Bombay High Court
Angre Port Private Ltd vs Tag 15 And Anr on 3 January, 2022
Bench: B.P. Colabawalla
Aswale ial.112.21 comasl.4.20..docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Digitally signed
ANJALI
ADMIRALTY AND VICE ADMIRALTY JURISDICTION
by ANJALI
TUSHAR
TUSHAR ASWALE
ASWALE Date: 2022.01.03
14:13:41 +0530
INTERIM APPLICATION(L) NO. 112 OF 2021
IN
COMMERCIAL ADMIRALTY SUIT(L) NO. 4 OF 2020
Angre Port Private Ltd ..Applicant/Plaintiff
Vs.
TAG 15 (IMO. 9705550) & Anr. ..Defendants
Mr.Prathamesh Kamat a/w Pooja Tidke, Krushi Barfiwala, Ryan
Menedes i/b Parinam Law Associates, for the Applicant/Plaintiff.
Mr. Amir Arsiwala, Mr. Dhrupad Vaghani, Ms. Naveli Reshamwalla,
Mr. Ajiz M. K., Farzeen Pardiwalla, Nidhi Shah i/b Economic Law
Practices, for Defendant No.2.
CORAM :- B. P. COLABAWALLA, J.
Reserved on :- December 20, 2021.
Pronounced on :- January 03, 2022.
JUDGMENT:-
1. The above Interim Application is 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") seeking a summary judgment against the 1st
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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 plus
poundage. The basic premise on which the aforesaid relief is sought is
that the Defendants have not only admitted/confirmed the dues of the
Applicant/Plaintiff but in any event the claim of the Applicant/Plaintiff is
really undisputed, and the Defendants have no real prospect of
successfully defending the claim of the Applicant/Plaintiff. It is in these
circumstances that a summary judgment is sought against the 1st
Defendant Vessel. For the sake of convenience, I shall refer to the parties
as they are arrayed in the suit.
2. The above suit is filed invoking the Admiralty Jurisdiction of
this Court inter alia seeking a judgment and decree against the 1st
Defendant Vessel - Tag-15 (IMO. 9705550) in the sum of
Rs.9,37,19,098/- as per the particulars of claim together with further
interest @ 18% p.a. from 18th December, 2020 till payment and / or
realization, plus poundage. For the sake of convenience, Mr. Kamat, the
learned counsel appearing on behalf of the Plaintiff, has tendered a chart
indicating the breakup of the Plaintiff's claim. The said breakup is as
under:
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Heads of Claim 1st period 2nd Period 3rd Period Total (in Rs.)
13/2/2019 to 16/1/2020 to 30/10/2020 to
15/1/2020 (Till 29/10/2020 (Till 15/12/2020
the filing of Suit) sale of Vessel)
I. Port charges Rs.10,01,000/- Rs.7,28,728/- 17,29,728/-
II. Berth Hire Charges Rs.1,18,65,000/- Rs.1,05,98,700/- 2,24,63,700/-
III. Penal Berth Hire Rs.1,18,65,000/- Rs.1,05,98,700/- 2,24,63,700/-
Charges
IV. Salvage Rs.1,85,00,000/- 1,85,00,000/-
V. Mooring Crew Rs.37,800/- 37,800/-
VI. GST Rs.77,81,580/- Rs.39,53,508/- 1,17,35,088/-
VII. Interest Rs.43,63,125/- Rs.88,91,660/- Rs.18,94,296/- 1,51,49,082/-
VIII. Legal Costs 16,40,000/-
GRAND TOTAL: 9,37,19,098/-
3. The suit as originally filed was only against the 1st Defendant
Vessel and in fact the decree/judgment that is sought in the above Interim
Application is also against the 1st Defendant Vessel only. Since the owners
of the 1st Defendant Vessel (Tag Offshore Ltd.) went into liquidation, one
Mr. Sudip Bhattacharya was appointed as the Liquidator of Tag Offshore
Ltd. He was thereafter brought on record as Defendant No.2, pursuant to
an order passed by this Court on 29th January, 2020.
4. The brief facts giving rise to the present controversy are this.
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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.
5. 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.
6. On 24th April 2019, insolvency proceedings were initiated
against Tag Offshore Ltd. (owners of the 1st Defendant Vessel) by one R.H.
Petroleum Ltd. under section 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.
7. Since, neither EXIM Bank nor the IRP took any measures to
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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.
8. Thereafter, 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.
9. In the interregnum, 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, called TUG
SHAMBHAVI 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
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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.
10. Be that as it may, 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.
11. Finally, 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.
12. 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
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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. I must mention that despite this Court
allowing Defendant No.2 to sell the 1st Defendant Vessel, he was unable
to do so.
13. In these circumstances, 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
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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. The
aforesaid statements were accepted by this Court as undertakings given
by Defendant No.2.
14. Thereafter, 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 make arrangements 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
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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.
15. Finally, 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
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Pvt. Ltd., has also taken possession of the 1st Defendant Vessel.
16. In this factual backdrop, Mr. Kamat, the learned counsel
appearing on behalf of the Plaintiff, submitted that the 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. Mr. Kamat took
me through Exhibit "E" of the Plaint which are the invoices for the period
starting from 13th February 2019 (the date when the 1st Defendant Vessel
first arrived at Plaintiff's port) to 15th January 2020 (the date of filing of
the above suit). For the period from 16th January, 2020 to 31st August,
2020, the invoice is annexed at Exhibit "VV" and for the period from 1st
September, 2020 to 30th September, 2020 is annexed at Exhibit "XX" of
the Plaint. Finally, the invoice for the period from 1st October, 2020 till
29th October, 2020 (the date when the 1st Defendant Vessel was sold), is
annexed at Exhibit "ZZ" to the Plaint. Mr. Kamat submitted that if one
goes through the invoices annexed to the Plaint, they include Berth Hire
charges, Penal Berth Hire charges, Port charges and Salvage charges. He
submitted that a small amount of Rs. 37,800/- is also included in these
invoices towards the payment made to the Mooring Crew to secure the 1st
defendant Vessel during the cyclone "Nisarga". Mr. Kamat submitted
that none of these invoices have been disputed either by the owners of the
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1st Defendant Vessel (i.e. Tag Offshore Ltd) or Defendant No.2 (the
Liquidator appointed for Tag Offshore Ltd). Mr. Kamat submitted that
in fact, Defendant No.2 has admitted that Berth and Port charges as well
as the Salvage charges are payable to the Plaintiff as recorded by this
Court in its order dated 9th March, 2020 (Exhibit "UU" to the Plaint). Mr.
