Bombay High Court
Axis Trustee Services Ltd. And Anr vs Dlb Nand Gaurav on 20 March, 2023
Author: B.P.Colabawalla
Bench: B. P. Colabawalla
2023:BHC-OS:1805
17.IAL.38384.22.DOCX
Aswale
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADMIRALTY AND VICE ADMIRALTY JURISDICTION
IN ITS COMMERCIAL DIVISION
INTERIM APPLICATION (L) NO. 38384 OF 2022
IN
COMM. ADMIRALTY SUIT NO. 50 OF 2022
Axis Trustee Services Limited ...Applicants /Original Plaintiffs
Versus
DLB Nand Gaurav
(MMSI: 419900783) ...Respondent/ Defendant
vessel Mr.Zarir Bharucha with Mr. Rishi Thakur,Dhwani Gala i/b ZBA, advocates for the Applicant in IAL.38384/22 in COMAS.50/22.
Mr.Ajai Fernandes a/w Ms. Sneha B. Pandey i/b Motiwalla & Co., advocates for the Applicant in IAL.3112/23 and for the Plaintiff in COMAS.18/22, for Defendant No.2 in COMAS.18/22.
Mr. Balaji Harish Iyer i/b Ashwin Shankar, for the Plaintiff in ADMS.20/15.
Mr.Rahul Narichania, Sr. Avocate a/w Sharila D'souza, Vaishnavi Malusari i/b Flavia Legal, Advocates for the Applicant in IA.707/23.
Ms. Sapna Rachure, for the Official Liquidator.
CORAM : B. P. COLABAWALLA, J
DATE : MARCH 20,2023
P. C.:
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17.IAL.38384.22.DOCX
The Plaintiffs/Applicants seek payment out/release of Rs. 67,29,18,791/- (Rupees Sixty-Seven Crores Twenty-Nine Lakhs Eighteen Thousand Seven Hundred and Ninety-One Only) out of the balance sale proceeds of the Defendant vessel together with accrued interest, towards satisfaction of their decree. 2 The Defendant vessel was arrested on 25 th November 2021 and subsequently, was sold to Tog Mor Transport on 7 th July 2022 for a total sale consideration of Rs. 76,66,88,000/. The bill of sale was also issued on 15 th July 2022. The balance sale proceeds of Rs. 74,67,45,769/- is now deposited with this Court. 3 Mr. Bharucha, the learned counsel appearing on behalf of the Applicants, submits that the Hon'ble Bombay High Court on 5 th April 2022 decreed the Applicant/Plaintiff's suit for an aggregate amount of US$ 2,76,91,421.56 along with interest @ 10.837380 % [i.e. 3-month LIBOR plus 6.50 % p.a.] from 1 st April 2018 till the date of decree. A sum of Rs. 3,40,07,890/- for the expenses incurred by the Applicant towards preservation and maintenance of the Defendant vessel before arrest, was also allowed and decreed by the said judgment and order.
4 Mr. Bharucha further submits that the Applicant's status as a valid maritime claimant under Section 4(1)(c) of the Admiralty Page 2 of 10 ______________ 20 March 2023 ::: Uploaded on - 24/03/2023 ::: Downloaded on - 24/03/2023 22:12:37 :::
17.IAL.38384.22.DOCX Act, 2017, is determined pursuant to a final judgement and decree dated 5th April 2022.
5 Mr. Bharucha then submitted that public notices in terms of Rules 1087 and 1088 of the Bombay High Court Admiralty Rules 2017, were issued by the Sheriff of Mumbai inviting claims against the sale proceeds of the Defendant vessel. The notice period inviting claims against the sale proceeds of the Defendant vessel expired on 26th October 2022 and no claim higher than that of Applicants & Defendant No. 2 is received.
6 Mr. Fernandes, the learned counsel appearing for Defendant No. 2/ the Board of Mumbai Port Authority ("The Port") submits that the Port has filed Commercial Admiralty Suit No. 18 of 2022 asserting a maritime lien over the sale proceeds of the Defendant vessel aggregating to (a) Rs. 7,37,40,633/- together with interest at the rate of 15% per annum on the sum of Rs. 6,41,50,944/- from 1st October 2021 till payment and/or realization; and (b) Rs. 86,345/- inclusive of GST @ 18% (Rs. 73,174 per day charges + Rs. 13,171- GST @ 18%) per day plus other charges from 01 st October 2021 as per the scale of rates, till the Defendant Vessel is removed from the port and harbour of Mumbai, together with interest at the rate of 15% per annum till payment and/or realization. Page 3 of 10
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17.IAL.38384.22.DOCX 7 Mr. Fernandes further submits that, as on 15 March 2023, the total claim of the Port including interest is Rs. 11,88,12,176/-. He submits that the Port is yet to obtain a decree and the claim amount may increase. He, therefore, requests that an amount of Rs. 14,00,00,000/- (out of the balance sale proceeds) should be kept aside, which the Port will pursue in its suit. The same is accepted.
