The Single Bench of Bombay High Court consisting of Justice B. P. Colabawalla, while hearing an Interim Application filed under the provisions of Order XIII-A read with Order XII Rule 6 of the Code of Civil Procedure, 1908 (for short the “CPC”) invoking the Admiralty Jurisdiction of seeking a summary judgment against the 1st Defendant Vessel, passed a summary judgement and a decree in favour of the Plaintiff.

Facts

  • On 13th February 2019, the 1st Defendant Vessel entered the Plaintiff’s Port and started occupying berth space. The Plaintiff supplied the necessary berthing charges (as per its Tariff Booklet) to the said Vessel and thereafter raised invoices from time to time.
  • On 4th March 2019, one EXIM Bank Ltd, a secured creditor of Tag Offshore Ltd., (the owner of the 1st Defendant Vessel), invoked the Admiralty jurisdiction of this Court by filing Commercial Admiralty Suit (L) No. 15 of 2019 against the 1st Defendant Vessel and obtained an order of arrest. The said Vessel continued under arrest and day by day was incurring berthing charges and port dues (in addition to other dues and charges) as the same was occupying the berth at the Plaintiff's port.
  • On 24th April 2019, insolvency proceedings were initiated against Tag Offshore Ltd. (owners of the 1st Defendant Vessel) by one R.H. Petroleum Ltd. u/s 9 of the Insolvency and Bankruptcy Code, 2016 (for short the “IBC, 2016”). Pursuant thereto, one Mr. Pramod Mulgund was appointed as the Interim Resolution Professional (“IRP”) for Tag Offshore Ltd.
  • Since, neither EXIM Bank nor the IRP took any measures to provide supplies, stores, bunker etc. to the said Vessel/ its crew, severe unrest broke out amongst the crew on board the 1st Defendant Vessel. Ultimately, on 7th May 2019, the crew abandoned the said Vessel.
  • On 30th May 2019, the Committee of Creditors (for short the “CoC”) of Tag Offshore Ltd. resolved to appoint Mr. Sudip Bhattacharya as the Resolution Professional (“RP”). The appointment of Mr. Sudip Bhattacharya (as the RP of Tag Offshore Ltd.) was confirmed by the NCLT vide its order dated 28th June 2019.
  • On 16th June 2019, on account of strong winds and currents brought on by the monsoon, the 1st Defendant Vessel began drifting away from the Plaintiff’s berth. The said Vessel broke her mooring rope, floated away, and posed a serious threat to the port, its navigational channels, and the nearby village. In short, it was causing a serious navigational hazard and a danger to the life and property of the villagers nearby as well as their fishing boats. In view of this event, the Plaintiff immediately engaged and deployed a nearby tug for salvaging and bringing back the 1st Defendant Vessel to safe harbour. It is the case of the Plaintiff that Mr. Sudip Bhattacharya (who was the RP of Tag Offshore Ltd at the time) did not provide any assistance to ensure the safety of the 1st Defendant Vessel or for bringing it back to safe harbour. The Plaintiff even raised an invoice for the same, which according to the Plaintiff, has yet not been paid.
  • On 15th July 2019, the NCLT ordered the CoC to secure the assets of Tag Offshore Ltd and take possession of the 1st Defendant Vessel, if necessary, and proceed in terms of Sections 51 and 52 of the Merchant Shipping Act, 1958. It also directed the CoC to explore the liquidation option and inter alia move the 1st Defendant Vessel to a safer place without creating problems for the Port Trust.
  • On 26th September 2019, the NCLT ordered liquidation of Tag Offshore Ltd. and confirmed Mr. Sudip Bhattacharya as its Liquidator. It is the case of the Plaintiff that since its invoices remained unpaid, it finally approached this Court by filing the above suit on 20th January 2020 against the 1st Defendant Vessel. On the very same date, this Court also ordered arrest of the said Vessel.

