A significant instance of situational irony occurs in Billy Budd when John Claggart, the ship's master-at-arms, falsely accuses Billy of mutiny. Claggart's accusation against Billy is an unexpected turn of events. Throughout the novella, Melville characterizes Billy as trustworthy, likable, innocent, and loyal. Because Billy has a reputation for being good and even naive, the serious accusations made against him come as a surprise to the reader. The novella's central irony lies in this contrast between Billy's character and Claggart's accusations.
When Billy confronts Claggart after being falsely accused, he is unable to speak and instead lashes out physically, striking Claggart and accidentally causing his death. Billy Budd has genuinely good intentions and is an innocent person who, in trying to prove his innocence, ironically ends up calling his own innocent nature into question. This only furthers the irony of Billy's situation. Billy ends up losing a bit of his innocence in the end, even though this innocence is exactly what he was trying to prove in the first place.
Claggart, the ship's master-at-arms, is a strict disciplinarian who enforces order and discipline on the ship. Yet the narrator makes it clear to the reader that Claggart harbors a deep and irrational hatred for Billy. In falsely accusing Billy of mutiny, which results in Billy's execution, Claggart actually undermines justice, another notable instance of irony. All in all, Melville presents these instances of irony to the reader to underscore the complex moral and ethical dilemmas that take place in the novella.
