Bombay High Court

Idbi Bank Ltd vs Mv Tag Navya (Imo No. 8819081) And ... on 22 November, 2022

Bench: N. J. Jamadar

SWAROOP Digitally
SWAROOP
signed by

SHARAD SHARAD PHADKE
Date: 2022.11.24
PHADKE 17:33:52 +0530
37 ial 25181 of 2022.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADMIRALTY AND VICE ADMIRALTY JURISDICTION
IN ITS COMMERCIAL DIVISION
INTERIM APPLICATION (L) 25181 OF 2022
IN
COMM. ADMIRALTY SUIT NO.85 OF 2021

IDBI Bank Ltd. ... Applicant/Plaintiff
Versus
MV Tag Navya (IMO No.8819081) and Anr. ... Defendants
WITH
INTERIM APPLICATION NO.493 OF 2021
IN
COMM. ADMIRALTY SUIT NO.85 OF 2021

Suresh Kumar Magotra ... Applicant
and
IDBI Bank Ltd. ... Plaintiff
versus
Tav Navya and Anr. ... Defendants
WITH
INTERIM APPLICATION NO.496 OF 2021
IN
COMM. ADMIRALTY SUIT NO.85 OF 2021

Capt. Neeraj Prakash Gandhi ... Applicant
and
IDBI Bank Ltd. ... Plaintiff
versus
Tav Navya and Anr. ... Defendants
WITH
INTERIM APPLICATION (L) NO.24472 OF 2021
WITH
COMM. ADMIRALTY SUIT NO.74 OF 2021

Oil and Natural Gas Corporation Ltd. ... Applicant
versus
Sale Proceeds of M.V.Tag Navya ... Defendants
WITH
INTERIM APPLICATION (L) NO.8013 OF 2021

SSP 1/13
37 ial 25181 of 2022.doc

IN
COMM. ADMIRALTY SUIT NO.85 OF 2021

Arjun Singh Kalra ... Applicant
and
IDBI Bank Ltd. ... Plaintiff
versus
M.V.Tag Navya and Anr. ... Defendants
WITH
INTERIM APPLICATION (L) NO.8774 OF 2021
IN
COMM. ADMIRALTY SUIT NO.85 OF 2021

Amarjeet ... Applicant
and
IDBI Bank Ltd. ... Plaintiff
versus
M.V.Tag Navya and Anr. ... Defendants
WITH
INTERIM APPLICATION NO.50 OF 2022
IN
COMM. ADMIRALTY SUIT NO.85 OF 2021

Jamil Akhtar ... Applicant
and
IDBI Bank Ltd. ... Plaintiff
versus
M.V.Tag Navya and Anr. ... Defendants

Mr. Zarir Bharucha with Mr. Rishi Thakur, Ms. Dhwani Gala i/by ZBA for IDBI Bank
in IAL 25181 of 2022, and for Respondent in IAL 8013 of 2021, IA 50 of 2022, IAL
8774 of 2021, IA 493 of 2021 and 496 of 2021.
Ms. Rajalakshmy Mohandas i/by Rajalakshmy Associates for Plaintiff in COMAS 74
of 2021.
Mr. Jainendra Sheth i/by Mr. Yunus Vakharia for Applicant in IAL 8013 of 2021.
Mr. Mayank Vira i/by Dave and Co., for Applicant in IA 496 of 2021 and IAL 8774 of
2021
Ms. Gayatri Mohite i/by The Law Point for Plaintiff in COMASL 17795 of 2022.
Mr. Amir Arsiwala with Mr. Dhaval Deshpande, Ms. Nidhi Shah, for Liquidator - Tag
Offshore.

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37 ial 25181 of 2022.doc

CORAM: N.J.JAMADAR, J.

                     DATE:         22nd NOVEMBER, 2022

P.C.:

1. Interim Application (L) No.25181 of 2022 is taken out seeking

declaration that being the registered mortgagee of M.V.Tag Navya - Defendant No.1

Vessel and a decree holder, the Applicant/Plaintiff is entitled to priority in payment in

accordance with Section 10(1)(b) of the Admiralty ( Jurisdiction and Settlement of

Maritime Claims) Act, 2017 (the Admiralty Act, 2017) and for an order to release the

entire sale proceeds of the Defendant No.1 Vessel after keeping aside the sum of

Rs.4,41,18,686/- to cover the amount towards the claim of the claimants who stand

high in priority.

2. M.V.Tag Navya - Defendant No.1 Vessel was arrested pursuant to an

order dated 20th January, 2020. By a subsequent order dated 22 nd May, 2020 the

Defendant No.1 Vessel was sold and the sale proceeds have since been realized. Tag

Offshore Limited - Defendant No.2 was the registered owner of the Defendant No.1

Vessel. Insolvency Resolution Proceedings were initiated against Tag Offshore

Limited and pursuant to the orders passed by the National Company Law Tribunal

(NCLT) under Section 33 of the Insolvency and Bankruptcy Code, 2016, Tag Offshore

Limited is ordered to be liquidated and the liquidator stands appointed.

