Gujarat High Court

Credit Suisse Ag vs M.V. Sam Hawk on 4 February, 2021

Bench: Biren Vaishnav

                 C/AS/17/2020                                ORDER




                IN THEHIGHCOURTOF GUJARATAT AHMEDABAD

                           R/ADMIRALTYSUITNO. 17 of 2020
                                       With
                           CIVILAPPLICATIONNO. 4 of 2020
                          In R/ADMIRALTYSUITNO. 17 of 2020
==========================================================
                                 CREDITSUISSEAG
                                       Versus
                                  M.V. SAMHAWK
==========================================================
Appearance:
DHRUVTOLIYA(9249)for the Defendant(s)No. 1
MRHARSHN PAREKH(6951)for the Plaintiff(s) No. 1
==========================================================

 CORAM: HONOURABLE MR. JUSTICE BIREN VAISHNAV

                                  Date: 04/02/2021

                                COMMONORALORDER

1. The Plaintiff has filed the instant Suit for securing, protecting and

recovering the Plaintiff's maritime claim as a registered mortgagee of

the Defendant Vessel MV Sam Hawk secured by a First Preferred

Liberian Ship Mortgage dated 24 th July 2015 pursuant to the Loan

Agreement dated 20th December 2012 executed between the Plaintiff

and the Registered Owners of the Defendant Vessel i.e. M/s. SPV Sam

Hawk Inc. and M/s. SPV Sam Jaguar Inc, both of whom are jointly and

severally liable for the Plaintiff's claim and has filed the present Suit,

inter alia, seeking the arrest/ sequestration/ condemnation and sale of

the Defendant No.1 Vessel for the satisfaction of the Plaintiff's claim in

the Suit for the principal amount with costs of USD 23,658,293.24 plus

accrued interest amounting to USD 456,118.03 and USD 25,000 for

costs filing this suit aggregating to USD 24,143,731.38 with further

C/AS/17/2020 ORDER

interest at the rate of 12% per annum from the date of filing of the Suit

till the date of decree and further interest at 12% per annum from the

date of decree till payment and/or realization as per particulars of

claim.

2. This Court vide its order of 13.05.2020 passed an order of arrest

against the Defendant Vessel. Thereafter, this Court passed orders for

sale of the Defendant Vessel. The Defendant Vessel came to be sold

by order dated 07.08.2020 passed by this Court for the sum of USD

10,655,000.00 to M/s. Lavera Shipping Inc. and the sale proceeds

came to be deposited with the Court.

3. Subsequently, one M/s. SPV Sam Hawk Inc., the Registered Owner of

the Defendant Vessel filed its Written Statement to the Plaint in the Suit

wherein it admitted to the Plaintiff's claim in its entirety and confirmed

that the Plaintiff is the registered mortgagee of the Defendant Vessel.

4. The Plaintiff has thereafter filed an application seeking summary

judgment under Order XIII-A of Code of Civil Procedure, 1908 as

inserted by the virtue of the Commercial Courts Act, 2015. M/s. SPV

Sam Hawk Inc., the Registered Owner of the Defendant Vessel have

also filed their reply to the said Application, admitting to the dues as

mentioned in the Plaint in the Suit and confirming that the Plaintiff was

the registered mortgagee of the Defendant vessel. At this stage, no

C/AS/17/2020 ORDER

relief for disbursement of the sale proceeds with the Court Registry are

being pressed by the Plaintiff.

5. Mr. Majumdar, Learned Counsel for the Plaintiff submits that M/s. Sam

Hawk Inc., the Registered Owner of the Defendant Vessel have filed

their Written Statement and a Reply to the present Application taken

out by the Plaintiff for summary judgment. It is stated that it is evident

from the Written Statement [at para (5)] and the reply [at para (5)] to

the Application under Order XIII-A of the Code of Civil Procedure, 1908

that the Registered Owner of the Defendant Vessel has admitted to the

entirety of the Plaintiff's claim and to the fact that the Plaintiff has a

registered mortgage over the Defendant Vessel. Mr. Majumdar submits

that Registered Owner of the Defendant Vessel has also admitted to all

the averments and documents of the Plaint filed in the Suit at para (3)

of Written Statement. It is also further submitted that the Plaintiff with

its Plaint has submitted all the supporting documents in support of the

claim which have not been disputed and have been admitted by the

Defendant. A list of the admitted and undisputed documents which the

Plaintiff has placed reliance on in the support of its claim in the Plaint

are set out below:

