Bombay High Court
Ashoke Arya vs M.V. "Kapitan Mitsos", Board Of ... on 20 January, 1988
Equivalent citations: AIR1988BOM329, AIR 1988 BOMBAY 329
Author: S.P. Bharucha
Bench: S.P. Bharucha
ORDER
1. This is a notice of motion taken out by the plaintiff in an Admiralty Suit. It seeks a declaration that the plaintiff has priority for his claim, which has been decreed, against the sale proceeds of the 1st defendant vessel (M.V. "Kapitan Mitsos"), which are lying in Court; in the alternative, for a declaration that his claim ranks pari passu with the claim of the Trustees of the Port of Bombay (B.P.T.) for anchorage fees in regard to the said vessel; and for ancillary reliefs.
2. The said vessel entered the port of Bombay on 9th June, 1980 and remained therein until after 24th Oct., 1985. It was first arrested by this Court in Admiralty Suit No. 13 of 1980, Adam Abdul Khan v. M.V. Kapitan Mitsos.
3. On 27th Sept., 1980 the B.P.T. passed a resolution sanctioning an amendment to its Port and Pilotage Scale of Rates. The sanction of the Government of India in regard to the amendment was sought on 20th Oct., 1983 under Section 52 of the Major Port Trusts Act, 1963. The sanction was granted on 9th Dec., 1983 and the amendment was published in the Maharashtra Government Gazettee dt. 29th Dec., 1983. In consequence of the amendment, the said vessel became liable to anchorage fees from 28th Jan., 1984.
4. On 10th Sept., 1984 the said vessel was arrested by the B.P.T. for failure to pay its charges, amounting on 1st Aug., 1984 to Rs. 2,14,031.35. The notice then issued by the B.P.T. stated that the said vessel would be sold under the provisions of Section 64(2) of the said Act, after obtaining the permission of this Court, if its charges were not paid within 5 days. On 7th Jan., 1985 the advocates of the B.P.T. informed the Sheriff of the arrest made by the B.P.T. and called upon him to inform bidders for the said vessel that it would not be permitted to be removed until the B.P.T. charges were paid.
5. On 2nd April, 1985 an order was passed by this Court in Notice of Motion No. 199 of 1985 (taken out by a crew member) in Admiralty Suit No. 22 of 1980 (filed by another crew member) directing the Sheriff to sell the said vessel. On 30th April, 1985 the present suit was filed and the said vessel arrested therein. On 10th May, 1985 the B.P.T. wrote to the Sheriff calling upon him to apprise bidders at the auction sale of the said vessel, which had been fixed on 13th May, 1985, of its claim. On 13th May, 1985 the auction sale was held but the reserve price of Rs. 25 lakhs was not reached. On 20th May, 1985 the Sheriff made a report to the Court in this behalf. On 1st July, 1985, upon a further report, the Court directed the Sheriff to reduce the reserve price and hold a fresh auction sale. On 9th July, 1985 the Sheriff informed the B.P.T. that the auction sale would be held on 22nd July, 1985. On 19th July, 1985 the advocates of the B.P.T, requested the Sheriff to apprise bidders at the auction of its outstanding claim. The second auction sale also proved infructuous. On 26th July, 1985 the Sheriff made a further report to the Court. For the first time, notice of the report was not given to the B.P.T. On the report the court, on 2nd Aug., 1985, ordered the Sheriff to invite private offers for the said vessel and fixed Rs. 20 lakhs as the reserve price. On 30th Aug., 1985 the Sheriff made a report to the Court, notice of which was again not given to the B.P.T. Upon this report the Court directed the Sheriff to accept a private offer of Rs. 19,50,000/-. On 15th Oct., 1985 the Sheriff made another report to the Court. Notice thereof was not given to the B.P.T. In it the Sheriff stated that the price of Rs. 19,50,000/-had been received. It also stated that the advocates of the B.P.T. had informed the Sheriff that a sum of Rs. 7,63,312.50 was due and payable to the B.P.T. The Sheriff asked (a) that the sale be sanctioned, and to be directed (b) "Whether the Bombay Port Trust should be paid over their claim Rs. 7,63,312.50P. being their dues and other charges that may be accrued?"
(c) to hand over possession; and (d) to give letters to the B.P.T. and the Customs Authorities recording the sanction to the purchase of the said vessel. On 21st Oct., 1985 the Court granted prayers (a), (c) and
(d) of the report. As regards prayer (b), it ordered the "matter to be placed on board for determining the claim."