Kamat submitted that in the said order, a categorical statement of
Defendant No.2 is recorded that Berth and Port charges of the Plaintiff
are not disputed by Defendant No.2. Even as far as the Salvage charges
are concerned, Mr. Kamat submitted that the fact that 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.
Mr Kamat submitted that Salvage operations have been duly carried out
as reflected in Exhibit-Y to the Plaint and the amount claimed thereunder
is as per the invoice issued by the Salvor (Vedant Ship Management) and
which is annexed at Exhibit-Z to the Plaint. He submitted that when one
reads the said report (dated 16th June 2019) along with the invoice raised
by the Salvor (dated 25th June 2019), it is clear that the Plaintiff is also
entitled to be paid for the Salvage operations carried out in relation to the
1st Defendant Vessel. He, therefore, submitted that a judgment and
decree be passed in favour of the Plaintiff and against the sale proceeds
Aswale ial.112.21 comasl.4.20..docx
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.
17. On the other hand, based on the grounds/arguments set out
hereafter, Mr. Arsiwala, the learned counsel appearing on behalf of
Defendant No.2, submitted that there was no merit in any of the
arguments canvassed by Mr. Kamat. The following four
grounds/arguments were canvassed by Mr. Arsiwala to deny relief to the
Plaintiff:-
I. The above suit itself is not maintainable in light of the
bar contained in Section 33(5) of the IBC, 2016;
II. 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;
III. Without prejudice to the aforesaid arguments, the
Plaintiff is not entitled to any amounts towards Penal
Berth Hire as the same is in the nature of a penalty,
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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;
IV. 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.
ARGUMENT - I SUBMISSIONS:-
18. The first argument canvassed by Mr. Arsiwala was that the
present suit was not maintainable in view of the provisions of Section
33(5) of the IBC, 2016. In support of this argument, Mr. Arsiwala
submitted that it is an admitted position that the Defendant No. 1 Vessel
is owned by a company called Tag Offshore Ltd. One of the unsecured
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creditors of Tag Offshore Ltd filed an application under Section 9 of the
IBC, 2016 being Company Petition No. 54 of 2019. By an order dated 24th
April 2019, the said Petition was admitted and the Corporate Insolvency
Resolution Process of Tag Offshore Ltd (the Corporate Debtor) began. As
there seemed little hope for its revival, the CoC of the Corporate Debtor
chose to seek its liquidation by way of a resolution passed at its meeting
held on 17th July 2019 with a 76.30% voting share. This decision was
approved by the National Company Law Tribunal, Mumbai Bench
("NCLT"), by its order dated 26th September 2019. This order passed by
the NCLT was under Section 33 of the IBC, 2016. In other words, by this
order, Tag Offshore Ltd. (the Corporate Debtor) was ordered to be wound
up. Once Tag Offshore Ltd was ordered to be wound up, Section 33 (5) of
the IBC, 2016 also came into effect prohibiting the institution of any suit
against Tag Offshore Ltd (the Corporate Debtor). Mr. Arsiwala submitted
that a combined reading of Sections 33, 35, 36, 53, and 238 of the IBC,
2016 make it clear that the bar of jurisdiction is for the purposes of
protecting the assets of the Corporate Debtor, including the 1st Defendant
Vessel which belonged to Tag Offshore Ltd. (the Corporate Debtor). That
is the express intention of the Legislature, was the submission.
19. Mr. Arsiwala submitted that in the facts of the present case,
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the above suit was filed on 20th January 2020 which is much after the
order passed by the NCLT on 26th September, 2019 winding up Tag
Offshore Ltd. Therefore, the present suit was instituted much after the
owner of the 1st Defendant Vessel, i.e. Tag Offshore Ltd (the Corporate
Debtor), was ordered to be wound up. Mr. Arsiwala therefore submitted
that for this reason alone, the present suit is not maintainable considering
the clear provisions of Section 33(5) of the of the IBC, 2016.
20. It was the further submission of Mr. Arsiwala that merely
because the suit was originally instituted by the Plaintiff only against the
1st Defendant Vessel, would not be of any assistance to overcome the
jurisdictional bar. As per Section 12 of the Admiralty (Jurisdiction and
Settlement of Maritime Claims) Act, 2017 (for short the "Admiralty
Act"), the provisions of the CPC would apply to Admiralty Suits. This
would include the provisions of Order I Rules 3 & 9 of the CPC which
make it mandatory for the Plaintiff to join all necessary parties.
Defendant No.2, being the Liquidator of the owner of the 1st Defendant
Vessel, would be a necessary party to the present suit, was the
submission. He, therefore, submitted that the suit itself not being
maintainable, there was no question of granting any summary judgment
in favour of the Plaintiff. He, therefore, submitted that the Interim
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Application be dismissed on this ground alone.
FINDINGS ON ARGUMENT - I:
21. I have heard the learned counsel for the parties at length and
have perused the papers and proceedings in the above Interim
Application. The first argument canvassed by Mr. Arsiwala is that the
present suit is not maintainable considering the bar contained in Section
33(5) of the IBC, 2016. To understand this argument, it would be
apposite to reproduce the provisions of Section 33 of the IBC, 2016.
Section 33 reads thus:
"33. Initiation of liquidation.--(1) Where the Adjudicating Authority,--
(a) before the expiry of the insolvency resolution process period or
the maximum period permitted for completion of the corporate
insolvency resolution process under Section 12 or the fast track
corporate insolvency resolution process under Section 56, as the
case may be, does not receive a resolution plan under sub-section
(6) of Section 30; or
(b) rejects the resolution plan under Section 31 for the non-
compliance of the requirements specified therein,
it shall--
(i) pass an order requiring the corporate debtor to be liquidated in
the manner as laid down in this Chapter;
(ii) issue a public announcement stating that the corporate debtor is
in liquidation; and
(iii) require such order to be sent to the authority with which the
corporate debtor is registered.
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(2) Where the resolution professional, at any time during the corporate
insolvency resolution process but before confirmation of resolution plan,
intimates the Adjudicating Authority of the decision of the committee of
creditors approved by not less than sixty-six per cent of the voting share
to liquidate the corporate debtor, the Adjudicating Authority shall pass a
liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b)
of sub-section (1).
