National Bank Of Fujairahpjsc vs Mt Gp B4( Imo No. 9246487)
2022 Latest Caselaw 7032 Guj

    C/AS/1/2021                                      ORDER DATED: 05/08/2022




      IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

            R/ADMIRALTY SUIT NO. 1 of 2021
                          With
CIVIL APPLICATION (OJ) (FOR DIRECTION) NO. 1 of 2021
           In R/ADMIRALTY SUIT NO. 1 of 2021
                          With
 CIVIL APPLICATION (FOR JOINING PARTY) NO. 2 of 2021
           In R/ADMIRALTY SUIT NO. 1 of 2021
                          With
   CIVIL APPLICATION (FOR DIRECTION) NO. 3 of 2021
           In R/ADMIRALTY SUIT NO. 1 of 2021
                          With
 CIVIL APPLICATION (FOR JOINING PARTY) NO. 4 of 2021
           In R/ADMIRALTY SUIT NO. 1 of 2021
=====================================================
             NATIONAL BANK OF FUJAIRAHPJSC
                         Versus
               MT GP B4( IMO NO. 9246487)
=====================================================
Appearance:
MR ANMOL SUROLLIA(9379) for the Defendant(s) No. 1
DS AFF.NOT FILED (N) for the Defendant(s) No. 3
HARSH V GAJJAR(7828) for the Defendant(s) No. 1
MR MANAN K PANERI(7959) for the Defendant(s) No. 2
MR UNMESH SHUKLA SENIOR advocate with MS PAURAMI B.
SHETH(841) for the Plaintiff(s) No. 1
MR BIMAL RAJASEKHAR with MR DHAVAL BAROT for the
Applicant in Civil Application No.2 of 2021
MR PREMAL NANAVATY with MR. ANMOL SUROLLIA for the
Applicant in Civil Application Nos.3 and 4 of 2021
=====================================================

 CORAM:HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI

                             Date : 05/08/2022

                                ORAL ORDER

1. Heard Mr. Unmesh Shukla, learned Senior advocate with Ms. Paurami Sheth, learned advocate assisted by Mr. Prashant Asher and Ms.

C/AS/1/2021 ORDER DATED: 05/08/2022

Bulbulsingh Rajpurohit, advocates for Plaintiff, Mr. Manan Paneri, learned advocate for Defendant, Mr. Bimal Rajshekhar, learned advocate for Mr. Dhaval Barot, learned advocate for the Swedish Club, Applicant of C.A. No. 2 of 2022, Mr. Premal Nanavaty, learned advocate for Mr. Anmol Surollia, learned advocate for Applicants of C. A. No. 3 & 4 of 2022.

2. Mr. Unmesh Shukla, learned Senior advocate with Ms. Paurami Sheth, learned advocate for Plaintiff submitted that the Plaintiff has filed above suit wherein it is stated that Defendant No. 2 is the registered owner of the Defendant No. 1 vessel (for short " Defendant Vessel") and Defendant No. 3 is parent entity of Defendant No. 2, that the Plaintiff as lender and Defendant No. 3 as borrower entered into a Secured Loan Agreement dated 31 August 2015 for an amount of USD USD 11,050,000 /- on terms and conditions set out in the said Agreement to assist Defendant No. 3 to finance/refinance the purchase of three double hull oil tankers, including the Defendant Vessel, that to satisfy the Plaintiff's requirement for security to be provided for the loan agreement, Defendant No. 3 its ship-owning entities entered into the following ship mortgages with the Plaintiff,

C/AS/1/2021 ORDER DATED: 05/08/2022

as owner of the Defendant Vessel stood as a guarantor and mortgaged the Defendant Vessel in favor of the Plaintiff, that as security for the

inter alia executed first preferred mortgage over the Defendant Vessel, that pursuant to the Secured Loan Agreement, the Plaintiff and Defendant No. 2 entered into an agreement for First Preferred Ship Fleet Mortgage dated 6 October 2015 under which Defendant No. 2 agreed for the payment of loan principal amount, interest thereon, as per the Secured Loan Agreement, and all other sums of money from time to time owing to the Plaintiffs under the Secured Loan Agreement and the performance and observation of and compliance will all provisions of the said Agreement that the First Preferred Ship Mortgage for the Defendant Vessel was registered with Public Registry of the Republic of Panama on 6 January 2016 and continues till date, that at the request of Defendant No. 3, on 9 July 2019, the Plaintiff approved extension of banking facilities to USD USD 14,400,000/- including the Secured Term Loan, for finance continuation of the business operations of the Defendants and the first preferred mortgage on the Defendant Vessel was reconfirmed under the extended facilities as well and mortgage over Defendant Vessel.