Sr.                            Document                        Relevant         Relevant

No.                                                            Annexure            Page

                                                                  in the          No. in

                                                                  Plaint            the

                                                                                  Plaint





            C/AS/17/2020                            ORDER



1    Certificate of Ownership and Encumbrance of             B               54

the Defendant Vessel dated 20 th April 2020

issued by the Liberian Registry 2 Loan Agreement dated 20th December 2012 D 58-122

between the Plaintiff and the Registered Owner

of the Defendant Vessel and one M/s. SPV Sam

Jaguar Inc., registered owner of the vessel MV

Sam Jaguar 3 Notice of Drawdown dated 27th December 2012 E 123 4 Notice of Drawdown dated 25th January 2013 F 124-126 5 Debit Note issued by the Plaintiff dated 28 th G 127

December 2012 6 Debit Note issued by the Plaintiff dated 28 th H 128

January 2013 7 SWIFT Advice evidencing the remittance of the I 129-130

sum of USD 13,011,750 to the Shipbuilders

dated 28th January 2013

Borrowers dated 31st January 2013 by the

Plaintiff 9 Deed of General Assignment dated 31 st January K 132-151

10 Deed of Covenants dated 31st January 2013 L 152-175 11 Certificate of Encumbrance and Mortgage dated M 176

31st January 2013 12 International Swaps and Derivatives Association N 177-216

2002 Master Agreement dated 31st January 2013 13 Notice of Drawdown dated 15th March 2013 O 217

15 Notice of Drawdown dated 11th September 2013 Q 219-221

19 SWIFT receipt of the 12th September 2013 U 225-226

C/AS/17/2020 ORDER

remittance of the sums under the second tranche

of the Loan Agreement from the Plaintiff to the

Bank Account(s) of M/s. SPV Sam Jaguar Inc

dated 1st October 2013 21 Amendment to the Loan Agreement dated 3 rd W 228-240

June 2015 22 Mortgage Agreement dated 24th July 2015 X 241-267 23 Amendment No. 2 to the Loan Agreement dated Y 268-283

17th August 2016.

24 Letter dated 6th November 2019 from the Plaintiff Z 284-285

to the Borrowers 25 Letter dated 31st January 2020 from the Plaintiff AA 286-287

to the Borrowers 26 Letter dated 11th February 2020 from the Plaintiff BB 288-290

to the Borrowers 27 Letter dated 6th March 2020 from the Plaintiff to CC 291-293

the Borrowers 28 Email received by the Plaintiff from the DD 294

Borrowers dated 11th March 2020, requesting for

restructuring the loan agreement 29 Reply email sent by the Plaintiff to the Borrowers EE 295

dated 11th March 2020 30 Outstanding Overview of the SAM Shipping FF 296-298

Group evidencing the total outstanding amount

as on 12th March 2020 31 Notice of Acceleration and Demand dated 1st GG 299-301

April 2020 from the Plaintiff to the Borrowers 32 Letter dated 14th April 2020 sent by the Plaintiff HH 302-303

calling upon the Borrowers to immediately pay all

sums due as mentioned in the Notice of

Acceleration and upon which default interest

C/AS/17/2020 ORDER

would continue.