Explanation.--For the purposes of this sub-section, it is hereby declared
that the committee of creditors may take the decision to liquidate the
corporate debtor, any time after its constitution under sub-section (1) of
Section 21 and before the confirmation of the resolution plan, including
at any time before the preparation of the information memorandum.
(3) Where the resolution plan approved by the Adjudicating Authority
under Section 31 or under sub-section (1) of Section 54-L, is contravened
by the concerned corporate debtor, any person other than the corporate
debtor, whose interests are prejudicially affected by such contravention,
may make an application to the Adjudicating Authority for a liquidation
order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-
section (1).
(4) On receipt of an application under sub-section (3), if the Adjudicating
Authority determines that the corporate debtor has contravened the
provisions of the resolution plan, it shall pass a liquidation order as
referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1).
(5) Subject to Section 52, when a liquidation order has been passed, no
suit or other legal proceeding shall be instituted by or against the
corporate debtor:
Provided that a suit or other legal proceeding may be instituted
by the liquidator, on behalf of the corporate debtor, with the prior
approval of the Adjudicating Authority.
(6) The provisions of sub-section (5) shall not apply to legal proceedings
in relation to such transactions as may be notified by the Central
Government in consultation with any financial sector regulator.
(7) The order for liquidation under this section shall be deemed to be a
notice of discharge to the officers, employees and workmen of the
corporate debtor, except when the business of the corporate debtor is
continued during the liquidation process by the liquidator."
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(emphasis supplied)
22. What sub-section 5 of Section 33 contemplates is that
subject to Section 52, when a liquidation order is passed against the
Corporate Debtor, no suit or other legal proceeding shall be instituted by
or against the Corporate Debtor. Section 52 deals with the rights of the
secured creditor in liquidation proceedings. The proviso to Section 33(5)
stipulates that a suit or other legal proceeding may be instituted by the
Liquidator, on behalf of the Corporate Debtor, with the prior approval of
the Adjudicating Authority. When one reads Section 33(5), it is ex-facie
clear that the said provision prohibits the institution of a suit or other
legal proceeding against the Corporate Debtor only. It does not in any way
prohibit the institution of a suit or other legal proceeding against a
ship/Vessel owned by the Corporate Debtor when invoking the Admiralty
Jurisdiction of this Court. I say this because under the Admiralty Act, the
Vessel is treated as a separate juristic entity which can be sued without
joining the owner of the said Vessel to the proceeding. The action against
the Vessel under the Admiralty Act, is an action in rem and a decree can
be sought against the Vessel without suing the owner of the said Vessel.
Under the Admiralty Act, a ship, or a Vessel, as commonly referred to, is
a legal entity that can be sued without reference to its owner. The purpose
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of an action in rem against the Vessel is to enforce the maritime claim
against the Vessel and to recover the amount of the claim from the Vessel
by an admiralty sale of the Vessel and for payment out of the sale
proceeds. It is the Vessel that is liable to pay the claim. This is the
fundamental basis of an action in rem. The Claimant/Plaintiff is not
concerned with the owner, and neither is the owner a necessary or a
proper party. In other words, the presence of the owner is not required
for adjudication of the Plaintiff's claim. It is for this very reason that there
is no requirement to serve the writ of summons on the owner of the Vessel
and the service of the warrant of arrest on the Vessel is considered
adequate. For the purposes of an action in rem under the Admiralty Act,
the ship/Vessel is treated as a separate juridical personality, an almost
corporate capacity having not only rights but also liabilities (sometimes
distinct from those of the owner). The fundamental legal nature of an
action in rem, as distinct from its eventual object, is that it is a proceeding
against the res. Thus, when a Vessel represents such res as is frequently
the case, the action in rem is an action against the Vessel itself. The action
is a remedy against the corpus of the offending Vessel. It is distinct from
an action in personam which is a proceeding inter-parties founded on
personal service on the Defendant within jurisdiction of the Court,
leading to a judgment against the person of the Defendant. In an action
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in rem, no direct demand is made against the owner of the res personally.
What I have briefly stated above is succinctly explained by this Court in
its decision in the case of Raj Shipping Agencies v/s Barge Madhwa
& Anr [2020 SCC OnLine Bom 651].
23. The aforesaid decision in Raj Shipping Agencies v/s
Barge Madhwa (supra) has also examined the inter-play between the
provisions of the Admiralty Act and the IBC, 2016. After examining the
provisions of both the Acts, this Court has succinctly harmonized the
provisions of the Admiralty Act viz-a-viz the provisions of the IBC, 2016.
The discussion on the harmonious construction between the Admiralty
Act and the IBC, 2016 can be found from paragraph 78 onwards of the
said decision. In fact, at paragraph 123, the Court has opined that the bar
under Section 33(5) of the IBC, 2016 applies to suits against the
Corporate Debtor and this necessarily means that it is a suit in personam.
An action in rem is not against the Corporate Debtor but against the
Vessel. The Vessel is a distinct juridical entity and the action proceeds
without reference to the owner who is not a party to the suit when filed.
Liquidation of the Corporate Debtor does not affect the ownership of the
res so as to defeat a maritime claim in respect of the Vessel. The res
continues to be in the ownership of the Corporate Debtor and the
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Liquidator merely acts as a custodian. The status of the res does not
change. Hence, the action in rem can be entertained even at the stage of
liquidation of the Corporate Debtor as the claim is against the res and not
against the Corporate Debtor. By arrest of the Vessel, the Plaintiff would
become a secured creditor to the extent of the value of the res only but
not a secured creditor of the Corporate Debtor's other assets. Hence, this
will not affect other secured creditors of the Corporate Debtor. However,
by not permitting the action in rem and arrest of the Vessel, the rights in
rem given to a maritime claimant under the Admiralty Act would be
defeated and denied. The entire purpose of these rights (whether a
maritime lien or a maritime claim) is to enable such a claimant to have
his claim perfected in law by arrest of the Vessel. If a claimant is not
permitted to do so, then his right in rem may stand extinguished and be
lost forever.
24. 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
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the same is rejected.