3. The Applicant/Plaintiff instituted Commercial Admiralty Suit No.85 of

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2021 on the strength of the registered mortgage. Interim Application No.2181 of 2022

was taken out by the Applicant for a summary judgment under Order XIIIA of the

Code of Civil Procedure, 1908 and/or a decree on admission under Order XII Rule 6

of the Code of Civil Procedure, in an admiralty action instituted in rem against the sale

proceeds of M.V.Tag Navya - Defendant No.1 Vessel.

4. By an order dated 2nd August, 2022 the said Interim Application was

allowed and a summary judgment was passed against the sale proceeds of M.V.Tag

Navya in the sum of USD 33,19,734 along with further interest at the rate of 5.25% on

the principal amount of USD 31,55,697.96 from the date of the suit till realization.

Armed with the said decree, the Applicant/Plaintiff has preferred this Application.

5. It would be contextually relevant to note that in an earlier Interim

Application (L) No.8364 of 2020, by an order dated 18 th December, 2020, this Court

had directed the Sheriff of Mumbai to publish a notice under Rule 1088 of the Bombay

High Court (Original Side) Rules, 1980 inviting claims against the Defendant No.1

Vessel or the proceeds of sale thereof and the claimants were called upon to institute

Suit within a period of 90 days from the date of publication of the said notice. This

Court had not then acceded to the prayer of the Plaintiff to determine the priority.

However, liberty was granted to the Plaintiff to renew the prayer after the Plaintiff

obtains a judgment and decree in its favour.

6. Pursuant to the aforesaid directions, the Sheriff of Mumbai published a

SSP 4/13 37 ial 25181 of 2022.doc

notice on 22nd December, 2020 calling upon the persons to lodge claims within 90 days

from the date of the publication of the said notice. It appears that pursuant to the said

notice, six crew members namely Arjun Singh, Neeraj Prakash Gandhi, Amarjeet,

Jamil Akhtar and Suresh Kumar Magotra have filed IA No.493 of 2021, IA No.496 of

2021, IAL 8013 of 2021, IAL 8774 of 2021 and IA 50 of 2022 seeking their wages.

James Joseph, another crew member who lays a claim, has not instituted any

proceedings. Oil and Natural Gas Limited has instituted Suit No.74 of 2021 arising out

of Charter Party Agreement in respect of the Defendant No.1 Vessel. The Board of

Trustees of Jawaharlal Nehru Port Trust has also instituted Comm. Admiralty Suit (L)

No.17795 of 2022 against the sale proceeds of M.V.Tag Navya for payment of port

charges.

7. An additional Affidavit is filed on behalf of the Applicant setting out the

priorities which the claimants are entitled to.

8. An Affidavit in Reply is filed on behalf of Defendant No.2 - Liquidator

of Tag Offshore Limited. The prayers in the Application are resisted by the

Liquidator primarily on the ground that the Plaintiff has not contributed to the

liquidation costs in accordance with the provisions contained in Insolvency and

Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (Liquidation

Process Regulations), and, consequently, the Applicant's maritime claim is lost.

9. I have heard the learned Counsel for the Applicant/Plaintiff and the

SSP 5/13 37 ial 25181 of 2022.doc

learned Counsel for the Liquidator of Tag Offshore Limited - Defendant No.2, the

learned Counsel for the Applicants - Crew Members in the Interim Applications,

learned Counsel for the Port Trust in Suit (L) No.17795 of 2022 and the learned

Counsel for the Plaintiff in Suit No.74 of 2021.

10. Evidently, the Applicant/Plaintiff has obtained a decree. Neither the

crew members, nor the Port Trust and ONGC have yet been able to obtain a decree.

Nonetheless, the Applicant/Plaintiff asserts that they are proceeding on an

assumption that the claim of the crew members, Port Trust and ONGC, who have

lodged their respective claims pursuant to a notice published under Rule 1088 of the

Bombay High Court (Original Side) Rules, deserve to be allowed and on that basis the

priorities may be determined and the sums which are claimed by the crew members

and Port Trust, which rank higher in priority, be kept aside.

11. In the statement of priorities of claim (Exhibit A) annexed to the

additional Affidavit, the Applicant/Plaintiff has furnished the particulars as under :



Sr.No.   Detail of Claimant         Status   of     the Claim amount          Priority    under
                                    claimant                                  Section 10 of the
                                                                              Admiralty    Act,

1        Arjun Singh (IA(L) No.8013 Maritime       Lien Rs.7,80,000/-        First priority
         of 2021 in COMAS 85 of (Crew)                  together       with
         2021                                           interest of 24% p.a.