8 Mr. Narichania, the learned Senior Counsel appearing for Suraksha Asset Reconstruction Ltd. ("Suraksha"), submits that Suraksha shares pari-passu charge over the Defendant vessel with IDBI, the decree-holder.
9 He also submits that pursuant to an Original Application No. 1312 of 2018 filed by Suraksha, the Hon'ble DRT-II, New Delhi passed a Judgment and Order dated 15 th September 2022 and issued a recovery certificate in favour of Suraksha on 28 th September 2022 for an amount of Rs. 333,79,79,071/- together with interest. As on the date of this order, the total claim of Suraksha together with interest is Rs. 479,96,430,080.33/-. Suraksha has filed a separate interim application under Rule 1087 of Admiralty Rules (i.e., IA No 707 of 2023 in Commercial Admiralty Suit No. 18 of 2022) which is pending.
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17.IAL.38384.22.DOCX 10 Mr. Narichania submits that during the pendency of OA No.1312 of 2018 filed by Suraksha, the Hon'ble DRT-II, New Delhi, by an order dated 01st December 2018, had appointed a Local Court Commissioner with directions to maintain the general upkeep of the Defendant vessel with the assistance of Falcon Offshore Services India Ltd. Accordingly, from January 2019 till the arrest of the vessel on 25th November 2021, Suraksha and IDBI have, jointly, incurred expenses towards general maintenance and upkeep of the Defendant vessel, which, in turn, ensured that it could be sold for trading purposes. This, however, is the subject matter of IA No 707 of 2023, which Suraksha is separately pursuing.
11 He submits that the total expense, for the general maintenance of the Defendant vessel as detailed above, was of Rs. 9,01,83,757/- out of which Rs. 5,47,10,557/- was incurred by Suraksha and Rs. 3,54,73,200/- by IDBI. IDBI's expense is allowed by the decree passed in their favour and the same can be paid from the balance sale proceeds. He submits that Suraksha's expenses aggregating to Rs. 5,47,10,557/- should be kept aside to satisfy Suraksha's expense claim, which Suraksha will pursue in IA No 707 of 2023. The same is accepted.
12 Mr. Bharucha submits that apart from the claims of the Port and that of Suraksha, 2 more suits are filed, which is evident from the search. These suits are (a) Admiralty Suit No 20 of 2015 - Page 5 of 10
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17.IAL.38384.22.DOCX Transtar Offshore Services Pvt Ltd v DLB Nand Gaurav, in which a decree for an amount of Rs 15,81,843/- together with interest was passed by the Bombay High Court on 8 February 2023; and (b) Commercial Suit No 73 of 2016 - Sumayla Marine Services Limited v. DLB Nand Gaurav, in which a decree for an amount of Rs. 47,29,161/- together with interest was passed by the Bombay High Court on 8th February 2023. These claims rank below in priority to the Applicant, Suraksha and the Port.
13 in the light if these facts, Mr. Bharucha submits that (i) pending the decree in Commercial Admiralty Suit No. 18 of 2022 (filed by the Port) and the expense claim of Suraksha in their interim application ( Interim Application No. 707 of 2023), the Applicant should be permitted to withdraw the balance sale proceeds towards partial satisfaction of its decretal amount. He submitted that the Applicant agrees and undertakes to bring back any amount, if so directed by the court, together with such interest, to satisfy any claims ranking higher in priority than the Applicant's claim. The undertaking is accepted.