ARGUMENT - II SUBMISSIONS:-
25. The second argument canvassed by Mr. Arsiwala was that
the above suit is barred under 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), the Plaintiff 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. As far as this argument is concerned, Mr. Arsiwala submitted that
this issue is being raised without prejudice to the ground taken by
Defendant No. 2 that the present suit is barred by virtue of Section 33(5)
of the IBC, 2016. In support of this argument, Mr. Arsiwala submitted
that in the facts of the present case, there is no qualitative difference
between the claim made against Tag Offshore Ltd. (the Corporate Debtor)
and the claim made against the 1st Defendant Vessel because the claim is
based on the same cause of action. The claim made by the Plaintiff against
Tag Offshore Ltd. (the Corporate Debtor), is based on an invoice dated
17th October, 2019 [page 42 of the Plaint]. This invoice overlaps with
other invoices which form part of the claim in the present suit. However,
it is an admitted position that the cause of action in the present suit is for
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unpaid Port / Berthing / Salvage charges etc, incurred by Tag 15 (the 1st
Defendant Vessel), which is the same cause of action for the claim filed
by the Plaintiff with Defendant No. 2 (the Liquidator of Tag Offshore Ltd).
It is also submitted that the failure of the Plaintiff to make Defendant
No.2 a party to the present suit was a fatal failure which was only rectified
by the subsequent intervention of Defendant No.2. Admittedly, the
Plaintiff submitted its claim with Defendant No.2 in his capacity as
Liquidator of the Corporate Debtor. This claim was submitted within the
statutory period of 30 days from 26th September 2019. As per Sections
35, 38, 39, 40, and 41 of the IBC, 2016, the claims submitted to the
Liquidator are processed and adjudicated upon. In the present case, it is
an admitted position that the Plaintiff submitted a claim in the amount
of Rs.3,72,99,376/- being the amount alleged to be outstanding and
payable by the Corporate Debtor as on the liquidation commencement
date. Defendant No.2 admitted the claim of the Plaintiff only to the extent
of Rs.1,72,99,376/-. This was for the simple reason that the Plaintiff had
claimed an amount of Rs.2,00,00,000/- towards reimbursement of
Salvage charges but had not provided any supporting documentation for
the same. Mr. Arsiwala submitted that the cause of action for the claim
submitted by the Plaintiff to Defendant No. 2 was for Port charges, Berth
Hire charges, Mooring charges, Penal Birth Hire charges, and Salvage
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charges relating to the 1st Defendant Vessel. In other words, the claim
filed by the Plaintiff with Defendant No. 2 was based on the same cause
of action as in the present suit, was the submission.
26. Mr. Arsiwala submitted that it is pertinent to note that as per
Regulation 16 of the Insolvency and Bankruptcy Board of India
(Liquidation Process) Regulations, 2016, claims are filed as on the
liquidation commencement date (which in the present case would be 26th
September 2019). Thus, the claim filed by the Plaintiff would be deemed
to be the claim of the Plaintiff against the Corporate Debtor as on the
liquidation commencement date. It is an admitted position that the
Plaintiff has not challenged the partial rejection of its claim by filing an
Appeal under Section 42 of the IBC, 2016. Mr. Arsiwala submitted that
the role of the Liquidator and the nature of adjudication by him under the
IBC, 2016 has been explained by the Hon'ble Supreme Court in the case
of Swiss Ribbons Private Limited v. Union of India [(2019) 4
SCC 17]. He submitted that in paragraph 90 of this decision, the
Supreme Court has clearly held that when the Liquidator determines the
value of a claim submitted by a creditor, then, that determination is a
decision which is quasi-judicial in nature and can be challenged before
the Adjudicating Authority under Section 42 of the IBC, 2016. Thus, in
the present case, Defendant No. 2 has made a quasi-judicial
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determination of the debt owed to the Plaintiff on account of the services
rendered to the 1st Defendant Vessel as on 26th September 2019. In these
circumstances, Mr. Arsiwala submitted that:
(i) The larger principles of res judicata are a matter of
public policy and apply even to quasi-judicial
determinations or decisions made under special
statutes - [Smt Ujjam Bai v. State of Uttar
Pradesh [AIR 1962 SC 1621];
(ii) The claim of the Plaintiff for Port charges, Berth Hire,
Penal Berth Hire, Mooring charges, and Salvage
charges in relation to the 1st Defendant Vessel have
already been considered by Defendant No.2 and
quantified at Rs.1,72,99,376/- as on 26th September,
2019. This is a quasi-judicial determination which the
Plaintiff has not challenged by way of an Appeal under
Section 42 of the IBC, 2016 and has therefore attained
finality;
(iii) If this Court entertains the present suit and adjudicates
upon the claim made by the Plaintiff, then, the same
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will amount to reviewing the decision of Defendant
No.2. Mr. Arsiwala also placed reliance on Sections 63
& 231 of the IBC, 2016 to contend that these provisions
specifically prohibit Civil Courts from entertaining any
suit or proceeding in respect of which the NCLT has
jurisdiction. The NCLT would otherwise have had
jurisdiction under section 42 of the IBC, 2016 to
entertain a challenge to the partial rejection of the claim
of the Plaintiff, and therefore, this Court cannot allow
the Plaintiff to re-agitate its claim through the present
proceedings;
(iv) Even otherwise, the Plaintiff has already adopted the
remedy under the IBC, 2016 by filing a claim with
Defendant No.2. Therefore, the Plaintiff is estopped
from pursuing the inconsistent remedy of filing the
present Admiralty Suit. Mr. Arsiwala submitted that the
Supreme Court in the case of Transcore v. Union of
India [(2008) 1 SCC 125] has held that there are
three elements to the Doctrine of Election, namely, (1)
existence of two or more remedies, (2) inconsistencies
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between such remedies, and (3) choice of one of them.
All three elements can be found in the present case, was
the submission;
(v) The Plaintiff first submitted its claim to Defendant No.2
in accordance with the provisions of the IBC, 2016.
Being dissatisfied with the partial rejection of that
claim, but not challenging the same through an Appeal,
the Plaintiff instead proceeded to file the present suit
under the Admiralty Act. The effect of filing the present
suit and seeking an order of arrest and sale of the 1st
Defendant Vessel was to take it out of the liquidation
estate thereby depriving the general pool of creditors.
Therefore, the two remedies are inconsistent;
(vi) The Doctrine of Election has also been explained by the
Supreme Court in the recent case of Union of India
v. N. Murugesan [(2021) SCC Online SC 895].
