Supreme Court Allows Release of Foreign Vessel Seized for Contraband, Sets Rs. 110 Crore Indemnity Bond Condition.


23 September 2025 Custom Duty >> Tax Laws  

The Indian Supreme Court has allowed the release of a Vietnamese ship arrested by Indian Customs officials for shipping banned goods, under strict financial conditions laid on the foreign ship owner.

The case developed after the ship owned by Asia Pacific Shipping Co. Ltd. was impounded at Paradip Port in Odisha. The Trial Court had previously directed its release but demanded the submission of a bank guarantee worth Rs. 10 crore and an indemnity bond of Rs. 100 crore backed by solvent surety. Discontent with those conditions, the Union of India and the shipowner both went to the Orissa High Court under Section 482 of the Code of Criminal Procedure, 1973. The High Court partially amended the conditions by exempting the bank guarantee and lowering the indemnity condition to Rs. 75 crore with two solvent sureties.
 
 
 
 

Challenging this amendment, the Union of India took the case before the Supreme Court, contending that the ship should not have been released at all, and if it was to be released, proper security should have been arranged so it could be presented before the authorities in case of confiscation.

The Justice Pankaj Mithal and Justice Prasanna B. Varale bench, however, apprehended the practical limitation of keeping the vessel stuck at the dock for the entire period of trial proceedings. The Court remarked that extended docking not only causes the vessel to deteriorate but also places a heavy burden on the owner by way of extravagant port charges without any real useful purpose.

After considering both parties' submissions, the Court reinstated the indemnity bond to the initial Rs. 100 crore, as per the value of the ship determined from insurance papers. Nevertheless, in a mutual offer, advocate for the respondent firm offered to sign an even more substantial indemnity bond of Rs. 110 crore, indirectly covering the Rs. 10 crore bank guarantee as well.

Appreciating this compromise, the Court ordered the release of the ship only after the company provides:
  • An indemnity bond of Rs. 110 crore,
  • Two solvent sureties of Rs. 75 crore each (as earlier directed by the High Court), and
  • Two Indian sureties for Rs. 10 crore each instead of the bank guarantee.
The Court also made it clear that Customs and Port Authorities have to be apprised by the shipowner every time the vessel leaves or enters Indian ports.

With this, the appeals of the Union were rendered obsolete, and the release of the ship was directed on fulfillment of the amended financial terms.


Section 482., Code of Criminal Procedure - 1973  

Code of Criminal Procedure, 1973