33 Invoice for the Defendant Vessel and the vessel II 304-305

MV Sam Jaguar from M/s. BankServe Insurance

Services for Mortgagees Additional Perils

Insurance dated 2nd August 2019 34 Invoice for the Defendant Vessel and the vessel JJ 306-307

MV Sam Jaguar from M/s. BankServe Insurance

Services for Mortgagees Interest Insurance

dated 20th August 2019 35 SWIFT receipt evidencing a remittance of USD KK 308

3,234.96 to BMS Group Ltd Client Money

Account by the Plaintiff towards payment of the

premiums for the Mortgagees Additional Perils

Insurance and the Mortgagees Interest

Insurance dated 30th April 2020 36 Revised invoice dated 30th April 2020 from M/s. LL 309-310

BankServe Insurance Services for the

Mortgagees Additional Perils Insurance for the

sum of USD 470.85 for the Defendant Vessel 37 Revised invoice dated 30th April 2020 from M/s. MM 311-312

BankServe Insurance Services for the

Mortgagees Interest Insurance to USD 1,147.70

for the Defendant Vessel 38 Revised invoice dated 30th April 2020 from M/s. NN 313-314

BankServe Insurance Services for the

Mortgagees Additional Perils Insurance to USD

487.18 for the vessel MV Sam Jaguar 39 Revised invoice dated 30th April 2020 from M/s. OO 315-316

BankServe Insurance Services for the

C/AS/17/2020 ORDER

Mortgagees Interest Insurance to USD 1,187.51

for the vessel MV Sam Jaguar 40 SWIFT receipt evidence the remittance of the PP 317

differential increase in the premium for the

insurance covers for both the vessels by the

Plaintiff to BMS Group Ltd Client Money Account

on 4th May 2020 for the sum of USD 58.28 41 Working statement for the total outstanding sums TT 328-329

including interest with respect to the loan

extended towards the Defendant Vessel and the

vessel MV Sam Jaguar as on 12th May 2020

6. Learned Counsel Mr. Majumdar urges this Court to pass a summary

judgment in terms with Order XIII-A of the Code of Civil Procedure,

1908 or in the alternative pass a decree/judgment on admission by the

Defendant pursuant to Order XII Rule 6 of the Code of Civil Procedure,

1908. Mr. Majumdar places reliance on the following decisions in

support of his submissions:

a. Su-Kam Power Systems Ltd. v. Kunwer Sachdev and Another

[(2019) SCC Online Del 10764] (Paras 90-92); and

b. Karan Kapahi v. Lal Chand Public Charitable Trust [(2010) 4 SCC

753 (Paras 37 to 40, 42, 45, 46 and 48).

7. Mr. Majumdar relying on these decisions and the relevant paragraphs

thereto, along with the various admissions of the Registered Owner of

the Defendant Vessel submits that a decree/summary judgment be

C/AS/17/2020 ORDER

passed in favour of his clients. Mr. Majumdar also submits that the

Plaintiff is presently not seeking any decree as per para 53(c) of the

Plaint for pay out and will take out a separate application under Section

9 and 10 of the Admiralty (Jurisdiction and Settlement of Maritime

Claims) Act, 2017 for determination of priorities. Mr. Sanjanwala,

Learned Senior Advocate appearing for the Defendant supports the

arguments of Mr. Majumdar and also requests this Court to pass a

decree/summary judgment in favour of the Plaintiffs.

8. Having heard the learned counselsconsidering the submissions

advanced by them for the respective parties, what needs to be

determined is whether a decree can be passed in favour of the Plaintiff.

The Delhi High Court in the Su-kam Power (supra) whilst granting the

Plaintiff a summary judgment under Order XIII A of the Code of Civil

Procedure, 1908 made the following observations in relation to the

principles governing the same:

""90. To reiterate, the intent behind incorporating the summary

judgment procedure in the Commercial Court Act, 2015 is to

ensure disposal of commercial disputes in a time-bound

manner. In fact, the applicability of Order XIIIA, CPC to

commercial disputes, demonstrates that the trial is no longer the

default procedure/norm.

91. Rule 3 of Order XIIIA, CPC, as applicable to commercial

disputes, empowers the Court to grant a summary judgement

C/AS/17/2020 ORDER

against the defendant where the Court considers that the

defendant has no real prospects of successfully defending the

claim and there is no other compelling reason why the claim

should not be disposed of before recording of oral evidence.

The expression ―real directs the Court to examine whether

there is a ―realistic as opposed to ―fanciful prospects of

success. This Court is of the view that the expression ―no

genuine issue requiring a trial in Ontario Rules of Civil

Procedure and ―no other compelling reason.....for trial in

Commercial Courts Act can be read mutatis mutandis.

