The Andhra Pradesh High Court at Amaravati has vacated an interim order that earlier allowed Hong Kong–based Zion Shipping Ltd. to attach 1,600 metric tonnes of rice belonging to Sarala Foods Pvt. Ltd. at Kakinada Port. Justice Challa Gunaranjan delivered the verdict on October 13, 2025, bringing relief to the Indian rice exporter after nearly a year of legal wrangling over demurrage charges under a vessel charter agreement.
Background
Zion Shipping Ltd, which owns and charters vessels globally, had entered into a charter party with Sarala Foods and its associates in March 2021 to transport rice from Kakinada, Andhra Pradesh, to Ho Chi Minh City, Vietnam. The company claimed that unloading delays at the Vietnamese port cost it significant demurrage - roughly USD 1,28,000 - and that interest and costs later raised the total to about USD 2,96,326.
When the Indian firm failed to pay despite multiple reminders, Zion filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking protection before arbitration began in Singapore. The shipping company asked the court to either attach the rice cargo awaiting export or compel Sarala Foods to furnish security for the disputed amount.
In April 2024, the court initially allowed a conditional attachment of the rice cargo, subject to Sarala Foods depositing the equivalent security amount. The exporter complied but soon appealed, arguing that Zion was misusing the provision to pressure settlement of a contested claim.
Court’s Observations
Justice Gunaranjan noted that although Zion had raised an invoice in 2021, the company took no legal steps for nearly three years, undermining its plea for urgent interim protection. The court observed that the demurrage claim was “in the nature of liquidated damages” that had not yet been adjudicated, meaning no enforceable debt currently existed.
“The petitioner has since raised the demand at the very first instance itself… yet chose to remain silent for years,” the judge remarked, calling the sudden move to secure attachment “an eleventh-hour attempt.”
The bench also pointed out that vague statements about Sarala Foods possibly disposing of its assets did not satisfy the stringent test under Order 38 Rule 5 of the Civil Procedure Code, which governs attachment before judgment.
Citing Supreme Court rulings, including Raman Tech v. Solanki Traders and Sanghi Industries v. Ravin Cables, the court emphasized that attachment powers are “drastic and extraordinary” and cannot be exercised mechanically.
“The petitioner has not shown any strong possibility of diminution of assets. The cargo itself is stock in trade,” Justice Gunaranjan noted. He added that the balance of convenience clearly tilted in favour of Sarala Foods since Zion had failed to act with reasonable expedition.
Decision
Concluding that Zion Shipping had not established a prima facie case for attachment, the High Court vacated its earlier interim order dated April 23, 2024. It directed the court registry to return the deposited security amount of USD 296,326.74 to Sarala Foods Pvt. Ltd.
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With this, the Andhra Pradesh High Court made it clear that such interim protections cannot be sought to convert an unsecured commercial claim into a secured one. Arbitration proceedings between the parties continue before a Singapore tribunal.
Case Title: Zion Shipping Ltd. vs. Sarala Foods Pvt. Ltd. & Others
Case Type: International Commercial Arbitration Original Application No. 5 of 2024
Date of Judgment: October 13, 2025