6. On 20th Oct., 1985 the B.P.T. was informed by the advocate of a claimant that the Court had sanctioned the sale, on 31st Oct., 1985 the advocates of the B.P.T. pointed out to the Sheriff that no notice of the report seeking sanction of the sale had been given to it and asked for a copy thereof. On 21st Nov., 1985 the claimant just mentioned took out a Notice of Motion in Admiralty Suit No. 22 of 1980 for determining his claim. Interim orders were passed therein on 20th Dec., 1985; the Sheriff was directed to pay the claimant, while retaining the sum of Rs. 9,10,031.25, which was claimed by the B.P.T. as anchorage fees up to 24th Oct., 1985 and interest thereon.
7. In the meantime, on 10th Dec., 1985 a decree for Rs. 2,98,239.85 was passed in the present suit.
8. In support of the notice of motion Mr. Gomes submitted that the amended Scale of Rates had no legal effect because Section 52 of the Act had not been complied with. Section 49 of the Act requires the Board of a Major Port Trust to frame from time to time "a scale of rates on payment of which, and a statement of conditions under which............ any place within the limits of the port or the port approaches may be used." Such use may be for the purpose of approaching or lying at or alongside any buoy, mooring, wharf, etc. Section 52 requires that every scale of rates and every statement of conditions framed by a Board shall be submitted to the Central Government for sanction and shall have effect when so sanctioned and published in the Official Gazettee. It was Mr. Gomes' submission that what had been submitted to the Central Government for sanction and had been sanctioned was only the scale of rates and that no statement of conditions had been submitted, sanctioned or gazetted. Since both were required to be submitted and sanctioned and thereafter published in the Official Gazettee, the amended Scale of Rates had no application and the claim of the B.P.T. to anchorage fees based thereon was not tenable.
9. The affidavit filed on behalf of the B.P.T. in reply to the notice of motion annexes the amended Scale of Rates. It is this amendment, as is clear from the affidavit, that was submitted to the Central Government for sanction, was sanctioned and was gazetted. The amendment contains the scale of rates. It also contains the conditions in which the rates become applicable to a vessel. It is therefore, "a scale of rates on payment of which, and a statement of conditions under which," places within the limits of the port may be used. There is, therefore, no merit in the submission that the statement of conditions had not been submitted to or sanctioned by the Central Government or published in the Official Gazettee.
10. In the alternative, Mr. Gomes submitted that no anchorage fees could be levied because the B.P.T. had rendered no service to the said vessel; and that, in any case, the anchorage fees were exorbitant. Anchorage fees are levied for the use of parts of the harbour for the anchoring of vessels. Making available to vessels parts of the harbour for anchoring is the service which is rendered, and this is permissible having regard to the provisions of Section 42(e) of the Act. The resolution passed by the B.P.T., which is also annexed to its affidavit in reply, makes it clear that the rates were prescribed with a view to deter vessels from remaining overlong in the port. A rapid turn around of vessels is desirable and rates may be prescribed with this in view. The Supreme Court has so said in Trustees of the Port of Madras v. M/s. Aminchand Pyarelal, .
11. Mr. Gomes' third submission causes some concern. The submission was that the B.P.T. had failed to exercise its right under Section 64 of the Act of selling the said vessel or its right of detaining it until its dues were paid. Mr. Gomes submitted that the B.P.T. should have refused to deliver the said vessel to the Sheriff and to its purchaser. Having done so, the B.P.T. had lost its lien upon the said vessel and could claim no priority for payment of its dues.
12. Section 64 empowers the B.P.T., in the event of failure to pay the rates in respect of a vessel, to distrain or arrest it and its tackle, apparel and furniture and to detain the same until the amount due, and such further amount as may accrue during the period during which the vessel is under distraint or arrest, is paid. Sub-section (2) thereof empowers the B.P.T. to sell what is distrained or arrested if its dues remain unpaid for five days after such distress or arrest.
13. Mr. Gomes drew attention to the Sheriff's report dt. 15th Oct., 1985 and the order thereon. He also drew attention to the certificate issued by the Sheriff on 28th Oct., 1985 physically delivering to its purchaser the said vessel on " 'as is where is' basis, charter free, free from maritime lien, free from mortgages and port dues incurred up to the date of the sanction of the sale". Mr. Gomes laid stress on the fact that though the B.P.T. had not been given notice of the report dt. 15th Oct., 1985 it had within five days thereafter come to know of the order thereon, but it had not approached the Court for having the order varied. It had, therefore, acquiesced in the destruction of its lien upon the said vessel.
