INDIA Law and Practice Contributed by: Gautam Bhatikar, Deeksha Dev Singh and Isha Patil, Phoenix Legal
may order the arresting party to furnish counter- security, either at its discretion or upon applica - tion by the owners. 4.6 Arresting Bunkers and Freight Bunkers and freight can be arrested, provided they are not arrested independently unless there Section 5(2) of the Admiralty Act permits the arrest of any other vessel for the purpose of pro - viding security against a maritime claim (sub - ject to the test of ownership/privity as set out in Section 5(1) being satisfied), and thus Indian law allows sister-ship arrests. 4.8 Other Ways of Obtaining Attachment Orders is a claim against a vessel. 4.7 Sister-Ship Arrest Other forms of attachment orders are available to the party for securing its claim, such as attach - ment before judgment. However, the ship-owner or defendant must be within the jurisdiction of the court and such a claim is a claim in per - sonam against the ship-owner or the defendant. 4.9 Releasing an Arrested Vessel The party seeking release of a vessel is required to furnish security for the plaintiff’s claim (inclu - sive of interest and costs), by way of either cash deposit or a bank guarantee. Indian courts do not accept letters of undertaking issued by P&I Clubs as security as a right, but may accept them if the plaintiff consents or if the parties can agree to such letter of undertaking as security. 4.10 Procedure for the Judicial Sale of Arrested Ships Under Section 11(3) of the Admiralty Act, the court has the power to pass an order for the sale of an arrested vessel, and the sale proceeds are
deposited in court to the benefit of the maritime claims. The judicial sale of arrested vessels is by way of public auction, and the vessel is sold to the purchaser free of all encumbrances and liens. Proceedings for the sale of a vessel under arrest can be initiated three days after the date of arrest if the owner fails to enter an appearance and/or furnish security for the plaintiff’s claim. The sale order would set out timelines for: • valuation by a court-appointed surveyor, on the basis of which a reserve bid price may be set; • settling the terms of the auction; • the publication of an advertisement in news - papers inviting bids; • the submission of bids in sealed envelopes to court, along with the Earnest Money Deposit (EMD) as set in the terms of auction; and • the date for the opening of bids in court and the awarding of the sale to the highest bid - der, subject to the contents of the valuation report. If the court does not receive a satisfactory bid, it will direct that the vessel be put up for re-auc - tion. Once the vessel is arrested under the Admiralty jurisdiction, it becomes custodia legis. After the court orders the arrest, the vessel is placed under the court’s custody, and any further actions, including its sale, can only be conducted with the order of the court. Consequently, an arrested vessel cannot be sold by private sale without the court’s permission. Under the Admiralty Act, the order of maritime claims determining the inter se priority in an admiralty proceeding shall be:
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