Gujarat High Court
Credit Suisse Ag vs M.V. Sam Hawk on 1 February, 2021
Bench: Biren Vaishnav
C/AS/17/2020 CAV IA ORDER
IN THEHIGHCOURTOF GUJARATAT AHMEDABAD
CIVILAPPLICATION(OJ) (FORJOININGPARTY) NO. 1 of 2021
In R/ADMIRALTYSUITNO. 17 of 2020
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ENMALTDCORPORATION
Versus
CREDITSUISSEAG
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Appearance:
MRMANAVA MEHTAfor the PETITIONER(s)No.
MRDHRUVTOLIYAfor the RESPONDENT(s)No.
MRAMITAVAMAJUMDAR,ADVOCATEWITHMRHARSHN PAREKHfor the
RESPONDENT(s)No.
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CORAM: HONOURABLE MR. JUSTICE BIREN VAISHNAV
Date: 01/02/2021
CAVIA ORDER
1. The applicant - ENMA Limited Corporation has filed this
application to implead itself as defendant no. 2 in the proceedings
of the Admiralty Suit No. 17 of 2020.
2. Facts in brief are as under:
2.1 Admiralty Suit No. 17 of 2020 has been filed by Credit Suisse
AG claiming that it had mortgage over the opponent no. 2 vessel -
M.V. Sam Hawk as well as M.V. Sam Jaguar for recovery of an
amount of USD 24,143,731.38. According to the applicant, this
court by an order dated 13.05.2020 was pleased to grant an arrest
of opponent no. 2 vessel - M.V. Sam Hawk. The registered
owners did not appear to secure the claim of the plaintiff of the
Admiralty Suit No. 17 of 2020. On 22.06.2020, orders were
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passed for the sale of the vessel and by an order dated
07.08.2020, the vessel was sold to M/s. Lavera Shipping Inc. and
the sale proceeds of USD 10,655,000 are deposited in this Court.
A bill of sale was issued in favour of M/s. Lavera Shipping by an
order of 18.08.2020 on the sale proceeds being deposited.
2.2 The case of the applicant is that suddenly after the sale of
the ship, the opponent no. 2 herein i.e. the registered owners of
M.V. Sam Hawk have filed their written statement on 10.09.2020 in
Admiralty Suit No. 17 of 2020 admitting the entire claim of the
plaintiff in the suit of the amount of USD 24,143,731. The case of
the applicant is that once the vessel had been transferred to M/s.
Lavera Shipping, the registered owner ought not to have shown
any interest in the vessel or in the suit and the sudden appearance
of the erstwhile registered owners filing a written statement and
admitting the entire claim of the plaintiff of the Admiralty Suit No.
17 of 2020 is an attempt to obtain a collusive decree so as to dupe
the claimant's dues which are due and have been claimed by way
of filing Admiralty Suit No. 14 of 2020.
2.3 It is the claim of the applicant that it has filed Admiralty Suit
No. 14 of 2020 for recovery of the sums due for the supplied fuel
and bunkers for an amount of USD 475,852.67 from the registered
owners. In the event, the suit of the plaintiffs namely Admiralty
Suit No. 17 of 2020 is decreed, the applicant's suit namely
Admiralty Suit No. 14 of 2020 would suffer inasmuch as it would
prejudice their right for entitlement to claim its dues from the sale
proceeds deposited by the successful bidder as is sought by
obtaining such collusive decree.
C/AS/17/2020 CAV IA ORDER
3. Mr. Manav Mehta, learned counsel for the applicant who is
the original plaintiff of Admiralty Suit No. 14 of 2020 would submit
that by various orders passed in various Admiralty Suits being
Admiralty Suit No. 11 of 2020, Admiralty Suit No. 14 of 2020 and
Admiralty Suit No. 17 of 2020, M.V. Sam Hawk has been arrested
on various dates by orders of this court dated 27.03.2020,
09.04.2020 and 13.05.2020. Mr. Mehta would submit that by
reading the claims in the Admiralty Suit at page 31, para 33 of the
suit, it is apparent that the registered owners by filing the written
statement have admitted the entire claims viz-a-viz M.V. Sam
Hawk, the vessel in question in the Admiralty Suits as well as M.V.
