Gujarat High Court
Island Oil Ltd vs M V Bulk Rose - Imo No - 9501215 on 18 April, 2019
Author: A.J. Desai
Bench: A.J.Desai
C/AS/31/2015 IA JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL APPLICATION (OJ) NO. 1 of 2017
In
R/ADMIRALITY SUIT NO. 31 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE A.J.DESAI Sd/
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1 Whether Reporters of Local Papers may be allowed to see No the judgment ?
2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the No judgment ?
4 Whether this case involves a substantial question of law as No to the interpretation of the Constitution of India or any order made thereunder ?
============================================= ESSAR BULK TERMINAL LIMITED Versus M V BULK ROSE IMO NO 9501215 ============================================= Appearance:
MR KEYUR GANDHI for NANAVATI ASSOCIATES for the PETITIONER(s) No. MR PR NANAVATI for the RESPONDENT(s) No. ============================================= CORAM: HONOURABLE MR.JUSTICE A.J.DESAI Date : 18/04/2019 IA JUDGMENT [1.0] RULE. Mr. P.R. Nanavati, learned advocate waives service of notice of Rule on behalf of the opponent. With the consent of learned advocates appearing for respective parties, present application is taken up for final hearing today.
[2.0] By way of present application, Essar Bulk Terminal Ltd. seeks appropriate direction for reimbursement of the expenses incurred by it for providing the berthing facilities to M.V. Bulk Rose, shifting the Vessel to the applicant's berth and ensuring safe possession of Page 1 of 13 C/AS/31/2015 IA JUDGMENT the Vessel till the auction and sale of the Vessel was to be concluded, for the period between 21.01.2016 to 15.11.2016.
[3.0] Initially, the applicant had joined the original plaintiff viz. Island Oil Limited as opponent No.2 as one of the five opponents, however pursuant to objections raised by different plaintiffs who have filed suits under the provisions of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (hereinafter referred to as "Admiralty Act"), opponent Nos.6 to 9 have subsequently been joined as party opponents in the present application.
[4.0] Learned advocates appearing for present applicant, Gujarat Maritime Board and different Advocates appearing for original plaintiffs were heard before deciding the present application.
In response to the present application, only opponent No.9 i.e. Yapi Ve Kredi Bankasi A.S. (plaintiff of Admiralty Suit No.34/2016) has filed its affidavit and opposed the grant of the relief as prayed for. However, learned advocates appearing for different plaintiffs have also opposed grant of any relief.
[5.0] The short facts arising from the record are as follows:
[5.1] That the opponent No.2 herein - Island Oil Limited filed Admiralty Suit No.31/2015 against one M.V. Bulk Rose (Vessel) and prayed for a decree to the tune of USD 273,178.26 as well as interest at the rate of 2% per month from the date of filing till the amount is realized for maritime claims.
[5.2] The coordinate Bench by an order dated 21.09.2015 directed the arrest of the Vessel. That, Gujarat Maritime Board filed an application being Civil Application (OJ) No.825/2015 and requested to modify the orders dated 21.09.2015 and 12.10.2015. Such request was made on behalf of the Gujarat Maritime Board, Page 2 of 13 C/AS/31/2015 IA JUDGMENT pursuant to message sent by Captain of the Vessel to the GMB, a protracted correspondence appears to have taken place between the Gujarat Maritime Board, Director General (Shipping), Turkish Consulate and Commander, Coast Guard Region (NW). Ultimately, the Turkish Consulate expressed its concern regarding the safety and protection of the crew members as well as of the Vessel. However, before any concrete steps could be taken for supply of necessaries and Vessel could be kept in a manned condition by supplying necessaries, fuel, etc., the crew members abandoned the Vessel. As the Vessel has been abandoned, the Port was in imminent danger of fatal accident or mishap and therefore, the Gujarat Maritime Board made an application for impleadment as a party in the Admiralty Suit No.31/2015.
[5.3] By an order dated 01.01.2016, the coordinate Bench permitted the Gujarat Maritime Board to shift the Vessel at another place or shelter berth while Vessel remained under arrest. Accordingly, the Gujarat Maritime Board vide its letter dated 08.01.2016 requested the applicant herein to permit for the berth of the Vessel and it was assured that the expenses for maintaining the Vessel shall be reimbursed to Gujarat Maritime Board.
