, or otherwise obtained an order invalidating it.<\/p>\n

The Court further observed that the plaintiff’s claim had crystallised through the consent decree and that the settlement constituted accord and satisfaction in its favour. Even if Defendant 2’s alleged contractual disputes with the plaintiff were assumed to survive, the plaintiff could not recover an amount exceeding what it had already received under the decree. In considering Section 45, Arbitration and Conciliation Act, 1996, the Court held that referring the dispute to arbitration in the circumstances would require it first to treat the existing decree as non-binding upon Defendant 2. The Court found no sufficient justification to do so at the execution stage, particularly because the competence of the Court that passed the decree and the legality of the settlement were not under challenge.<\/p>\n

Accordingly, the Court dismissed Defendant 2 application under Section 45, Arbitration and Conciliation Act, 1996. The execution application filed by the plaintiff, was allowed to the extent that the consent decree dated 9 September 2024 was held binding and executable against Defendant 2. The Court also refused the defendant’s subsequent prayer for a stay of the order dismissing its arbitration application.<\/p>\n

[Emami Paper Mills Ltd. v. Owners and Parties Interested in the Vessel M. V. Ph Giang Minh, 2026 SCC OnLine Cal 15774, decided on 21-9-2026<\/span>]<\/p>\n\n

Advocates who appeared in this case :<\/p>\n

For the Plaintiff:<\/span> Ratnanko Banerji, Senior Advocate, Pranit Bag, Sristi Barman Roy, Rohit Mukherji, Satyaki Mitra, Amani Kayan, Ratul Deb Banerjee, Advocates <\/p>\n

For the Defendant:<\/span> S.N. Mookherjee, Senior Advocate, Subhrojyoti Mookherjee, Souvik Kundu, Viraj Gupta, Advocates<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

In considering Section 45 of the Arbitration and Conciliation Act, 1996, the Calcutta High Court held that referring the dispute to arbitration would require it to treat the existing consent decree as non-binding on the charterer, which could not be done at the execution stage in the absence of proceedings to set aside the decree.<\/p>\n","protected":false},"author":67544,"featured_media":399671,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,10],"tags":[29568,53245,43146,43145,10111,10131,117963,2513,117965,117967,48524,45316,32949,30650,117966,2554,58368,42338,117961,45815,80891,117964,25234,117962,31697],"class_list":["post-399633","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-highcourts","tag-29568","tag-accord-and-satisfaction","tag-action-in-personam","tag-action-in-rem","tag-arbitration-agreement","tag-arbitration-and-conciliation-act","tag-binding-effect-of-decree","tag-Calcutta_High_Court","tag-charter-party-agreement","tag-collateral-challenge","tag-compromise-decree","tag-consent-decree","tag-executing-court","tag-execution-proceedings","tag-fixture-note","tag-Jurisdiction","tag-justice-arindam-mukherjee","tag-maritime-law","tag-non-signatory-charterer","tag-order-ix-rule-13-cpc","tag-order-xxiii-rule-3-cpc","tag-parties-interested-in-vessel","tag-section-45","tag-separability-doctrine","tag-settlement-agreement"],"yoast_head":"\nCalcutta HCon Admiralty consent decree and foreign arbitration | SCC Times<\/title>\n<meta name=\"description\" content=\"Calcutta HC held that an admiralty consent decree was binding and executable against charterer, rejected its plea for arbitration under Section 45 Arbitration Act\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2026\/10\/24\/calcutta-high-court-admiralty-consent-decree-charterer-section-45-arbitration\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Consent decree in Admiralty suit binds Charterer; 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