Sam Jaguar. He would submit that the written statement is
primarily filed only by and on behalf of SAM HAWK and it is not
open for the defendant to admit the liability of the registered owner
SAM JAGUAR.
3.1 Mr. Mehta would invite the Court's attention to the Admiralty
Suit by the applicant namely Admiralty Suit No. 14 of 2020 and
submit that there is an outstanding claim viz-a-viz the registered
owner of Sam Hawk and if a collusive decree by the defendant of
the Admiralty Suit No. 17 of 2020 on the basis of a written
statement by which a claim is admitted is passed, it would be a
clear attempt to steal a march over other creditors. He would
submit that if Admiralty Suit No. 17 of 2020 is decreed it will
prejudicially affect the applicant and other creditors. He would
therefore submit that he has a right to be joined in Admiralty Suit
No. 17 of 2020 as defendant no. 2 because then he would
question the documents and would be able to object to the
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documents and thwart a passing of a collusive decree on the basis
of the admissions in the written statement.
4. Mr. Amitava Majumdar, learned advocate appearing for Mr.
Harsh Parekh for the original plaintiff of Admiralty Suit No. 17 of
2020 and for the opponent no. 1 in the present application would
submit that the intervening application must not be entertained.
Reading of the application would indicate that the intervenor is
opposing the summary judgement on the ground that the written
statement was filed by the owners of Sam Hawk after the sale of
the vessel. He would submit that the intervention application
cannot be allowed. Taking the Court through the various
documents on record of the Admiralty Suit namely the mortgage
documents, loan documents, Mr. Majumdar would submit that in
each and every document it was unequivocally clear that the
mortgage and the loan documents were for both M.V. Sam Hawk
and M.V. Sam Jaguar. He would submit that the bank are the
registered mortgagees of debt for two loan agreements. The
liability of M.V. Sam Hawk and M.V. Sam Jaguar is joint and
several. He would take the court through the master agreement,
the mortgage deed, the loan agreement and various terms namely
borrowers, liabilities etc and to the signatories of the agreement to
submit that the liability of both Sam Hawk and Sam Jaguar was
joint and several and therefore it is not open for the applicant to
contend that the documents in relation to the liability were only that
in context of the sole defendant's ship M.V. Sam Hawk.
4.1 Mr. Majumdar relied on the decisions in the case of
Sparebanken Sogn og Fjordane v. M.V. Bos Angler & Ors. [Notice
C/AS/17/2020 CAV IA ORDER
of Motion No. 242 of 2013 in Admiralty Suit No. 24 of 2011,
th
judgment dated 20 March 2013]; The Cosmos Cooperative Bank
Ltd v. M. T. Pratibha Cauvery and Anr. [Admiralty Suit (L) No.356
th
of 2013, order dated 10 May 2013]; and Navamossa Navigation
S.A. v. M.V. MEEM (IMO No.8311429) & 2 Ors. [Commercial
th
Admiralty Suit No.129 of 2017, order dated 28 June 2018] read
with Joplin Overseas Investment Ltd. v. Navamosa Navigation S.A.