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3. It is further stated in the Plaint that the Defendants have defaulted in making payment from 01.08.2020 and thereby acted in breach of the loan facilities extended to them, that the Plaintiff through their UAE advocates addressed a Notice dated 09.08.2020 putting the Defendants to notice for the breach of loan facilities and declared that all the respective loans of the facilities, together with accrued interest, and all other amounts accrued or outstanding are immediately due and payable, demanded immediate payment of USD 1,995,058.96 from the Defendants and further notified that the Plaintiff would immediately exercise any of its rights in the Facilities and mortgages, and as available under law, that the monthly installments under the Secured Loan Agreement are payable in 2 years or 31 December 2022, however, due to occurrence of the event of default and the Defendants failing to remit the same, the entire amount has become due and payable forthwith.

4. The Plaintiff therefore filed the above Suit for maritime claim under Section 4 (1) (c) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 and prayed for an order and decree in favour of the Plaintiff and against the Defendants in the sum of principal

C/AS/1/2021 ORDER DATED: 05/08/2022

amount of USD 450,000 plus interest on delayed payment amounting to USD 11,598.66, penalty of USD 4,742.43 on delayed payment and USD 20,000 for cost of litigation in India aggregating USD 486,341.09 with further interest at the rate of 3.1% per annum plus 1-month LIBOR from date of suit till its realization as per particulars of claim.

5. By order dated 04.01.2021 this Court granted arrest of the Defendant No. 1 Vessel. The said order was duly served upon the Defendants.

6. Defendant No. 2, registered Owner of Defendant Vessel entered appearance on 22.01.2021, filed Affidavit dated 22.01.2021stating that Defendant no. 2 would not be in a position to maintain the Defendant Vessel and would not have objection for judicial sale.The Plaintiff then filed Civil Application No. 1 of 2021 seeking for sale of the Defendant Vessel. On the said Application, by order dated 28.01.2021 this Court put the Defendant Vessel for sale.

7. Mr. Bimal Rajshekhar, the learned advocate appearing for Swedish Club submitted that since the registered Owner has shown inability to maintain the defendant Vessel and practically abandoned the vessel, Crew were required to be provided food and provisions, that the Swedish

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Club, the P&I club of the Defendant Vessel therefore came forward by filing Civil Application No. 2 of 2021in the above Suit and volunteered to make payment of the maintenance expenses of the Defendant vessel and crew whilst she was under arrest and until her sale provided the same be considered in priority from sale proceeds.

8. By an order dated 05.02.2021, this Court had permitted the Swedish P&I club to make such payments and further directed that the amount spent by the Swedish would be paid out on priority basis out of the sale proceeds of the Defendant vessel.

9. Mr. Premal Nanavaty, the learned advocate appearing with Mr. Anmol Surollia advocate submitted that the crew members who were on board the Defendant Vessel during the period of arrest filed the Civil Application No. 3 of 2021 on 23.04.2021 for recovery of their crew wages to the tune of USD 1,36,653/-.

10. By order dated 23.04.2021, this Court directed to sell the Defendant Vessel for a sum of Rs. 8,10,00,000/- to Kukkis Trading & Consultancy FZE LLC, By the said order, this Court passed further orders permitting the Swedish Club for disembarkation in the first

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instance, to decide with the issue of whether the said amount would be expenses of the arrest/ paid out in priority to be decided on next date of hearing, to pay 50% of the amounts of wages to Crew as provided in Civil Application No.3 of 2021 filed on behalf of the crew members immediately once the sale proceeds were received and in any case within 2 weeks thereof by the Court Commissioner and also ordered that the order withregard to balance wages (which will be payable till they havethe opportunity to disembark), reimbursement of expenses and other orders will be passed on the application of theSwedish Club and crew members after hearing all the parties.

