Isabella Mariam

In a recent judgment, the Bombay High Court Single Bench of Justice Somasekhar Sundaresan, issued an interim injunction preventing the transfer of shares in a maritime dispute involving Alphard Maritime Ltd., Samson Maritime Ltd., Underwater Services Company Ltd., and J.M. Baxi Marine Services Private Limited. The order was delivered under Section 9 of the Arbitration and Conciliation Act, 1996, and was pronounced on April 2, 2025, following a hearing reserved on March 20, 2025.

The Court directed that all equity shares of Underwater Services Company Ltd. (Underwater) held by Samson Maritime Ltd. (Samson) remain frozen in their current dematerialized form, effectively blocking any third-party transfer or invocation of pledge by J.M. Baxi Marine Services Private Limited (Baxi) until the arbitral tribunal is constituted and examines the matter.

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The petition was filed by Alphard Maritime Ltd. (Alphard) seeking interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, in connection with disputes arising from a Settlement Agreement dated September 16, 2024. Alphard alleged that Samson and Underwater breached the terms of this agreement, particularly Clause 3.4, which required them not to sell specified assets, including 100% shareholding in Underwater, to any party other than Alphard unless expressly permitted.

Alphard contended that the transfer of shares in Underwater to Baxi violated this clause. The Settlement Agreement followed several failed transactions, including a 2023 Memorandum of Agreement (MOA), a 2024 Memorandum of Understanding (MOU), and an April 2024 agreement related to charter hire dues. These culminated in a crystallized net set-off liability of USD 6,757,214 owed by Samson to Alphard. The Settlement Agreement capped the acquisition consideration at Rs. 170 crores for vessels and Rs. 43.5 crores for the shares in Underwater.

The agreement gave Alphard the option to execute final acquisition documents annexed to the Settlement Agreement, while obligating Samson and Underwater to execute them. Clause 3.4 stated that Samson and Underwater "covenanted not to sell the Asset to any person other than Alphard unless Alphard were to designate another person to acquire the Asset or Alphard were to refuse to execute the agreements contained in the Schedules to the Settlement Agreement."

The governing law and seat of arbitration under the Settlement Agreement was Singapore, administered by the Singapore Chamber of Maritime Arbitration (SCMA). The SCMA Rules do not permit emergency arbitration. On February 20, 2025, Alphard issued a Notice of Arbitration under SCMA Rules. The respondents denied the claims and requested a copy of the executed Settlement Agreement.

Subsequently, on March 5, 2025, Alphard issued a legal notice alleging a breach of Clause 3.4 upon learning that Samson and Underwater were negotiating share transfer with Baxi. Alphard asserted indemnifiable losses arising from the discrepancy between the market value of the vessels and the agreed purchase price.

The respondents opposed the petition on two main grounds: first, that Alphard had opted for indemnity in its Notice of Arbitration and not specific performance; and second, that the shares had already been pledged to Baxi in January 2025. Baxi argued it was a bona fide pledgee for value and submitted a Pledge Master Report dated March 1, 2025, issued by ICICI Bank. However, the pledge was only dematerialized on February 26, 2025, six days after the Notice of Arbitration.

The respondents also alleged delay, lack of readiness and willingness on Alphard's part, and forum shopping. They stated Alphard had taken out motions for vessel arrest in other forums and had not sought to acquire all assets under the Settlement Agreement.

Justice Sundaresan noted that all analysis was "purely on a prima facie basis" to determine whether temporary relief was necessary to safeguard the subject-matter of arbitration.

The Court recorded that the Notice of Arbitration was indicative and not binding for all time: "It is not a pleading – it is an indicative instrument to start the process of appointment of the arbitral tribunal." The Court stated that Alphard had reserved the right to seek additional reliefs upon change of circumstances.

The Court found that Baxi's affidavit asserting a prior pledge in January 2025 was vague: "What sums were advanced and when they were advanced is not even attempted to be spelt out." The Pledge Master Report showed the pledge was created on March 1, 2025. The dematerialization occurred only on February 26, 2025, suggesting actions were triggered by the arbitration notice.

Regarding the amendment to Underwater's Articles of Association, the Court stated: "To expect a counterparty who holds a right corresponding to the commitment not to alienate the Shares, to keep checking the public records of the Registrar of Companies... is an unreasonable and commercially irrational expectation."

The Court further noted the Settlement Agreement constituted a call option in Alphard's favour. It observed: "Effectively, prima facie, the parties have agreed to a 'call option' where one party has a right to require the other party to sell at a price not exceeding a specified price."

On the question of delay, the Court stated: "It is not a delay and that too, of a nature that denudes the entitlement to interlocutory protection. On the contrary, no sooner than the serious risk of the very underlying Shares being taken away coming to Alphard’s knowledge, Alphard has moved with alacrity."

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Regarding rejoinder objections, the Court declined to consider the rejoinder: "I have chosen not to rely on the rejoinder for any facet of my decision. I am therefore not alluding to it at all."

The Court issued the following directions:

1. "All the Shares held by Samson in Underwater, which constitutes 100% of the equity share capital of Underwater shall remain the same state as they now are, in the demat account of Samson without any further change being effected."

2. "No further third party right or interest on the Shares, and no improvement of the third-party interest already created on the Shares in favour of Baxi shall be effected."

3. "Such status quo on the Shares shall be maintained if and until the Arbitral Tribunal arrives at a view (after having had occasion to consider the evidence) that such maintenance of status quo is not necessary for purposes of the potential outcome in or conduct of the arbitral proceedings."

4. "Samson and Underwater shall disclose to Alphard and to the Arbitral Tribunal, in full particular the precise nature of its transactions with Baxi that necessitated the creation of the pledge in favour of Baxi along with all supporting documents."

With the aforesaid directions, this Petition is finally disposed of. Considering the effective and smooth conduct of these proceedings, no case is made out for award of costs to any party although these proceedings entail consideration of a commercial dispute

Advocates Representing the Parties:

For the Petitioner: Mr. Venkatesh Dhond with Mr. Rohaan Cama, Jimisha Dalal, Sanchit Suri, and Aryan Sharma instructed by Singularity Legal.

For Respondents: Mr. Sharan Jagtiani, Senior Advocate with Joran Diwan instructed by Diwan Law Associates, Mr. Janak Dwarkadas, Senior Advocate with Mr. Nitesh Jain, Juhi Mathur, Atul Jain, Sonia Dasgupta, Prerna Shankar, and Abhimanyu Chaturvedi instructed by Trilegal.

Case Title: Alphard Maritime Ltd. vs Samson Maritime Limited & Ors.

Neutral Citation: 2025: BHC-OS:5579

Case Number: COMMERCIAL ARBITRATION PETITION (L) NO.7499 OF 2025

Bench: Justice Somasekhar Sundaresan

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