and Anr. [Chamber Summons No.143 of 2018 in Commercial
th
Admiralty Suit No.129 of 2017, order dated 18 July 2018] and
Joplin Overseas Investment Ltd. v. Navamosa Navigation S.A. and
th
Anr. [Commercial Admiralty Suit No.129 of 2017, order dated 14
February 2018]. Relying on these decisions and the relevant
paragraphs thereto, he would contend that the status of the
intervener is that of merely intervening. He cannot challenge the
claim of the plaintiff. His claim would be only to the extent proved
by him for determining the priority of the claims. He cannot be
therefore be joined as defendant in the suit. In the case on hand,
he would submit that the applicant has himself filed a separate suit
namely Admiralty Suit No. 14 of 2020 which can be decided on its
own merits. He would further submit that by the application, what
the applicant seeks is to thwart a decree which is to be passed on
an admission of the loan amount outstanding viz-a-viz the two
ships and the mortgage agreement and the loan agreements
entered into. The entire liability has been admitted. In case a
C/AS/17/2020 CAV IA ORDER
decree is passed on the basis of the admission in a summary
manner, it would not prejudicially affect the intervenor, inasmuch
as the sale proceeds by virtue of the sale of the vessel to
M/s.Lavera Shipping for an amount of USD 10,655,000 are
deposited in the High Court and which sale proceeds are in no way
affected by obtaining a decree under the summary procedure. The
claim of the plaintiff/applicant in obtaining a judgement and
seeking disbursement from the sale proceeds is not prejudicially
affected. The applicant therefore need not be joined as party
defendant no. 2 in the present suit.
5. Having considered the submissions of the learned advocates
for the respective parties, what needs to be seen is that Admiralty
Suit No. 17 of 2020 has been filed by the plaintiff - opponent no. 1
in the application, as according to the plaintiff bank an amount is
due under the loan agreements and under the mortgages for
financing the vessels which were jointly and severally owned by
registered owners with M/s. SPV Sam Jaguar Inc. Para 33 of the
plaint of the Admiralty Suit indicates amounts outstanding towards
principal and unpaid installments from M.V. Sam Hawk and M.V.
Sam Jaguar. Perusal of the loan agreements and the conditions of
the loan agreements would indicate that the liability of M.V. Sam
Hawk and M.V. Sam Jaguar was joint and several. Even the
master agreement dated 31.01.2013 was jointly and severally
between SPV Sam Hawk and SPV Sam Jaguar. The bank had
filed the suit as it was claiming as a registered mortgagee of the
defendant vessel secured by a first preferred liberian ship
mortgage and the loan agreement executed between the plaintiff
and the registered owners of the vessel M/s. SPV Sam Hawk Inc
C/AS/17/2020 CAV IA ORDER
and M/s. SPV Sam Jaguar Inc. both of whom are severally and
jointly liable for the plaintiff's claim.
6. If we also peruse the papers of the Admiralty Suit filed by the
applicant of the present OJ Civil Application, what is evident is that
the plaintiff has filed suit for recovery of outstanding amounts for
the supplies not only made to not M.V. Sam Hawk but other six
sister vessels which are produced in detail in para 11 of the plaint
of the Admiralty Suit No. 14 of 2020. Essentially the claim of the
applicant in Admiralty Suit No. 14 of 2020 is to the tune of USD
456,352.67 for supply of fuels and bunkers.
7. If the judgements referred to by Mr. Majumdar are seen,
though Mr. Manav Mehta would extensively refute the applicability
of these judgements on the ground of their inapplicability in context
of the Bombay High Court rules, the question of law that is culled
out by the decision in the case of Bos Angeler (supra) is that the
applicant cannot merely be entitled to be seeking intervention in
the suit of the plaintiff because it cannot seek to disprove the claim
of the plaintiff by being permitted to intervene as a defendant. It is
evident that in the present case the applicant has independently
filed a separate suit for claiming its entitled amount towards
outstanding dues. It cannot be permitted to intervene in the suit by
way of the Admiralty Suit No. 17 of 2020 to adjudicate a legitimate
maritime claim. It would be relevant to reproduce paragraphs 28,
29, 41, 44, 45 and 48 of the decision in the case of bos angeler
(supra).
"28. Hence it can be seen that upon having a right, title
or interest in the property which is the subject matter of
C/AS/17/2020 CAV IA ORDER
the suit, a party can by himself apply to intervene in the
suit. He would be a defendant in the suit. He would be
entitled to defend the suit and for that purpose to
challenge the Plaintiff's claim. He, of course, may put
up his claim which would be considered alongside the
Plaintiff's claim, but having sought to intervene himself
he cannot be disallowed from challenging the Plaintiff's
claim in the suit. Issues arising between him and the
Plaintiff would be framed which would be required to
be answered considering his evidence, oral and
documentary and challenge to this claim by the
Plaintiff. He would, therefore, be entitled to cross
examine the Plaintiff and to lead his own evidence and
be cross examined by the Plaintiff upon his claim. His
claim may be challenged by the other defendants in
the suit likewise.