14 The Applicants submit that the balance sale proceeds released to IDBI will be adjusted and shared between Applicant No. 2 and Suraksha in the manner agreed between the parties and the same shall be released to Suraksha within 5 working days (or within such period as mutually agreed between the parties) of receipt of the Page 6 of 10 ______________ 20 March 2023 ::: Uploaded on - 24/03/2023 ::: Downloaded on - 24/03/2023 22:12:37 :::
17.IAL.38384.22.DOCX balance sale proceeds from the Prothonotary and Senior Master. Mr. Narichania supports this and states that Suraksha also undertakes to bring back any amount received by it from IDBI, if so directed by the Court, together with interest, to satisfy any claim ranking higher in priority to Suraksha claim. The undertaking is accpeted. The Applicants further undertake to pay such sum by way of damages or costs which this Court may award as compensation if any party sustains prejudice by virtue of this order. 15 Heard the learned Counsels for the parties. 16 In the present case, undisputedly, the Applicants have obtained a decree. The Port is yet to obtain a decree. Plaintiffs in Admiralty Suit No 20. of 2015 and Commercial Suit No. 73 of 2016 have also obtained a decree, but the same, admittedly, ranks below in priority to the Applicant and Defendant No. 2 (the Port). I say this because under Section 10(1) of the Admiralty 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;"Page 7 of 10
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17.IAL.38384.22.DOCX 17 The claim of the Applicants, based on a registered mortgage of the Defendant Vessel, falls under clause (b) of sub- section (1) of Section 10 of the Admiralty Act. On the other hand, the claim of the Port, and which is in the nature of a maritime lien, stands on a higher pedestal under clause (a) of sub-section (1) of Section 10. The claims of the Plaintiffs in Admiralty Suit No. 20 of 2015 and Commercial Suit No. 73 of 2016 fall under clause (c) of sub-section (1) of Section 10, and rank below the claim of the Applicants and Defendant No. 2 (the Port).
18 The adjudication of the claims of the Port and Suraksha, may require time as their suit/application have not yet been decreed. In these circumstances, I agree with the submissions of Mr. Bharucha that the Applicants who are the decree holders, should not have to wait indefinitely for at least what is a partial satisfaction of its decretal amount. It will be sufficient to clarify that any claim ranking higher to the Applicants, shall have priority. Therefore, release of the balance sale proceeds to the Applicant No.2- IDBI, must be conditional on IDBI bringing back any amount to satisfy adjudicated claims which rank higher in priority. Mr. Bharucha fairly states that he has instructions to make a statement in those terms which is accepted as an undertaking given to this court. 19 In view of the foregoing discussion, the following order Page 8 of 10 ______________ 20 March 2023 ::: Uploaded on - 24/03/2023 ::: Downloaded on - 24/03/2023 22:12:37 :::
17.IAL.38384.22.DOCX is passed:-
(a) The Prothonotary and Senior Master shall keep aside a sum of Rs 14,00,00,000/- to satisfy the decree which may be eventually passed in favour of the Port in Commercial Admiralty Suit No. 18 of 2022. A further sum of Rs.
5,47,10,557/- shall be kept aside towards the claim of Suraksha in IA No 707 of 2023 in Commercial Admiralty Suit No. 18 of 2022.
(b) After keeping aside a total sum of Rs. 19,47,10,557/-, the entire remaining sale proceeds, together with interest accrued thereon, shall be released by the Prothonotary and Senior Master to Applicant No.2- IDBI towards satisfaction of (i) Rs. 3,40,07,890/- incurred as expenses for maintaining the defendant vessel and (ii) the remaining amount towards part satisfaction of the decree passed in favour of the Applicants. IDBI Applicant No. 2 shall, in turn, pay to Suraksha (as per Clause 14 above) towards part satisfaction of its recovery certificate dated 28th September, 2022 passed by DRT-II, New Delhi.
(c) The Applicants/Plaintiffs will be at liberty to seek further payment in the event there is a surplus, after satisfying the decrees which may be passed in favour of the claimants which Page 9 of 10 ______________ 20 March 2023 ::: Uploaded on - 24/03/2023 ::: Downloaded on - 24/03/2023 22:12:37 :::
17.IAL.38384.22.DOCX rank higher in priority than that of the Applicants/Plaintiffs or if those claimants fail to prove their claims;
(d) The Applicants and Suraksha agree and undertake to bring back to this Court, if necessary, any amount required to meet the adjudicated claim of any person having a maritime lien or claims in respect of the Defendant vessel in priority (i) to Applicant no. 2- IDBI's Claim and/or (ii) to Suraksha claim and which cannot be met from the retention of Rs. 19,47,10,557/-.
(e) All undertakings recorded in this order are accepted as unertaking give to the court.
(f) For the purposes of implementing this order, the Prothonotary & Senior Master will break the fixed deposits.
(g) The above Interim Application (L) No. 38384 of 2022 accordingly stands disposed of. No order as to costs. 20 This order will be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.
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