Having accepted the remedy under the IBC, 2016 to
recover its dues, the Plaintiff cannot now seek to pursue
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the present suit for the same purpose, was the
submission of Mr. Arsiwala.
27. For all the aforesaid reasons, Mr. Arsiwala submitted that
the present suit is barred by the principles of res judicata and hence there
was no question of granting any relief to the Plaintiff in the above Interim
Application.
FINDINGS ON ARGUMENT - II:-
28. As mentioned earlier, the second argument canvassed by Mr.
Arsiwala was that the suit is barred by the principles of res judicata. This
argument proceeded on the basis that (i) there is no qualitative difference
between the claim made against the Corporate Debtor and the claim
made against the 1st Defendant Vessel because the claim is based on the
same cause of action. Firstly, I do not think that this argument is correct,
in view of the decision pronounced by this Court in the case of Raj
Shipping Agencies v/s Barge Madhwa (supra). In the said
decision, this Court has clearly made a distinction between the claim
made against the Vessel which is an action in rem and the claim made
against the owner of the Vessel (in the present case the Corporate Debtor
- Tag Offshore Ltd.), and which is a claim in personam. Be that as it may,
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the aforesaid argument was pressed on the basis that the Plaintiff has
submitted an invoice dated 17th October, 2019 to Defendant No.2. That
invoice was adjudicated by Defendant No.2 and was only partly allowed.
The Plaintiff herein has not challenged the said adjudication under the
provisions of the IBC, 2016. This being the case, the claim agitated by the
Plaintiff in the present proceedings is therefore barred by the principles
of res judicata, was the submission. I am unimpressed with this
argument also for multiple reasons. Firstly, a limited adjudication done
by Defendant No.2 has no impact on the present Admiralty Suit. The
adjudication done by Defendant No.2 would be qua the Corporate
Debtor. Under the provisions of the IBC, 2016, admittedly, Defendant
No.2 would have no jurisdiction to adjudicate any claim against the 1st
Defendant Vessel. That apart, Section 11 of the CPC lays down the
principles of res judicata. Section 11 reads thus:-
"11.Res judicata.-
No Court shall try any suit or issue in which the matter directly and
substantially in issue has been directly and substantially in issue in a
former suit between the same parties, or between parties under
whom they or any of them claim, litigating under the same title, in a
Court competent to try such subsequent suit or the suit in which such
issue has been subsequently raised, and has been heard and finally
decided by such Court.
Explanation I- The expression "former suit" shall denote a suit which
has been decided prior to the suit in question whether or not it was
instituted prior thereto.
Explanation II.- For the purposes of this section, the competence of a
Court shall be determined irrespective of any provisions as to a right
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of appeal from the decision of such Court.
Explanation III.- The matter above referred to must in the former suit
have been alleged by one party and either denied or admitted,
expressly or impliedly, by the other.
Explanation IV.- Any matter which might and ought to have been
made ground of defence or attack in such former suit shall be deemed
to have been a matter directly and substantially in issue in such suit.
Explanation V.- Any relief claimed in the plaint, which is not expressly
granted by the decree, shall, for the purposes of this section, be
deemed to have been refused.
Explanation VI- Where persons litigate bona fide in respect of public
right or of a private right claimed in common for themselves and
others, all persons interested in such right shall, for the purposes of
this section, be deemed to claim under the persons so litigating.
Explanation VII.- The provisions of this section shall apply to a
proceeding for the execution of a decree and references in this section
to any suit, issue or former suit shall be construed as references,
respectively, to proceedings for the execution of the decree, question
arising in such proceeding and a former proceeding for the execution
of that decree.
Explanation VIII.-An issue heard and finally decided by a Court of
limited jurisdiction, competent to decide such issue, shall operate as
res judicata in a subsequent suit, notwithstanding that such Court of
limited jurisdiction was not competent to try such subsequent suit or
the suit in which such issue has been subsequently raised."
29. As can be seen from the said Section, the principles of res
judicata would apply when the matter in issue in a previously instituted
suit is directly and substantially in issue in the subsequent suit between
the same parties, or between the parties under whom they or any of them
claim, litigating under the same title, in a Court competent to try such
subsequent suit or the suit in which such issue has been subsequently
raised, and has been heard and finally decided by such Court. In other
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words, for the subsequent suit to be barred by the principles of res
judicata, the matter directly and substantially in issue in the subsequent
suit (i) has been directly and substantially in issue in the former suit; (ii)
must be between the same parties, or between the parties under whom
they or any of them claim, litigating under the same title; and (iii) the
former suit has been heard and finally decided on merits. What follows
therefrom is that the principles of res judicata would not apply if (a) there
is no decision on merits; or (b) if it is between different parties. The view
that I take is also supported by a decision of the Supreme Court in the
case of Erach Boman Khavar v/s Tukaram Shridhar Bhat & Anr
[(2013) 15 SCC 655]. The relevant portion of this decision reads thus:-
"39. From the aforesaid authorities it is clear as crystal that to
attract the doctrine of res judicata it must be manifest that
there has been a conscious adjudication of an issue. A plea of
res judicata cannot be taken aid of unless there is an expression
of an opinion on the merits. It is well settled in law that principle
of res judicata is applicable between the two stages of the same
litigation but the question or issue involved must have been
decided at earlier stage of the same litigation."
30. In the facts of the present case, the claim of the Plaintiff
adjudicated by Defendant No.2 was only pertaining to one invoice for the
period 24th April 2019 to 26th September 2019. This invoice can be found
at page 42 of the Plaint and is dated 17th October 2019. In this
adjudication, Defendant No.2 allowed the claim of the Plaintiff for (i)
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Berth Hire charges, from 24th April 2019 to 26th September 2019 @ USD
500/- per day; (ii) Penal Berth Hire charges for the very same period also
at USD 500/- per day; and (iii) Port dues for the said period for an
aggregate amount of USD 6,600/-. The claim for Salvage
costs/operations was rejected by Defendant No.2. The claim of the
Plaintiff with reference to any other periods, was never submitted nor
adjudicated by Defendant No.2. In these circumstances, even if I were to
assume that this adjudication would amount to attracting the bar of res
judicata, then, at the highest, the Plaintiff in the present suit, may not be
permitted to recover Salvage charges as the same has been adjudicated
upon by Defendant No.2 and rejected. This however does not mean that
any other claim is also hit by the principles of res judicata. It is also
important to note, and I must mention, that the claim for Salvage charges
has not been rejected by Defendant No.2 on merits. The claim has been
rejected on the basis that not enough supporting documentation is
provided to substantiate the claim under the heading "Salvage charges".