29. The claimant who intervenes upon leave being
granted to intervene in the suit would have to
simpliciter to prove his claim. There is no provision
under which he can challenge the Plaintiff's claim. He
is not given notice to challenge the Plaintiff's claim: he
is noticed to lodge and prove his claim. Even if he is
allowed to intervene in the suit that would not be as a
defendant in the suit. His claim would only be to the
extent proved by him for determining the priority of all
claims. He is, therefore, not a defendant in the suit who
would be entitled to cross examine the Plaintiff.
...
41. In the light of such common sense interpretation
we must interpret the words "to intervene" such as to
derive a practical result of such intervention. Would it
necessitate an intervention in a particular Admiralty
Suit so as to prove to Court that the intervener also
has a legitimate maritime claim which is entitled to be
settled from the sale proceeds of the ship or whether it
could have been contemplated by the High Court, the
rule making authority to invite all and sundry to tell the
Court whether the Plaintiff's claim is tenable at law, an
aspect the Court is duty bound to see for itself and to
satisfy itself without the aid, advise, or arguments of a
C/AS/17/2020 CAV IA ORDER
stranger on invitation. What a grotesquely impractical
result it would have if the world at large is invited to
challenge the Plaintiff's claim? Any one, even a
busybody, would be entertained by the Court to be a
defendant in the Plaintiff's cause. The court would
throw open its doors to various strangers and have to
hear them in support of their contention, not why they
should be paid any part of the sale proceeds, but why
the Plaintiff should not be paid. That is neither the
intendment nor the practicality of determination of such
admiralty claims.
...
44. Should a reading of the aforesaid principles not
drive this Court to consider the unintended
unreasonable result of a person claiming priority,
invited to do so, be the one who does only that, without
more? Can he be allowed to drive the litigation at his
whim into unchartered waters attacking the Plaintiff's
original claim itself? It would be like the camel in the
fable who drove out the Arab from the tent upon being
allowed to put his neck in the tent against the night's
bitter cold. Such was never the intention of granting
others a finger in the pie of the plaintiff.
45. Rule 951 cannot be read as to include the
intervener much like the intervener under Rule 949. He
must abide the purpose for which he is invited and
noticed. He can and must only prove his claim and his
priority. He cannot go any further. That would be
unwarranted transgression, unintended by the Rules.
...
48. The contention is, therefore, seen to be incorrect
not only because the two rules specifying the eligibility
of the two interveners is different, but the purpose for
which they would intervene is also different.
Consequently simply because the persons who lodged
their claim are termed "interveners" by the defendants
because they would obtain leave to intervene, they are
not persons belonging to the same class. They would
be given leave to intervene only to prove their claim
C/AS/17/2020 CAV IA ORDER
before Court and not to disprove the Plaintiff's claim by
cross examining the Plaintiff whether they seek to
intervene before the Plaintiff obtains a decree or after
the Plaintiff obtains decree in the suit."