Accordingly, the Vessel was shifted at Hazira and berth was provided by the applicant herein.
[5.4] Since the defendant Vessel was not represented by either the owner or by any Advocate, the coordinate Bench passed another order on 16.03.2016 to auction the Vessel. On three occasions the procedure of auction was carried out and finally vide oral order dated 26.09.2016, the Court permitted to finalize the bids. Ultimately, the Vessel fetched a price to the tune of USD 35,11,111 and as per the order, the said amount was deposited before this Court and the same has been invested in a Nationalized Bank.
Page 3 of 13C/AS/31/2015 IA JUDGMENT [5.5] Since the applicant had provided berth to the Vessel and had incurred huge expenses from 21.01.2016 to 15.11.2016, invoices were prepared and accordingly, bills to the tune of Rs.6,99,60,138/ (Rupees Six Crore Ninetynine Lakh Sixty Thousand One Hundred and Thirtyeight Only) were raised. The amount fetched in the auction is lying before this Court, which is invested in a Nationalized Bank, the applicant has preferred the present application for reimbursement of the aforesaid amount.
[6.0] Mr. Keyur Gandhi, learned advocate appearing for the applicant has vehemently submitted that as per the request made by the Gujarat Maritime Board vide communication dated 08.01.2016, it was assured that expenditure for shifting the Vessel and keeping the same at applicant's berth safely, will be reimbursable to the applicant through Gujarat Maritime Board and accordingly, the Vessel remained at the berth of the applicant upto 15.11.2016 i.e. till the release of the Vessel from the berth subsequent to auction approved by this Court. By taking me through various invoices and the total calculation, which has been approved by a Chartered Accountant and found to be correct, he would submit that the applicant may be reimbursed the same. He would submit that the Chartered Accountant viz. C.R. Sharedalal & Co. was appointed and as per the order dated 23.03.2018 passed by the coordinate Bench of this Court, a report was prepared way back on 23.04.2018 by the said Chartered Accountant and has approved the claims put forth by the applicant and therefore, the amount may be reimbursed.
[6.1] He would further submit that the resistance put forward by the plaintiff of Admiralty Suit No.34/2016 about claiming first priority over the claim would not be applicable in the present case in lieu of section 47 of the Gujarat Maritime Board Act, 1981. He Page 4 of 13 C/AS/31/2015 IA JUDGMENT would submit that as per the request made by the Gujarat Maritime Board, berth was provided to the Vessel and for such claim, Gujarat Maritime Board would have priority over all other liens and claims. He would submit that this aspect has been considered by the coordinate Bench while passing the orders dated 01.01.2016, 16.03.2016 and 26.09.2016 in the present proceedings. By taking me through several paragraphs of those orders, he would submit that the Court has accepted the priority of the claim of the Gujarat Maritime Board and the applicant has acted according to the request made by the Gujarat Maritime Board and assurance given by it and therefore, the applicant may be reimbursed the same.
[6.2] In support of his submissions, learned advocate Mr. Keyur Gandhi has relied upon the decision of the Hon'ble Apex Court in the case of Board of Trustees, Port of Mumbai vs. Indian Oil Corporation and Anr. reported in (1998) 4 SCC 302 and would submit that the lien of a harbour authority over the Vessel is a paramount lien and realization of its dues by the harbour authority by the sale of the Vessel is above the priorities over the secured creditors and in view of the above decision also, the applicant is entitled for reimbursement as prayed for.
[6.3] He would further submit that if the applicant would not have provided berth for a considerable long time of almost 11 months and would not have maintained the same, the Vessel might have sunk or could not have fetched the amount which is ultimately received in the auction proceedings. He, therefore, would submit that the application be allowed.
[7.0] Mr. P.R. Nanavaty, learned advocate appearing for Gujarat Maritime Board would submit that Gujarat Maritime Board has also filed a separate application for reimbursement of the expenses Page 5 of 13 C/AS/31/2015 IA JUDGMENT incurred at the instance of the Gujarat Maritime Board. However, the Chartered Accountant by his report dated 23.04.2018 has not finally decided the value of expenses incurred by the Gujarat Maritime Board and therefore, he requested for an adjournment in an application submitted by the Gujarat Maritime Board. However, would submit that at a request made by the Gujarat Maritime Board, berth was provided by the applicant for the period referred in the present application. He has accepted that the Chartered Accountant has examined the details of all the invoices submitted by the applicant and has come to the conclusion that the claim made by the applicant is correct and therefore, if the amount is paid to the applicant through the Gujarat Maritime Board, the Gujarat Maritime Board has no objection.