31. In the facts of the present case, it is not in dispute that the 1st
Defendant Vessel stayed at the Plaintiff's berth from 13th February 2019
(i.e. the date when the Vessel came into the port of the Plaintiff) till 29th
October, 2020 (i.e. the date when the said Vessel was sold pursuant to
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orders of this Court). It is, therefore, clear that the period from 13th
February 2019 to 23rd April 2019 and 27th September 2019 to 29th October
2020 were not the subject matter of adjudication by Defendant No.2 at
all. What is also important to note is that by an email dated 15th October
2019, Defendant No.2 sought charges (with break up) for the period from
24th April 2019 to 26th September 2019 only and it is for this reason that
the invoice dated 17th October 2019 was submitted to Defendant No.2 for
the aforesaid period. This being the case, I am unable to accept the
argument that the entire claim of the Plaintiff is barred by the principles
of res judicata or constructive res judicata. One of the other factors that
I have to also consider is that on 9th March, 2020, a statement was
recorded on behalf of Defendant No.2 that all costs/expenses incurred by
the Plaintiff from 24th April 2019 till the 1st Defendant Vessel leaves the
berth, including the Berth 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 that as far as Berth/Port charges are concerned, there was no
dispute. As far as the Salvage charges were concerned, it was stated that
the same would be treated as liquidation costs or IRP costs subject to
scrutiny regarding its quantum by the Liquidator. It is pertinent to note
that this statement has been made after the so-called adjudication by
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Defendant No.2 and which was prior to the order passed on 9th March
2020 recording the statement on behalf of Defendant No.2 as set out
above. If in fact, Defendant No.2 was of the opinion that the claim for
Salvage charges was barred by the principles of res judicata, Defendant
No.2 would not have made a statement that Salvage charges "would be
treated as a liquidation costs or IRP costs subject to scrutiny regarding
its quantum by the Liquidator". I, therefore, fail to see how Defendant
No.2 can today canvass that the entire claim made in the above suit is
barred by the principles of res judicata or constructive res judicata. This
is apart from the fact that the claim made in the above suit and in the
above Interim Application is not against Defendant No.2 but only against
the 1st Defendant Vessel. 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.
32. Before parting on this issue, I must mention that as far as the
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argument of Mr. Arsiwala regarding the Doctrine of Election is
concerned, I find that the said argument, in the facts and circumstances
of the present case, is wholly misconceived. The Doctrine of Election
cannot and does not arise in the facts and circumstances of this case at
all. This being the position, I do not see any reason to deal with the
decisions relied upon by Mr. Arsiwala on the Doctrine of Election.
ARGUMENT - III SUBMISSIONS:-
33. The third argument canvassed by Mr. Arsiwala was that in
any event the Plaintiff was not entitled to any summary judgement in
relation their claim for Penal Berth Hire. In this regard, Mr. Arsiwala
submitted that the Plaintiff has sought "Penal Berth Hire" @ of USD 500
per day from 24th April, 2019 onwards. He submitted that the Plaintiff
claims to be entitled to this amount based on its Tariff Booklet and
specifically Cl. III of Section A thereof [page 130 of plaint]. Cl. III of
Section A of the Tariff Booklet contains the heading "Penal Berth Hire"
and prescribes three eventualities when it is leviable @ USD 1000 per
day. It is the case of Defendant No. 2 that this "Penal Berth Hire" is
nothing but a "penalty" in terms of Section 74 of the Contract Act, 1872,
and therefore the Plaintiff is required to prove the actual loss for which
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reasonable compensation can be claimed. For this reason, "Penal Berth
Hire" charges cannot be awarded to the Plaintiff by way of a summary
judgment under Order XIII-A of the CPC, was the submission.
34. Mr. Arsiwala then submitted that that the Plaintiff has
sought to rely upon overlapping invoices. The invoices at pages 30 to 41
of the plaint do not contain any charges for Penal Berth Hire. These
invoices pertain to the period between 1st February,2019 to 2nd May, 2019.
However, for the first time, the invoice dated 17th October, 2019 [page 42
of the plaint] sought Penal Berth Hire from 24th April, 2019 to 26th
September,2019. The subsequent invoice dated 27th December 2019
[page 44 of the plaint] sought to retrospectively impose Penal Berth Hire
from 13th February, 2019 to 31st February, 2019, which is contrary to the
invoices at pages 30 to 41, and at page 42. For this reason, the present
case requires further scrutiny and cannot be the subject matter of an
Application for summary judgment under Order XIII-A of the CPC, was
the submission. Mr. Arsiwala further submitted that Section 74 of the
Contract Act, 1872, has been interpreted by the Supreme Court in Oil &
Natural Gas Corporation Ltd v. Saw Pipes Ltd [(2003) 5 SCC
705], and in Kailash Nath Associates v. Delhi Development
Authority [(2015) 4 SCC 136]. Relying on these decisions, Mr.
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Arsiwala submitted that it is the unequivocal position of law that where a
liquidated amount is stated to be payable by way of damages, the same
can only be payable "if it is a genuine pre-estimate of damages fixed by
both parties and found to be such by the court". The Tariff Booklet does
not contain anything to suggest that "Penal Berth Hire" is a genuine pre-
estimate of damages fixed by both parties. The Plaintiff would therefore
be required to prove the same as per law. On the other hand, the Tariff
Booklet uses the phrase "Penal" to describe this amount. It is submitted
that the Tariff Booklet is solely prepared by the Plaintiff and the
Defendants have no negotiating power. Therefore, the rule of contra
proferentem would apply and this Court ought to be inclined towards
interpreting Cl. III of Section A of the Tariff Booklet as a clause stipulating
a penalty. In such a case, Mr Arsiwala submitted that the Plaintiff would
have to prove the amount, and would not be entitled to summary
judgment under Order XIII-A of the CPC.
FINDINGS ON ARGUMENT - III:-
35. The third argument canvassed by Mr. Arsiwala was that the
Plaintiff is not entitled to any Penal Berth Hire charges as they were in
the nature of a penalty and therefore have to be proved. Hence, the claim
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for Penal Berth Hire charges, cannot form the subject matter of an
Application for summary judgement, was the submission.