Consequently, Order XIIIA, CPC would be attracted if the Court,

while hearing such an application, can make the necessary

finding of fact, apply the law to the facts and the same is a

proportionate, more expeditious and less expensive means of

achieving a fair and just result.

92. Accordingly, unlike ordinary suits, Courts need not hold trial

in commercial suits, even if there are disputed questions of fact

as held by the Canadian Supreme Court in Robert Hryniak

(supra), in the event, the Court comes to the conclusion that the

defendant lacks a real prospect of successfully defending the

claim."

9. Upon perusal of the documents annexed by the Plaintiff in support of

its claim as enumerated above and in view of the admissions of the

Registered Owner of the Defendant Vessel, it is evident that Plaintiff

C/AS/17/2020 ORDER

has made out a case for grant of summary judgment in its favour.

Consequently, no purpose would be achieved by leading oral evidence

as from the pleadings and materials on record, it is apparent that the

Defendant Vessel has no prospect of defending the allegations of the

Plaintiff and there are no reasons for the parties to be compelled to

trial. The Defendant has no real prospect of succeeding and therefore

directing the Plaintiff to undergo a full-fledged trial would be grossly

unfair and there is no compelling reason for the same especially when

the Registered Owner of the Defendant Vessel has admitted its liability

and has also in [Para (6] the Written Statement and [Para (6)] of the

Reply to the application admitted to the passing of a decree for the

sums as claimed by the Plaintiff in the Suit and for the declaration that

the Plaintiff is the registered mortgagee of the Defendant Vessel.

10. Even otherwise, the Plaintiff has made out a case for grant of judgment

on admission. The Supreme Court in Karan Kapahi (supra) laid down

the following principles in relation to judgment on admission under

Order XII Rule 6 of the Code of Civil Procedure, 1908:

"37. The principles behind Order 12 Rule 6 are to give the

plaintiff a right to speedy judgment. Under this Rule either party

may get rid of so much of the rival claims about `which there is

no controversy' [See the dictum of Lord Jessel, the Master of

Rolls, in Thorp versus Holdsworth in (1876) 3 Chancery Division

637 at 640].

C/AS/17/2020 ORDER

38. In this connection, it may be noted that order 12 Rule 6 was

amended by the Amendment Act of 1976. Prior to amendment

the Rule read thus:-

"6. Judgment on admissions. - Any party may, at any stage of a

suit, where admissions of facts have been made, either on

pleadings or otherwise, apply to the Court for such judgment or

order as upon such admission he may be entitled to, without

waiting for the determination of any other question between the

parties and the Court may upon such application make such

order or give such judgment, as the Court may think just."

39. In the 54th Law Commission Report, an amendment was

suggested to enable the Court to give a judgment not only on

the application of a party but on its own motion. It is thus clear

that the amendment was brought about to further the ends of

justice and give these provisions a wider sweep by empowering

judges to use it `ex debito justitial, a Latin term, meaning a debt

of justice. In our opinion the thrust of the amendment is that in

an appropriate case, a party, on the admission of the other

party, can press for judgment, as a matter of legal right.

However, the Court always retains its discretion in the matter of

pronouncing judgment.

40. If the provision of order 12 Rule 1 is compared with Order 12

Rule 6, it becomes clear that the provision of Order 12 Rule 6 is

wider in as much as the provision of order 12 Rule 1 is limited to

admission by `pleading or otherwise in writing' but in Order 12

C/AS/17/2020 ORDER

Rule 6 the expression `or otherwise' is much wider in view of the

words used therein namely: `admission of fact.........either in the

pleading or otherwise, whether orally or in writing'.

...

42. In the case of Uttam Singh Duggal & Co. Ltd., v. United

Bank of India and others, (2000) 7 SCC 120, this Court, while

construing this provision, held that the Court should not unduly

narrow down its application as the object is to enable a party to

obtain speedy judgment.

...

