Idbi Bank Ltd vs Mv Tag Navya (Imo No. 8819081) And ...
2022 Latest Caselaw 7515 Bom

                                                       -IA2181-22INCADMS85-21.DOC

                                                                             Santosh
                        IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                         ADMIRALTY AND VICE ADMIRALTY JURISDICTION
                                  IN ITS COMMERCIAL DIVISION


                             INTERIM APPLICATION NO. 2181 OF 2022
                                              IN
                             COMM ADMIRALTY SUIT NO. 85 OF 2021

                   IDBI Bank Ltd.                                   ...Applicant
                   In the matter between
SANTOSH
SUBHASH            IDBI Bank Ltd.                                     ...Plaintiff
KULKARNI
                                        Versus
Digitally signed
by SANTOSH
SUBHASH
                   MV TAG NAVYA (IMO No.8819081) & ors.            ...Defendants
KULKARNI
Date: 2022.08.03
19:58:18 +0530
                   Mr. Zarir Bharuch, a/w Rishi Thakur, Dhwani Gala, i/b ZBA,
                        for the Applicant.

                                           CORAM:     N. J. JAMADAR, J.
                                           DATED :    2nd AUGUST, 2022
                   ORDER:-

                   1.   The plaintiff has taken out this application for a summary

                   judgment under Order XIII-A of the Code of Criminal Procedure,

                   1908 ("the Code") as amended by the Commercial Courts Act,

                   2015 and/or a decree on admission under Order XII Rule 6 of

                   the Code in an admiralty action instituted in rem against the

                   sale proceeds of vessel - MV TAG NAVYA, defendant no.1.

                   2.   The plaintiff is a banking company within the meaning of

                   Banking Regulation Act, 1949. The plaintiff had sanctioned a

                   Foreign Currency Loan of US$ 5.40 million to defendant no.2,

                   the registered owner of defendant no.1 - vessel, on the terms


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and conditions incorporated in the sanction letter dated 26th

October, 2016.   Pursuant to the Loan Agreement executed on

27th October, 2016, defendant no.2, in consideration of the said

facility, had furnished security in the nature of a first and

exclusive charge on the vessel - MV TAG NAVYA, defendant no.1.

A Deed of Statutory Mortgage of vessle thus came to be executed

on 27th October, 2016, whereby and whereunder the first and

exclusive charge of MV TAG NAVYA was created in favour of the

plaintiff.   Simultaneously, an unattested Memorandum of

Hypothecation was created in favour of the plaintiff under which

defendant no.1 - vessel was hypothecated.

3.    Defendant no.2 committed default in repayment of the

loan account in accordance with the terms of the contract.

Consequently, the account of the defendant was declared a Non-

Performing Assets (MPA).

4.    Eventually, under Judge's Order (L) No.6 of 2020, dated

20th January, 2020, defendant no.1 - vessel came to be arrested.

By a subsequent order dated 22nd May, 2020, defendant no.1 -

vessel was sold and the sale proceeds have since been realized.

The plaintiff has instituted this suit in rem against the sale

proceeds of defendant no.1 for the sum of US$ 33,19,734

comprising the principal loan amount and the interest accrued

thereon as of 5th January, 2020, along with further interest.
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The plaintiff has taken out this application with the assertions

that the claim of the plaintiff constitutes an admitted liability

and there is no real prospect of successfully defending the suit

claim.

5.      I have perused the averments in the plaint and the interim

application and the documents annexed with it. I have heard

Mr. Bharucha, the learned Counsel for the plaintiff - applicant.

The claim of the plaintiff that it had advanced a Foreign

Currency Loan finds requisite support in the sanction letter

dated     26th   October,   2016   incorporating   the   terms   and

conditions, which were acceded to by defendant no.2 and the

consequent loan agreement dated 27th October, 2016.              The

plaintiff had agreed to advance a Foreign Currency Loan of US$

5.40 Million equivalent to Rs.36 Crores, in the maximum

(Exhibits A and C). Defendant no.2 had agreed to pay interest at

the rate of 5.25% p.a. The stated purpose of the loan was part

finance of the acquisition of the defendant - vessel. It was, inter

alia, agreed that defendant no.2 would secure the said loan by

(I) exclusive charge on the vessel - MV TAG NAVYA and; (II)

exclusive charge on the USD Bank account/escrow account, in

which all cash flows related to the vessel - MV TAG NAVYA

would be deposited. The Deed of Mortgage executed on 27 th

October, 2016 evidences the creation of the mortgage in respect
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of defendant no.1 - vessel MV TAG NAVYA. Further claim of the

plaintiff that the said charge has been duly registered with

Mercantile Marine Department and the Registrar of Companies

find support in the letter dated 19th July, 2016 (Exhibit-E) and a

copy of Form No.CHG-1 (Exhibit-F).

6.   In order to lend support to the claim that defendant no.2

had acknowledged the liability and the suit claim constitutes an

admitted liability, the plaintiff has relied upon the balance

confirmation dated 6th April, 2018 executed by defendant no.2,

wherein the latter had acknowledged, inter alia, the outstanding

liability to the tune of US$ 42,44,101, as of 31st March, 2018.

7.   The situation which thus obtains is that there is adequate

material to show that defendant no.2, the owner of defendant

no.1 - vessel MV TAG NAVYA, had availed a credit facility from

the plaintiff and in order to create security, had executed

documents including a Deed of Mortgage thereby creating a first

charge on defendant no.1 - vessel.      Under Clause (c) of Sub-

section (1) of Section 4 of the Admiralty (Jurisdiction and

Settlement of Maritime Claim) Act, 2017 ("the Admiralty Act,

2017"), mortgage or a charge of the same nature on vessel

constitutes a maritime claim. Such a maritime claim furnishes

a sustainable ground for an action in rem under Section 5 of the

Admiralty Act, 2017.
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8.   In the case at hand, the plaintiff's claim is supported by

documents of unimpeachable character.          Moreover, there is a

clear and unequivocal acknowledgment of the liability in the

balance confirmation letter. In the totality of the circumstances,

the sale proceeds of defendant no.1 - vessle MV TAG NAVYA

does not seem to have real prospect of successfully defending

the plaintiff's claim.     I am, therefore, impelled to pass a

summary judgment under Order XIII-A of the Code.

9.   Hence, the following order:

                            :ORDER:

(i) The application stands allowed.

(ii) There shall be summary judgment against the sale proceeds of MV TAG NAVYA in the sum of US$ 33,19,734 along with further interest at the rate of 5.25% p.a. on the principal amount of US$ 31,55,697.96 from the date of the suit till realization.

(iii) The plaintiff is entitled to refund of Court-fees in accordance with the Rule.

(iv) The suit stands partly decreed in the aforesaid terms.

(v) Decree be drawn and sealed expeditiously .

[N. J. JAMADAR, J.]