36. To understand this argument, one must understand on what
basis the Plaintiff has charged Penal Berth Hire charges to the 1st
Defendant Vessel. The charges that the 1st Defendant Vessel would incur
are set out in the Tariff Booklet of the Plaintiff. It is not in dispute that
any Vessel, once it engages the services of the Plaintiff - Port, would be
contractually obligated to pay for those services as per the Tariff Booklet
of the Plaintiff (Exhibit "KK" to the Plaint). The relevant portion of this
Booklet relating to the charges for Berth Hire and Penal Berth Hire are
reproduced hereunder:-
II. Berth Hire
Per Gross Ton Per Hours US $ INR
Vessels not exceeding 30,000 Gross $ 0.01
Tons
Vessels 30,001 to 60,000 Gross Tons $ 0.015
Vessels exceeding 60,000 Gross $ 0.025
Tons
Minimum Charges $ 500 per vessel
per day up top 30000 GRT & $ 750
per vessel per day for other. The
charge is livable on each call of
vessel. Berth Stay is consider from
the First Line ashore ( Actual time of
berthing- ATB ) to All cast off (Actual
time of un-birthing- ATUB)
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III. Penal Birth Hire
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
37. As can be seen from the aforesaid table, Penal Berth Hire
charges, in addition to the Berth Hire charges, become payable (i) when
the Vessel is unable to commence cargo operations within 2 hours of all
fast time (i.e. the time after which the Vessel is completely moored and
secured at the port); or (ii) when the Vessel is not ready to sail after two
hours from the time of completion of cargo operations; or (iii) when the
Vessel discontinues cargo operations for its own reasons. In the facts of
the present case, it is not in dispute that the 1st Defendant Vessel was
berthed in the Plaintiff's Port from 13th February 2019 till the same was
sold on 28th October 2020. It is also not in dispute that at least one of the
contingencies contemplated for levying Penal Berth Hire charges were
triggered on 13th February 2019 itself. When one reads the aforesaid
Tariff Booklet, it is quite clear that the charges of Penal Berth Hire are
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not penal in nature per-se but are only additional charges that the Vessel
would incur in the event (i) it does not commence cargo operations within
two hours of the all fast time; or (ii) 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 (iii) when the Vessel discontinues cargo operations
for its own reasons. There is nothing penal about it. The 1st Defendant
Vessel agreed to pay these charges when it engaged the services of the
Plaintiff - Port. Once the 1st Defendant Vessel contractually agreed to pay
these additional charges, Defendant No.2, as the Liquidator of Tag
Offshore Ltd. (the owner of the 1st Defendant Vessel), cannot resile from
this contractual obligation on the specious ground that Penal Berth Hire
charges are really nothing but a penalty and will therefore have to be
proved. 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.
38. I have come to this conclusion also because this is exactly
how Defendant No.2 also understood the nature of Penal Berth Hire
charges. As mentioned earlier, Defendant No.2 adjudicated the invoice of
the Plaintiff dated 17th October 2019 (page 42 of the Plaint). This invoice
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was for a total sum of Rs. 3,72,99,376/- (inclusive of GST). This amount
inter alia was for (i) Berth Hire charges from 24th April 2019 to 26th
September 2019 @ USD 500/- per day; (ii) Penal Berth Hire charges for
the same period @ USD 500/- per day; (iii) Port dues amounting to USD
6,600/-; and (iv) Salvage costs/operations for securing the 1st Defendant
Vessel amounting to Rs.2,00,00,000/- (Rs.2 Crores). When the
aforesaid invoice was adjudicated by Defendant No.2, he accepted all the
charges except the Salvage costs/operations. In other words, whilst
adjudicating the aforesaid invoice, Defendant No.2 accepted Berth Hire
Charges as well as Penal Berth Hire charges, for the period from 24th April
2019 to 26th September 2019. Once having accepted that these amounts
are payable to the Plaintiff, Defendant No.2, cannot today argue that the
Plaintiff is not entitled to any Penal Berth Hire Charges as it is nothing
but a penalty which will be required to be proved.
39. Another factor that goes against Defendant No.2 is that on
9th March 2020, Defendant No.2 made a statement before this Court that
as far as Berth charges and Port charges are concerned, there is no
dispute. The relevant portion of the order dated 9th March 2020 reads
thus:-
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"6. Learned senior counsel appearing on behalf of the Liquidator
(defendant No.2), on instructions, has stated that all costs/expenses
incurred by the plaintiff from 24th April, 2019 till the 1st defendant-vessel
leaves the berth including the berthing/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 |Code, 2016. It is
stated that as far as the berth/port charges are concerned there is no
dispute. However, as far as the salvage charges are concerned the same
would be treated as a liquidation costs or IRP costs subject to scrutiny
regarding its quantum by the liquidator. The said statements are
accepted as undertakings given to this Court. For the time being, this
order should suffice till the Interim Application of the plaintiff is heard
and which to my mind can be heard only once the issue regarding which
Act overrides the other is decided by this Court in Admiralty Suit No. 1 of
2015 and other connected matters."
(emphasis supplied)
40. What is important to note is that when the aforesaid
statement was made, no distinction was carved out between Berth Hire
charges and Penal Berth Hire charges. When Defendant No.2 stated that
"as far as the berth/port charges are concerned there is no dispute" it
meant that it included all Berth charges/Port Charges including Penal
Berth Hire charges. I say this because when it came to Salvage charges,
Defendant No.2 qualified his statement by stating that "as far as the
salvage charges are concerned the same would be treated as a
liquidation costs or IRP costs subject to scrutiny regarding its quantum
by the liquidator."
41. In these circumstances and for the all the reasons set out
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earlier, I am unable to agree with Mr. Arsiwala's contention that the
Plaintiff is not entitled to any amount towards Penal Berth Hire charges.
This argument, therefore, stands rejected.
ARGUMENT - IV SUBMISSIONS:-
42. The last argument canvassed by Mr. Arsiwala was that the
Plaintiff is not entitled to any amount claimed towards Salvage
costs/operations. At the outset, Mr. Arsiwala fairly stated that Defendant
No.2 stands by his statements made before this Court on 9th March, 2020
and Defendant No.2 does not deny that Salvage operations were carried
out and nor does Defendant No.2 oppose payment of the same, subject to
the Salvage expenses being proved with adequate documentation. Mr.