Procedural History

  • On 28th January 2020, Mr. Sudip Bhattacharya filed Interim Application No. 1 of 2020, inter alia, seeking modifications/ recall of the order of arrest dated 20th January 2020. Pertinently, Mr. Sudip Bhattacharya, in the said Application, confirmed that if the 1st Defendant Vessel is not sold, its value will diminish, and the said Vessel will incur charges such as port charges and manning costs aggregating to USD 3,000/- per day which would further get added to the liquidation costs. This Court, by its order dated 29th January 2020, granted limited relief to Mr. Sudip Bhattacharya by allowing him to sell the 1st Defendant Vessel subject to certain terms and conditions. By the said order, Mr. Sudip Bhattacharya was also permitted to intervene in the above suit and the Plaintiff was directed to add Mr. Sudip Bhattacharya as a party Defendant in these proceedings. This is how Mr. Sudip Bhattacharya is joined as Defendant No.2 in the above suit. Despite this Court allowing Defendant No.2 to sell the 1st Defendant Vessel, he was unable to do so.
  • On 26th February 2020, the Plaintiff filed Interim Application No. 2 of 2020, inter alia seeking sale of the 1st Defendant Vessel. The ground on which sale was sought was that there was a severe risk of deterioration of the said Vessel which had been lying unmanned for a long period of time and the Plaintiff's maritime lien was likely to be prejudiced. On 9th March 2020, an order came to be passed in the said Application wherein the contentions of the Plaintiff that it had been incurring expenses since February 2019 were noted. This Court also recorded the undertaking and statements of Defendant No.2, who on instructions, stated that all costs / expenses incurred by the Plaintiff from 24th April 2019 till the 1st Defendant Vessel leaves the berth, including Berthing and Port charges as well as Salvage charges, shall be treated by the Liquidator as liquidation costs or IRP costs as contemplated under Section 53 (1) (a) of the IBC, 2016. It was further stated by Defendant No.2 that as far as the Berth and Port charges are concerned, there was no dispute. As far as the Salvage charges were concerned, Defendant No.2 stated that the same would be treated as liquidation costs or IRP costs, subject to scrutiny regarding its quantum by Defendant No.2.
  • On 30th April 2020, this Court directed Defendant No.2 to appoint a crew manning agency in relation to the 1st Defendant Vessel. On and from 29th May 2020, cyclone “Nisarga” began developing off the Arabian Sea and was moving towards the western coast of India where the Plaintiff’s Port is located. The Plaintiff duly alerted and called upon Defendant No.2 to immediately plan inter alia for crew and material to secure the 1st Defendant Vessel. During the discussions between the Plaintiff and Defendant No.2, Defendant No.2 indicated that he was not able to send the crew and/or ropes to secure the 1st Defendant Vessel. The Plaintiff, after discussing the terms of the requirement and costs, engaged Shore Watch Personnel/ Mooring Crew for attending rope and safety for the said Vessel for a total of seven days.
  • On 9th July 2020, this Court directed sale of the 1st Defendant Vessel. Pursuant thereto, on 22nd September 2020, this Court opened the bids received from the prospective buyers in presence of Defendant No.2 and the other stakeholders of the said Vessel/ CoC of Tag Offshore Ltd. After hearing the advocates for the Defendants and EXIM Bank, this Court confirmed the sale of the 1st Defendant Vessel in favour of J. T. Marine Services Pvt Ltd, for a consideration of Rs.10,75,00,000/-. Defendant No.2 as well as EXIM Bank, who appeared through counsel, on instructions, stated that they had no objection, if the 1st Defendant Vessel was sold to the highest bidder. Accordingly, this Court directed the successful bidder to deposit the sale consideration of the said Vessel in this Court within a period of 4 weeks. Once the sale consideration was deposited by the successful bidder, the Prothonotary and Senior Master also issued a Bill of Sale dated 29th October 2020, confirming the sale of the said Vessel in favour of the said M/s. J. T. Marine Services Pvt. Ltd. Pursuant thereto, M/s. J. T. Marine Services Pvt. Ltd., has also taken possession of the 1st Defendant Vessel.

Contentions made

Appellant: Plaintiff has been raising its invoices on the 1st Defendant Vessel from time to time. Despite raising these invoices and though no dispute has been raised in relation thereto, no payment has been made by the Defendants. Salvage operations were carried out is not disputed and a statement was made by the Liquidator (Defendant No.2) that the same would be treated as liquidation costs or IRP costs subject to scrutiny regarding its quantum. It was submitted that a judgment and decree be passed in favour of the Plaintiff and against the sale proceeds of the 1st Defendant Vessel in the sum of Rs.9,37,19,098/- together with interest @ 18% p.a. from 18th December 2020 till payment and/or realization.