11. By order dated 10.05.2021, this Court directed that on disbursement of the amount in favour of the crew members after proper verification as directed by order dated 23.4.2021, the Registry is directed to deposit the remaining amount with a Nationalized Bank for a period of one month. The balance amount of Sale proceeds are lying with the Registry of this Court.

12. Mr. Premal Nanavaty, the learned advocate also submitted that two crews who could not join earlier have filed Civil Application No. 4 of 2021 on 09.06.2021 for their wages for a sum of

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20284 USD as per the schedule provided along with the application and since the said Ap8plication was filed after the order dated 23.04.2021 passed by this Court, no orders were passed for payment to the said Applicants and they are required to pay entire amount of their wages.

13. The Swedish Club has filed two purshises dated 05.05.2021 and 01.08.2022 seeking reimbursement of INR 67,24,769incurred by it towards maintenance of the vessel and crew during the period of arrest.

14. Mr. Unmesh Shukla, learned Senior advocate appearing for the Plaintiff submitted that the Plaintiff has filed a purshish dated 15.06.2021 contending ineralia that the Plaintiff and the defendants entered into Consent Terms under which the Defendants have confirmed, acknowledged and admitted that the plaintiff has first mortgage over the Defendant No. 1 Vessel, admitted their liability to the plaintiff in the sum of USD 486,341.09, further agreed for passing of a decree for the said amount and execute the same form sale proceeds lying before this Hon'ble Court also placed on record the duly signed Consent Terms and requested to pass consent decree under order 23 Rule 3 of C.P. C. 1908 for the principal claim

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of USD 486,341.09 in favour of the Plaintiff and against Defendants since the Defendants have no objection.

15. Mr. Unmesh Shukla learned Senior advocate for the Plaintiff under the instructions further submitted that the Plaintiff has no objection if the amount spent by Swedish Club and claimed in purshish dated 05.05.2021 and 01.08.2022 is granted and the balance amount of 50% crew wages of the Applicants of Civil Application No. 3 of 2021 and the amount of the wages of two crew, Applicants of Civil Application No. 4 of 2021 as claimed are paid provided the decree as prayed above is passed in favour of the Plaintiff.

16. Mr. Manan Paneri, the learned advocate for the Defendant confirmed execution of consent terms and further stated that the consent decree as prayed in the purshish dated 15.06.2021 be passed.

17. Mr. Bimal Rajshekhar, the learned advocate for the Applicant, Swedish Club of Civil Application No. 2 of 2021 submitted that since the Plaintiff has fairly stated that it has no objection for payment to Swedish Club of a sum of Rs. 67,24,769/- as claimed in purshises dated 05.05.2021 and 01.08.2022 and order be

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passed, the Swedish Club's claim would get satisfied and hence it has no objection for passing consent decree as prayed by the Plaintiff.

18. Mr. Premal Nanavaty, the learned advocate appearing with Mr. Anmol Surollia, the learned advocate for the Applicants, Crew of Civil Application Nos. 3 of 2021 and 4 of 2021 submitted that since the Plaintiff has fairly stated that it has no objection for payment of balance 50% of wages to Crew of Civil Application No. 3 of 2021 a sum of USD 68326.50 equivalent to Rs. 5,12,4487.50 (Calculated as per 1 USD X 75 Rs. (round up of Rs. 74.80. as per rate on the date of Application, i.e. 23.04.2021) as claimed in Civil Application No. 3 of 2021 and wages of remaining two crews as claimed in Civil Application No. 4 of 2021 for a sum of USD 20284 which is equivalent to Rs. 15,21,300 (calculated at 1 USD X 75) and order be passed, the Crew's claim would get satisfied and hence they have no objection for passing consent decree as prayed by the Plaintiff.