2        Neeraj Prakash Gandhi (IA Maritime        Lien Rs.14,53,000/-        First priority
         No.496 of 2021 in COMAS (Crew)
         85 of 2021)


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3       Amarjeet (IA(L) No.8774 of Maritime      Lien Rs.1,96,000/-         First priority
        2021 in COMAS No.85 of (Crew)
        2021)

4       James Joseph              Maritime       Lien Rs.20,24,289/-        First priority
                                  (Crew)
5       Jamil Akhtar (IA No.50 of Maritime       Lien Rs.16,85,000/-        First priority
        2022 in COMAS 85 of 2021) (Crew)

6       Suresh Kumar Magotra (IA Maritime        Lien Rs.2,25,000/-         First Priority
        493 of 2021 in COMAS 85 of (Crew)
        2021)

7       The Board of Trustees of Maritime        Lien Rs.3,77,55,397/-     Second priority
        Jawaharlal Nehru Port Trust (Port)            together        with
        (Comm. Admiralty Suit (L)                     interest at 16.75%
        No.17795 of 2022)

8       IDBI Bank Ltd.            Registered          USD 3,319,734/- Third priority
        (Commercial Suit No.85 of Mortgagee           together        with
        2021)                                         contractual
                                                      interest at 5.25%
9       Oil   and   Natural   Gas Other claims        Rs.14,07,69,430/- Fourth priority
        Corporation   Limited                         together        with
        (Commercial Suit No.74 of                     interest at 18%
        2021)

12. Under Sections 2(g) and 9(1)(a) and (d) of the Admiralty Act, 2017, the

claim for wages and other sums due to the crew members and claims for port, canal

and other water way dues and any other statutory dues related to Vessel, inter alia,

constitute a maritime lien. Under Section 9(1)(a) of the Admiralty Act, 2017, the

claims of the crew members command the highest priority. The claims for port and

SSP 7/13 37 ial 25181 of 2022.doc

other statutory dues stand at the fourth place. Under Section 10(1) of the Act, the

order of priority of maritime claims is provided as under :

"10. Order of priority of maritime claims - (1) The order of maritime claims determining the inter se priority in an admiralty proceeding shall be as follows :

(a) a claim on the vessel where there is a maritime lien;

(b) registered mortgages and charges of same nature on the vessel;

(c) all other claims;"

13. Sub-section (2) of Section 10 governs the determination of priority, inter

se, as under :

"(2) The following principles shall apply in determining the priority of claims inter se -

(a) if there are more claims than one in any single category of priority, they shall rank equally;

(b) claims for various salvages shall rank in inverse order of time when the claims thereof accrue."

14. The claim of the Applicant/Plaintiff, based on a registered mortgage of

the Defendant No.1 Vessel, falls within clause (b) of sub-section (1) of Section 10.

Whereas, the claims of the crew members and the Port Authority which are in the

nature of maritime lien stand at a higher pedestal under clause (a) of sub-section (1) of

Section 10.

15. As regards the last claimant ONGC, the Plaintiff in Suit No.74 of 2021,

the learned Counsel for the Plaintiff, fairly submitted that the claim of the ONGC falls

SSP 8/13 37 ial 25181 of 2022.doc

in Section 4(1)(h) as it arises out of the failure to make the vessel available in

accordance with the terms of the agreement between the Plaintiff and Defendant No.2

- Tag Offshore Limited ( in liqn.). The said claim falls in clause (c) of sub-section (1)

of Section 10, below the claim of the Applicant/Plaintiff.

16. In view of the above, the priorities of the claimants are required to be

determined as under :




Sr.No.   Detail of Claimant                  Priority of the Claimants
1        Arjun Singh (IA(L) No.8013 of 2021 First Priority under Section 10(1)(a)     read with
         in COMAS 85 of 2021                Section 9(1)(a)

2        Neeraj Prakash Gandhi (IA No.496 of First Priority under Section 10(1)(a)    read with
         2021 in COMAS 85 of 2021)           Section 9(1)(a)
         (Note : Crew has not filed separate
         suit)
3        Amarjeet (IA(L) No.8774 of 2021 in First Priority under Section 10(1)(a)     read with
         COMAS No.85 of 2021)               Section 9(1)(a)

4        James Joseph                     First Priority under Section 10(1)(a)       read with
         (Note : Crew has yet not filed a Section 9(1)(a)
         suit/proceeding)
5        Jamil Akhtar (IA No.50 of 2022 in First Priority under Section 10(1)(a)      read with
         COMAS 85 of 2021)                 Section 9(1)(a)