14. Mr. Gomes cited the judgment of the Court of appeal in The Emilie Millon, (1905) 2 KB 817. The 'Emilie Millon' entered the Liverpool docks and became liable to pay the rates of the Mersey Docks and Harbour Board. When it entered the docks, wages were due from its owners to its master and crew. They had a maritime lien thereon. They brought an action in rem in the Court of Passage of the City of Liverpool (Admiralty Jurisdiction) for enforcing the lien and obtained judgment. An order was then made for her sale by auction. The attempt to sell by auction failed and the ship was ordered to be sold by private treaty. At this time rates in respect of the ship were due to the Harbour Board which had a right under the relevant statute to detain her. A summons was, therefore, directed to the Harbour Board to show cause why the sale by private treaty should not be sanctioned and why its lien should not be transferred from the ship to the fund in Court. The Harbour Board opposed the proposal. The learned judge ordered that the sale of the ship be confirmed and that it should be "delivered to the purchaser free from all claims and demands against her on payment of the purchase money into Court." The Harbour Board appealed. In concurring judgments the Court of Appeal allowed the appeal. It was said by Collins, M. R. that the order made by the learned judge seemed to ignore the right given by the statute because it ordered the ship to be delivered to the purchaser free from all claims and demands against her, and it purported to preserve to the Harbour Board any right which its statute might give it to payment of its charges in priority to other claimants. The Harbour Board had no such prior right or charge. The only protection which the statute gave it was the right to detain the ship until the rates were paid, and nobody could, against the will of the Harbour Board, undo or annul that statutory provision. Romer, L.J. noted that the Harbour Board was entitled to detain the ship until the rates were paid. The order appealed against deprived it of that right, and, without its consent, purported to give it an option to try and make some claim to a lien upon or right against the fund in priority to other claimants. The Harbour Board had no such lien or right. If the ship had been allowed to leave the dock, the Harbour Board would have been left to make a futile claim against the fund in Court.
15. The important thing to note is the principle that the lien given by statute to a dock or harbour authority cannot be extinguished by Court unless it be done with the authority's express or implied consent. It destroys the argument that the order of the learned judge dt. 21st Oct., 1985 on the Sheriff's report dt. 15th Oct., 1985 had the effect of extinguishing the B.P.T.'s Hen on the said vessel and that the B.P.T. had acquiesced therein by not seeking its variation.
16. In British Transport Docks Board v. Owners of Proceeds of Sale of the Steamships or Vessels, (1966) 3 All ER 117, cited by Mr. Gomes, the plaintiffs were the harbour authority for the Port of Lowestoft and the defendants were the owners of the vessel, which had incurred debts in respect of dock dues and charges. The vessel had been sold under the orders of the Court and the proceeds of the sale were in Court. The plaintiffs claimed priority over other claimants. Since they had not availed themselves of the special powers of arrest and sale given to them under Section 44 of the Harbours, Docks and Piers Clauses Act, 1847, which applied, their claim to priority was rejected.
17. In the present case the B.P.T. did arrest the said vessel in exercise of the power in that behalf conferred upon it by Section 64 of the Act. The principle of the Charger judgment does not, therefore, apply.
18. Mr. Chinoy, learned counsel for the B.P.T., drew my attention to a judgment which is most opposite. In Tergeste, (1903) P.D. 26 the facts were thus: The 'Tergeste' was arrested by the marshal of the Court in an action for wages and disbursements brought by its master on behalf of himself and the crew. At the time she was arrested a firm of ship-repairers claimed to have a common law possessory lien on the ship for work which it had done. The ship sold in the wages action, and, as the proceeds were insufficient to meet the total amount of both claims, the question had arisen between the master and crew on the one side and the ship-repairers on the other, as to which should have priority. Phillimore, J. noted that the view which the Admiralty Court took with regard to conflicting claims by shipwrights having a possessory common law lien and claims which had been sustained by process in the Admiralty Court, had been well-established and had been accepted by the Probate Division of the High court of Justice. The view was that "it is the duty of the material man not to contend with the Admiralty marshal; to surrender the ship to the officer of the Court, and let the officer of the Court, under the order of the Court, remove and sell her; but when he has done that, the Court undertakes that he shall be protected, and that he shall be put exactly in the same position as if he had not surrendered the ship to the marshal".
19. Substitute the B.P.T. for the shipwrights in the Tergeste case and you have the applicable statement of the law.
20. The B.P.T. was honour bound not to contend with the Sheriff but to surrender the said vessel to him as the representative of the Court and to let him sell her under the Court's directions. It was then the duty of the Court to protect the interests of the B.P.T. and to put it in the same position as if it had sold the said vessel itself under its powers under the Act. In permitting the said vessel to be sold by the Sheriff, the B.P.T. did not forgo its lien thereon or its right to have the sale proceeds applied towards the satisfaction of its dues in priority to all other claims thereon.
21. The B.P.T., in acting as it did, followed an established Admiralty practice which is of immense advantage to all those who have claims upon a vessel, for it ensures a sale thereof, at a fair price, by and under the direction of the Admiralty Court.
22. The B. P. T. is entitled to be paid the amount of its claim, being Rs. 9,10,031.25, out of the sale proceeds of the said vessel lying in Court in priority to any other claim thereto. If the sale proceeds have been invested, the B. P. T. is entitled to the payment of the proportionate accrued interest.
23. The notice of motion is dismissed.
24. No order as to costs.