The Kerala High Court has delivered a major reduction in the security deposit demanded from the owners of the container ship MSC Elsa 3, which tragically sank off the Kerala coast on May 25. The initial figure, a staggering ₹9,531 crore, has now been lowered to ₹1,227.62 crore, marking a significant modification to the court’s earlier order from July 7.
This case stems from an admiralty suit filed by the State government, which led to the conditional arrest of MSC Elsa 3’s sister vessel, MSC Akiteta-2, at Vizhinjam. The government’s substantial claim for compensation was primarily aimed at addressing severe marine and coastal pollution, alongside the considerable financial losses incurred by local fishing communities following the vessel’s sinking.
Breaking down the initial claim, a massive ₹8,626.12 crore was sought for environmental damage caused by the sunken ship. An additional ₹378.48 crore was earmarked for the costs associated with efforts to prevent, minimize, and remove environmental harm to the coastline and related state interests, as well as expenses for ecological restoration. Furthermore, ₹526.51 crore was claimed to cover the economic hardships faced by the State’s fishermen.
However, a Bench led by Justice M.A. Abdul Hakhim, in its decision to reduce the security amount, found that the government’s arguments were insufficient to justify such an exorbitant claim for environmental damage. The court noted a lack of concrete evidence detailing the true magnitude of environmental destruction due to oil pollution in the presented documents. While acknowledging undeniable oil discharge and its potential for serious marine pollution, the court deemed the initial environmental damage claim of ₹8,554.39 crore to be excessive.
Considering the available evidence on the extent of oil discharge and its discernible impact on the marine ecosystem, the court concluded that a security deposit of ₹500 crore would be sufficient to safeguard the State’s interests at this juncture.
Regarding the economic losses to fishers, the court affirmed that the government could rightfully demand ₹349 crore for losses due to market disruption. Similarly, the claim of ₹71 crore for lost catches resulting from a six-month fishing ban within 20 nautical miles off Alappuzha was also upheld as a valid demand against the ship’s owners.