45. Order 12 Rule 6 of the Code has been very lucidly

discussed and succinctly interpreted in a Division Bench

judgment of Madhya Pradesh High Court in the case of

Shikharchand and others Vs. Bari Bai.G.P. Singh (as His

Lordship then was) in a concurring judgment explained the

aforesaid rule, if we may say so, very authoritatively at page 79

of the report. His Lordship held: (AIR Para 19)

"... I will only add a few words of my own. Rule 6 of Order 12 of

the Code of civil Procedure corresponds to Rule 5 of Order 32

of the Supreme Court Rules (English), now rule 3 of Order 27,

and is almost identically worded (see Annual Practice 1965

edition Part I. p. 569). The Supreme Court Rule came up for

consideration in Ellis v. Allen (1914) Ch 904. In that case a suit

was filed for ejectment, mesne profits and damages on the

ground of breach of covenant against sub-letting. Lessee's

C/AS/17/2020 ORDER

solicitors wrote to the plaintiff's solicitors in which fact of breach

of covenant was admitted and a case was sought to be made

out for relief against forfeiture. This letter was used as an

admission under rule 5 and as there was no substance in the

plea of relief against forfeiture, the suit was decreed for

ejectment under that rule. Sargant, J. rejected the argument that

the rule is confined to admissions made in pleadings or under

rules 1 to 4 in the same order (same as ours) and said:

"The rule applies wherever there is a clear admission of facts in

the face of which it is impossible for the party making it to

succeed."

Rule 6 of Order 12, in my opinion, must bear the same

construction as was put upon the corresponding English rule by

Sargent, J. The words "either on the pleadings or otherwise" in

rule 6 enable us not only to see the admissions made in

pleadings or under Rules 1 to 4 of the same order but also

admissions made elsewhere during the trial." (emphasis added)

46. This Court expresses its approval of the aforesaid

interpretation of Order 12 Rule 6 by Justice G.P. Singh (as His

Lordship then was). Mulla in his commentary on the Code has

also relied on ratio in Shikharchand (supra) for explaining these

provisions.

...

48. However, the provision under Order 12 Rule 6 of the Code

is enabling, discretionary and permissive and is neither

C/AS/17/2020 ORDER

mandatory nor it is peremptory since the word "may" has been

used. But in the given situation, as in the instant case, the said

provision can be applied in rendering the judgment."

11. Though the Plaintiff has not made its application under Order XII Rule

6 of the Code of Civil Procedure, 1908, on a bare reading of the

provision and the powers of the Court under Section 151 of the Code of

Civil Procedure, 1908, this Court is of the opinion that it may on its

motion pass a decree in favour of the Plaintiff basis the admission of

the Registered owners of the Defendant vessel of the Plaintiff's Claim

in its entirety in its Written Statement. M/s. SPV Sam Hawk Inc., the

Registered Owners of the Defendant Vessel have admitted in [para (3)]

of the Written Statement and [para (3)] of the Reply that the Plaintiff

Bank has a registered mortgage as is evident from the Certificate of

Ownership and Encumbrance issued by the Liberian Registry and

annexed as Annexure B to the Plaint and admitted the entire claim of

the Plaintiff being USD 24,143,731.38 being due and payable by them

to the Plaintiff Bank in para (5) of the Written Statement and in para (5)

of the Reply to the Plaintiff's application seeking summary judgment. In

view of the same, a case has also been made out for passing a

judgment/decree in favour of the Plaintiff basis the said admissions.

12. The suit is within limitation. Resultantly, the present suit is decreed as

below:

a. That there be an order and a decree in favour of the

Plaintiff for a sum of

USD 24,143,731.38 (United States Dollars Twenty-Four Million

C/AS/17/2020 ORDER

One Hundred Forty-Three Thousand Seven Hundred and Thirty

One and Thirty Eight Cents only) which is inclusive of interest till

the date of filing of the Suit, together with further interest at the

rate of 12% p.a., from the date of the filing of the suit till the date

of decree and further interest at 12% p.a. from the date of

decree till date of payment and/or realisation and further order

b. That there be an order and decree that the claim of the

Plaintiff in the Suit is secured in favour of the Plaintiff by a valid

and subsisting first priority mortgage over the Defendant Vessel

M.V. SAM HAWK registered with the Liberian Flag dated 24 th

July 2015