Can a Creditor Arrest a Vessel After Its Demise Charter Has Been Terminated? Supreme Court Clarifies When Physical Repossession Is Required

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

Date of Judgment: 25 September 2026

Citation: 2026 INSC 1055

Bench: Surya Kant, CJI; Joymalya Bagchi and V. Mohana, JJ.

Held: A valid termination notice issued under the bareboat charter ended the demise charter even though the owner had not yet physically repossessed the vessel. Repossession completed the practical transfer of control; it was not a condition for termination under the charter’s terms. Since Nereides Marine Services was no longer the demise charterer when the vessel was arrested, the requirements for arrest under Sections 5(1)(b) and 5(2) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 were not met.

Summary: Om Freight Forwarders sought to arrest M.V. Nereus Progress to secure unpaid hire owed by Nereides under a separate charter of M.V. Bharadwaj. It argued that Nereides remained the demise charterer of Nereus Progress because its owner had not taken physical possession after terminating the charter. The Supreme Court examined the charter’s termination and repossession clauses, the notices issued following Nereides’ payment default, and the parties’ subsequent conduct. It found that the owner had validly terminated the charter on 13 November 2025 and had genuinely pursued repossession. By the arrest date of 4 December 2025, Nereides held the vessel only as a gratuitous bailee awaiting handover. The Court explained that arrest of another vessel under Section 5(2) remains subject to the conditions in Section 5(1); the claimant had to establish Nereides’ qualifying status in relation to the vessel it sought to arrest.

Decision: The Supreme Court allowed the appeal, set aside the Madras High Court’s judgment and vacated the vessel’s arrest.