19. Mr. Bimal Rajshekhar, the learned advocate for the Applicant, Swedish Club and Mr.PremalNanvaty, the learned advocate for the Crew members have relied on judgments in support of their contention that the amounts incurred

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with the leave of the admiralty court for the maintenance and upkeep of the vessel and crew during the period of arrest should be paid out in priority, immediately once the sale proceeds have come in and without any separate suits being filed. They have placed reliance on the judgment dated 23 March 2022 passed by a Division Bench of the Bombay High Court in the matter of The Swedish Club v. V8 Pool Inc. & Ors.

20. This Court has considered the oral submissions canvassed by Mr. Unmesh Shukla, learned Senior Counsel for the Plaintiff, perused the documents annexed with the Plaint, Purshish dated 15.06.2021 and Consent Terms dated 02.06.2021. This Court has also considered submissions of Mr. Manan Paneri, learned advocate for Defendant No. 2, erstwhile registered Owner of the Defendant Vessel that the Defendant No. 2 has executed consent terms and it has no objection for passing of consent decree as prayed by the Plaintiff. Having considered the submissions of the advocates for the Plaintiff and Defendant No. 2, this court is satisfied that the consent Decree as prayed under order 23 Rule 3 is required to be granted.

21.             This       Court           has       noted         that          upon
  instructions,             Mr.      Unmesh         Shuka,       the       learned





   C/AS/1/2021                                      ORDER DATED: 05/08/2022




  Senior        Counsel          has     fairly    consented           to      the

amounts as claimed by the P&I Club and the crew members being disbursed forthwith from the sale proceeds lying deposited with this Court.

22. This Court further has considered submissions of Mr. Bimal Rajshekhar, the learned advocate for the Swedish Club and Mr. Premal Nanvaty, the learned advocate for the Crew members, their reliance on various decisions and particularly on the judgment dated 23.03.2022 passed by a Division Bench of the Bombay High Court in the matter of The Swedish Club v. V8 Pool Inc. & Ors and felt that the proposition laid down in the said decision appears to bewell founded.

23. This Court therefore passes the following order:

a. That there shall be an order and decree in favour of the Plaintiff for the principal claim of USD 486,341.09 against the Defendants in terms of the consent terms dated 02.06.2021 executed between the Plaintiff and Defendant No. 2.

b. The Swedish Club is entitled for payment of a sum of Rs. 67,24,769/- from the sale proceeds in priority. The Registry is

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directed to remit a sum equivalent to USD of Rs. 67,24,769 to the Swedish P&I Club in their Bank Account within two weeks from receipt of the account details furnished by the advocate of the P&I club to the Registry.

c. The Applicants, Crew of Civil Application Nos. 3 of 2021 are entitled for balance 50% amount of wages of a sum of a sum of USD 68326.5equivalent to Rs. 51,24,487.50 (calculated as per 1 USD X75 Rs. as per rate on the date of Application, i.e. 23.04.2021(as claimed in Civil Application No. 3 of 2021. The registry is directed to remit the said amount in the bank accounts as per the details submitted by the learned advocate for the Crew out of sale proceeds.

d. The Applicants, Crew of Civil Application No. 4 of 2021 are entitled for their amount of wages of a sum of USD 20284 equivalent to Rs. 15,21,300 calculated as per 1 USD X 75 as per their claim.The registry is directed to remit the said amount in the bank accounts as per the details submitted by the learned advocate for the Crew out of sale proceeds.

e. The Registry is directed to make payment to

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Crew of both Applications within two weeks from the receipt of the account details of each crew member and the respective amounts payable to them from the advocate of the Crew to the Registry.

f. The Registry is further directed to remit the balance amount available out of sale proceeds forthwith after making payment to Swedish Club and Crews to the Plaintiff as per bank details provided by the advocate for the Plaintiff.

g. The Plaintiff shall be then at liberty to take such steps as required for expeditiously realizing its decree against the balance sale proceeds.

h. There shall be no orders of cost.

24. The parties are at liberty to apply to this Court in case of difficulties.

25. The Suit is decreed in terms of above.

26. All above Civil Applications filed in present Suit are disposed of in the terms of above. This Court has passed the aforesaid decree with consent of all the learned advocates appering for the respective parties.

(VAIBHAVI D. NANAVATI,J) Pallavi