Respondent: It was submitted that there was no merit in any of the arguments on behalf of the plaintiff. The following four grounds/arguments were canvassed:

  • The above suit itself is not maintainable considering the bar contained in Section 33(5) of the IBC, 2016.
  • The above suit is barred by the principles of res judicata. In other words, the Plaintiff, having already filed its claim before Defendant No.2 (the Liquidator of Tag Offshore Ltd), was not entitled to file and prosecute the present suit as the amounts claimed before the Liquidator as well as in the present suit arose from the same cause of action.
  • Without prejudice to the aforesaid arguments, the Plaintiff is not entitled to any amounts towards Penal Berth Hire as the same is a penalty, and in terms of Section 74 of the Contract Act, 1872, the Plaintiff would be required to prove actual loss for which only reasonable compensation can be claimed. This, therefore, can never form the subject matter of a summary judgment under Order XIII-A of the CPC.
  • At least, the claim towards Salvage charges was not payable because the same was rejected by Defendant No.2 and the adjudication done by Defendant No.2 in relation thereto being quasi-judicial in nature, the same claim now could not be agitated in the present suit without challenging the said adjudication under the provisions of the IBC, 2016. Further, no particulars of the Salvage charges have been given by the Plaintiff to Defendant No.2, and therefore, the aforesaid claim in any event would have to be proved by the Plaintiff and cannot form the subject matter of a summary judgment under Order XIII-A of the CPC.

Observations of the Court

The Bench observed the following regarding the grounds respectively:

“I find that the decision in Raj Shipping Agencies v/s Barge Madhwa (supra) clearly answers the aforesaid argument canvassed by Mr. Arsiwala on the maintainability of the present suit. He has been unable to distinguish the aforesaid judgment for me to take a different view. I am, therefore, clearly of the opinion that the objection regarding the maintainability of the present suit holds no substance and the same is rejected.”

“Considering that the claim made in the present suit is not against Defendant No.2 at all but against the sale proceeds of the 1st Defendant Vessel and which continues to be an action in rem, any adjudication done by Defendant No.2 regarding a claim made by the Plaintiff against Defendant No.2, cannot attract the principles of res judicata qua the present suit, which is seeking a decree only against the 1st Defendant Vessel. I am therefore clearly of the view that the claim in the present suit is not barred by the principles of res judicata.”

“When one reads the aforesaid Tariff Booklet, it is quite clear that the charges of Penal Berth Hire are Applicable when vessel is unable to commence cargo operations within 2 hours of all fast time Applicable when vessel is not ready to sail (i.e. fail to book outward pilot memo) after 2 hours the time of completion of cargo $ 1000 Applicable when vessel discontinues cargo operations (Loading / discharging) for vessels own reasons not penal in nature per-se but are only additional charges that the Vessel would incur in the event:

  1. it does not commence cargo operations within two hours of all fast time; or
  2. it is not ready to sail (i.e., fails to book outward pilot memo) after two hours from the time of completion of cargo operations; or
  3. when the Vessel discontinues cargo operations for its own reasons.

There is nothing penal about it. These charges are nothing but additional charges in the event the contingencies mentioned above are triggered. I am therefore of the view that Penal Berth Hire charges are not a penalty that would be required to be proved by the Plaintiff before it can seek to recover these charges.”

“As far as the claim for Salvage operations are concerned, I am not inclined to grant this claim at this stage only on the ground that there is not enough documentation to substantiate the Plaintiff’s claim on this count.”

Judgment

The Bench, while disposing of the interim application, held that:

  • there will be a summary judgement and a decree in favour of the Plaintiff and only against the sale proceeds of the 1st Defendant Vessel in the sum of Rs.5,51,00,016/- as per the breakup decided.
  • there will also be a decree in favour of the Plaintiff and only against the sale proceeds of the 1st Defendant Vessel. For the reasons recorded earlier, the claim towards Salvage operations is not granted at this stage and will have to be proved at the trial of the suit. The Bench was also not inclined to grant any interest for the period prior to 18th December 2020, or legal costs.
  • The Plaintiff shall, along with their claim for Salvage operations, also be entitled to agitate their claim for interest prior to 18th December 2020, and legal costs, at the trial of the suit.

Case Name: Angre Port Private Ltd vs TAG 15 (IMO. 9705550) & Anr

Citation: Interim Application(L) No. 112 of 2021

Bench: Justice B. P. Colabawalla

Decided on: 3rd January 2022

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