Arsiwala submitted that the Plaintiff is claiming these alleged charges
which were incurred during the course of emergency Salvage operations
carried out for the safety of the 1st Defendant Vessel. Mr. Arsiwala
submitted that firstly, there is a discrepancy in the amounts claimed by
the Plaintiff. As per the invoice dated 17th October 2019 [page 42 of the
plaint], the Plaintiff has sought an amount of Rs.2 Crores + GST @ 18%
towards "Salvage Cost for securing the vessel during broken mooring
rope". However, another invoice dated 27th December 2019 [page 44 of
the plaint] seeks payment of an amount of Rs. 1.85 Crores + 18% GST for
Aswale ial.112.21 comasl.4.20..docx
"Salvage Operations for Tag 15". Thus, there is an anomaly in this
regard. Mr. Arsiwala then submitted that the basis of the claim of the
Plaintiff is that emergency Salvage operations were carried out at its
behest to secure the 1st Defendant Vessel during a spell of bad weather. It
is the case of the Plaintiff that Salvage operations were carried out by TUG
SHAMBHAVI and a report was prepared by its Master [pages 85-87 of
plaint]. The Plaintiff has also relied upon an invoice dated 25th June 2019
[page 88 of plaint] issued by one Vedant Ship Management in the amount
of Rs. 1.85 Crores + 18 % GST. Based on these documents, Mr. Arsiwala
submitted:
(i) There is no correlation between the report of the
Master of TUG SHAMBHAVI and the invoice of
Vedant Ship Management. Neither does the salvage
report mention that TUG SHAMBHAVI is owned by
Vedant Ship Management, nor does the invoice at
page 88 of the Plaint mention the name TUG
SHAMBHAVI;
(ii) Thus, there is nothing on record to suggest that the
invoice at page 88 of the Plaint has any correlation
with the salvage report at page 85, nor is there any
material to substantiate the salvage report itself,
which does not bear the name of the person who
signed it;
Aswale ial.112.21 comasl.4.20..docx
(iii) The invoice at page 88 does not give any breakdown
or particulars as to the computation of the amount of
Rs. 1.85 Crores which has been levied/charged;
(iv) The invoices of the Plaintiff also do not correlate with
each other or with the invoice of Vedant Ship
Management, as set out above. There is no
consistency in the amount sought by the Plaintiff with
respect to Salvage operations; and
(v) The invoice of Vedant Ship Management at page 88 of
the Plaint has been raised in INR, whereas the
invoices of the Plaintiff mention the figures in USD.
This is yet another discrepancy.
43. He, therefore, submitted that for all the above reasons, while
the Plaintiff may very well have a claim on account of Salvage operations,
the documents on record are not sufficient for this Court to grant a
summary judgment under Order XIII-A of the CPC. This claim therefore
cannot be allowed at this stage, was the submission of Mr. Arsiwala.
FINDINGS ON ARGUMENT - IV:-
44. The last argument canvassed by Mr. Arsiwala is that the
Plaintiff is not entitled to any Salvage charges as claimed in the amended
Plaint or in the above Interim Application. He sought to dispute this
Aswale ial.112.21 comasl.4.20..docx
claim on two counts. Firstly, Mr. Arsiwala submitted that the Plaintiff is
not entitled to this claim because it made this claim vide its invoice dated
17th October 2019 and which was adjudicated upon by Defendant No.2.
On adjudicating the aforesaid claim, Defendant No.2 rejected the claim
of the Plaintiff towards Salvage charges. Not having challenged the said
adjudication under the provisions of the IBC, 2016, the Plaintiff now
cannot agitate the aforesaid claim before this Court. The second ground
on which the aforesaid claim was sought to be disputed by Defendant
No.2 was the fact that no proper documentation was produced by the
Plaintiff to substantiate its claim for Salvage.
45. 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. In the Plaint, all that has been produced in support of this
claim was a report dated 16th June 2019 [page 85 of the Plaint] and an
invoice issued by one Vedant Ship Management dated 25th June 2019
[page 88 of the Plaint] in the sum of Rs.2,18,30,000/- (inclusive of GST).
There is absolutely no breakup given as to how Vedant Ship Management
has come to the aforesaid figure of Rs.2,18,30,000/- for the salvage
operations carried out by it in relation to the 1st Defendant Vessel.
Aswale ial.112.21 comasl.4.20..docx
Further, I find that there is nothing on record to suggest that the invoice
at page 88 of the Plaint has any correlation with the Salvage report at page
85, nor is there any material to substantiate the Salvage report itself,
which does not bear the name of the person who signed it. In these
circumstances, I am unable to grant the claim towards Salvage
costs/operations under the provisions of Order XIII-A. This is a claim
that the Plaintiff will have to prove at the trial of the above suit.
46. In view of the foregoing discussion, 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/-, the
breakup of which is as follows:-
Heads of Claim 1st Period 2nd Period 3rd Period TOTAL:-
13/02/2019 to 16/01/2020 to 30/10/2020 to
15/01/2020 (Till 29/10/2020 15/12/2020
filing of the (Till the Sale of
suit) the Vessel)
Port Charges Rs.10,01,000/- Rs.7,28,728/- Rs.17,29,728/-
Berth Hire Charges Rs.1,18,65,000/- Rs.1,05,98,700/- Rs.2,24,63,700/-
Penal Berth Hire Charges Rs.1,18,65,000/- Rs.1,05,98,700/- Rs.2,24,63,700/-
Mooring Crew Rs.37,800/- Rs.37,800/-
GST Rs.44,51,580/- Rs.39,53,508/- Rs.84,05,088/-
Rs.5,51,00,016
47. There will also be a decree in favour of the Plaintiff and only
Aswale ial.112.21 comasl.4.20..docx
against the sale proceeds of the 1st Defendant Vessel for interest @ 18%
per annum on the said sum of Rs.5,51,00,016/- from 18th December 2020
till payment and/or realization. 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. I am also not inclined to grant any
interest for the period prior to 18th December 2020, or legal costs, at this
stage as there is no proper breakup or substantiation supplied for the
same. 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.
48. The Interim Application is disposed of in the aforesaid
terms. However, there shall be no order as to costs.
49. This order will be digitally signed by the Private
Secretary/Personal Assistant of this Court. All concerned will act on
production by fax or email of a digitally signed copy of this order.
[ B. P. COLABAWALLA, J. ]