6        Suresh Kumar Magotra (IA 493 of First Priority under Section 10(1)(a)        read with
         2021 in COMAS 85 of 2021)       Section 9(1)(a)

7        The Board of Trustees of Jawaharlal Second priority under Section 10(1)(a) read with

Nehru Port Trust (Comm. Admiralty Section 9(1)(d) Suit (L) No.17795 of 2022)

8 IDBI Bank Ltd. Third priority under Section 10(1)(b) read with (Commercial Suit No.85 of 2021) Section 4(1)(c)

SSP 9/13 37 ial 25181 of 2022.doc

9 Oil and Natural Gas Corporation Fourth priority under Section 10(1)(c) read with Limited Section 4(1)(h) (Commercial Suit No.74 of 2021)

17. The priorities are, thus, determined and ordered accordingly.

18. Under Rule 1087 (e)(iv) any person having claim against ship or

proceeds of sale thereof, is enjoined to file a suit before the expiration of the period

specified in the notice. In the case at hand, crew members have lodged Interim

Applications. It may, therefore, be expedient to allow the crew members to suitably

amend the Interim Applications so as to convert them into plaints. Necessary

amendment be carried out by the Applicants within a period of four weeks.

18. In any event, the adjudication of the claims of the rest of the claimants

including the crew members and the Port authority, may require time as the Plaintiffs'

will have to either substantiate the claim by adducing evidence or take out an

application under Order XIIIA for a summary judgment or under Order XII for a

decree on admission. The Applicant/Plaintiff has thus prayed that keeping aside the

amount which may be ultimately decreed in the suits, balance amount be ordered to be

paid to the Applicant/Plaintiff.

19. The total amount claimed by the crew members and the Port Trust

which stand high in priority comes to 4,41,18,686/-. The total sale proceeds credited

to the account of the Prothonotary and Senior Master are Rs.14,00,59,238/-. In the

SSP 10/13 37 ial 25181 of 2022.doc

circumstances, to account for the interest component which the Court may award on

the claim of the crew members and the Port Trust, it may be expedient to direct that a

sum of Rs.5 Crores be kept aside to satisfy the decrees which may be eventually passed

in favour of the crew members and the Port Trust. The Prothonotary and Senior

Master may pay the balance amount in satisfaction of the decree passed in favour of

the Applicant/Plaintiff in the sum of USD 33,19,734/- along with further interest @

5.25% p.a. on the principal sum of USD 31,55,697.96.

20. As regards the objection raised by the Liquidator of Tag Offshore

Limited ( in liqn. ), which is primarily based on the non-compliance with Regulation

21A of the Liquidation Process Regulations, since the controversy between the

Applicant and the Liquidator essentially revolves around the liability to pay the

liquidation costs, it may be expedient to grant liberty to the liquidator to agitate the

said grievance in an appropriate proceedings before the NCLT and recover

proportionate liquidation costs from the Applicant.

20. Hence, the following order :

ORDER

(i) Interim Application (L) No.25181 of 2022 stands allowed in the

following terms :

(a) The priorities are determined in terms of paragraph No.16

and 17 above.

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                      (b)    Liberty is granted to the Applicants in Interim Application

No.493 of 2021, 496 of 2021, Interim Application (L) Nos.8013 of 2021, 8774 of 2021

and Interim Application No.50 of 2022 to convert the Interim Applications into

plaints. Necessary amendment be carried out within a period of four weeks.

to satisfy the decrees which may be eventually passed in favour of the crew members

and the Port Trust.

(d) The balance amount be paid to the Applicant/Plaintiff

towards the satisfaction of the judgment and decree dated 2 nd August, 2022 in Comm.

Admiralty Suit No.85 of 2021 in the sum of USD 33,19,734/- along with further

interest @ 5.25% p.a. on the principal sum of USD 31,55,697.96, subject to filing an

undertaking to the effect that in the event the amount of Rs.5 Crores kept aside is

found insufficient to satisfy the decrees of the claimants which stand high in priority,

the Plaintiff/Applicant would bring back the amount to meet the shortfall along with

the interest at such rate as may be directed by the Court.

(e) The Applicant/Plaintiff will be at liberty to seek further

payment in the event there is remainder after satisfying the decrees which may be

passed in favour of the claimants which rank high in priority than the

Applicant/Plaintiff or if those claimants fail to prove their claims.

(f ) Liberty is granted to the Liquidator to agitate the grievance

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regarding non-payment of the proportionate liquidation costs in accordance with

Regulation 21A of the Liquidation Process Regulations, 2016 in an appropriate

proceedings before the NCLT.

(g) The Interim Application (L) No.25181 of 2022 accordingly

stands disposed.


                                                  ( N.J.JAMADAR, J. )




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