7.1 Similarly, considering the case of Cosmos (supra), which are
almost identical to the facts of the plaintiff in Admiralty Suit No. 17
of 2020 , it was a case where a caveator opposed the disposal of
the suit. The court in the relevant paragraphs held that if the sale
proceeds of the vessels which are deposited in the court are not
adversely affected, the intervenor cannot object to the plaintiff's
application seeking summary judgement when the disbursement of
sale proceeds is not prejudicially affected. The relevant
paragraphs of Cosmos (supra) read as under:
"The purpose of the Intervener being allowed to be
joined as a party Defendant is to ensure that no
orders are ultimately passed qua the ship which is
arrested or the sale proceeds in respect of the said
ship if sold so that the Intervener who also has a
right to obtain orders against the Vessel and/or
share its sale proceeds is not lost. In the instant
case, the Court is only passing a decree by
consent and the Court is informed that the Vessel
is ordered to be sold by the Chennai High Court
and the sale proceeds are directed to be deposited
before the Chennai High Court. The parties, by
these Consent Terms, are not seeking any orders
against the sale proceeds of the Defendant No.1
Vessel and the claim of the Caveator qua the sale
proceeds is in no way affected by filing of the
present Consent Terms by the parties and
obtaining an order thereon. It is also not the case
of the Caveator that the claim of the Plaintiff is
bogus and the decree obtained by consent is to
defraud the Creditors of the Defendants who have
a right qua the vessel or its sale proceeds. In any
event, the order of arrest of the Defendant No.1
C/AS/17/2020 CAV IA ORDER
was passed on 24th April 2013 after the Court was
satisfied qua the bonafides of claim of the Plaintiff
against the Defendants. In view thereof, opposition
on the part of the Caveator on the basis of Rule
949 of the Rules is rejected."
8. What is therefore evident from the aforesaid questions that
appear for consideration to decide the maintainability of the
application of the present applicant for being entitled to intervene
in the present suit being Admiralty Suit No. 17 of 2020 is
concerned, the following summary of reasons disentitled the
intervenor to be joined as defendant no. 2 in the suit. They are as
under:
(I) Admiralty Suit No. 17 of 2020 has been filed by the Bank
Credit Suisse AG for claiming an amount that they are
entitled to towards the loan advance and the mortgage
deeds executed between M.V. Sam Hawk and M.V. Sam
Jaguar jointly and severally.
(II)By way of a written statement the registered owner of M.V.
Sam Hawk has admitted the liability of entire amount of loans
outstanding and therefore a summary judgement is invited.
(III) The applicant has already filed an Admiralty Suit No.
14 of 2020 and has already obtained an order of arrest. The
arrested vessel has subsequently been sold and the sale
proceeds of over USD 10,655,000 are lying deposited
towards the sale proceeds of the vessel in the registry of this
court. Admiralty Suit No. 14 of 2020 has been filed by the
present applicant towards the outstanding dues as claimed in
its plaint for supply of fuel and bunkers not only to M.V. Sam
C/AS/17/2020 CAV IA ORDER
Hawk but other six sister ships.
(IV) The claim that is admitted by the registered owner
towards the loan agreement is far more than the amount of
sale proceeds that is deposited. The apprehension therefore
of the present applicant that the sale proceeds will be used
and therefore it will prejudicially affect the priority claim of the
plaintiff of Admiralty Suit No. 14 of 2020 is misconceived
because even the amount of sale proceeds will not satisfy
the claim of plaintiff of Admiralty Suit No. 17 of 2020.
Therefore the apprehension and the perception of the
applicant that a collusive decree is sought to be obtained is
misconceived.
(V) Nothing is shown by the applicant to submit that the entire
dues that are admitted by the registered owner of the vessel
towards the outstanding dues of the loan from the bank that
is the plaintiff of Admiralty Suit No. 17 of 2020 are to be paid
out of sale proceeds which are lying intact with the court and
therefore the ratio in the judgement in the case of Cosmos
(supra) will squarely apply.
(VI) The applicant by way of filing an intervention
application cannot oppose the claim of the plaintiff in the suit
and deny the genuineness of the claim or make objections
so as to defeat the genuineness of the outstanding claim of
the plaintiff of Admiralty Suit No. 17 of 2020. This is
particularly when it has filed a separate and substantive suit,
before the same court for adjudication of its claims.
9. Having held in the earlier part of the judgement that by virtue
of the sale proceeds that are deposited, the claim of the plaintiff of
C/AS/17/2020 CAV IA ORDER
Admiralty Suit No. 14 of 2020 - present applicant is not
prejudicially affected, the application seeking intervention and for
impleadment of the applicant in Admiralty Suit No. 17 of 2020 is
dismissed.
(BIRENVAISHNAV,J)
DIVYA