[8.0] On the other hand, learned Senior Advocate Mr. Percy Kavina appearing for opponent No.9 Yapi Ve Kredi Bankasi A.S. has vehemently opposed this application. He would submit that the opponent No.9 has filed a suit being Admiralty Suit No.34/2016 against the Vessel and prayed for a decree of USD 129,614,988.51 with running interest at the rate of 10.79% per annum from the date of filing of the suit till the same is realized. He would submit that the opponent No.9 being the Banker has entered into a Mortgage Agreement with regard to the Vessel in question and hence, the opponent No.9 would have first priority over the Vessel in question and therefore, if the amount as prayed in the application is reimbursed, at the end of the trial, if the decree is passed in favour of opponent No.9 (Plaintiff of Admiralty Suit No.34/2016), it would not be able to get complete fruits of the decree.
[8.1] By taking me through section 10 of the Admiralty Act, he would submit that the Admiralty Act provides order of priority with Page 6 of 13 C/AS/31/2015 IA JUDGMENT regard to maritime claims. Under subsection (1) of Section 10 of the Admiralty Act, the opponent No.9 being a registered mortgagor has priority over the claim. He would submit that even the applicant is considered to have similar priority like opponent No.9. He would submit that subsection (2) of Section 10 of the Admiralty Act provides for determining the priority amongst similarly situated claimants. He, therefore, would submit that the application be dismissed.
[8.2] He would further submit that the observations made in the orders dated 01.01.2016 and 16.03.2016 would not be binding to the opponent No.9 since the applicant was not party to those proceedings. He, therefore, would submit that application be dismissed.
[8.3] He would further submit that whether or not the applicant is entitled to reimbursement of the amount can be decided at the end of the trial of the suit and after examining witnesses and therefore, he would request to dismiss the present application.
[9.0] Mr. Manav Mehta and Ms. Paurami Sheth, learned advocates appearing for several opponents, who have filed different suits, have adopted the arguments advanced by learned Senior Advocate Mr. Kavina and have requested to reject the application.
[10.0] I have heard learned Advocates appearing for respective parties.
As far as last contention raised by learned Senior Advocate Mr. Kavina about nonhearing of opponent No.9 is concerned, it appears that opponent No.9 has filed the Admiralty Suit No.34/2016 only on 03.08.2016 i.e. subsequent to the above referred two orders. However, subsequent orders which shall be Page 7 of 13 C/AS/31/2015 IA JUDGMENT dealt with hereinafter reveal that all the proceedings were heard together and the Advocate appearing for opponent No.9 herein was also given an opportunity of hearing. The Admiralty Suit No.31/2015 came to be filed by Island Oil Ltd. on 19.09.2015. On 21.09.2015, the Vessel came to be arrested. Though the defendant Vessel was served, nobody appeared and therefore, an application was filed by Gujarat Maritime Board having received the request from the crew members and considering the fact that the Port was in imminent danger of fatal accident or mishap, a request was made to pass appropriate order and accordingly, order was passed on 01.01.2016. Paragraph 3 of the order dated 01.01.2016 reads as under:
"3. In view of the averments made in the application and in view of the submissions canvassed on behalf of learned advocate Mr. Nanavati appearing for the applicant and in view of no serious resistance on behalf of learned advocate appearing for the original plaintiff, for the time being, in the interest of justice, the order of arrest of the defendant vessel as observed hereinabove, is modified to the following extent:
(A) The applicant - Gujarat Maritime Board is permitted to shift the original defendant No.1 vessel at safe place or shelter birth while defendant No.1 vessel remaining under arrest.
(B) The expenses incurred by applicantGujarat Maritime Board towards safety of the vessel be reimbursed to the applicant and/or its appointed agencies from the sale proceeds of the vessel, as and when such order is passed, as first priority subject to producing necessary documents and necessary scrutiny."
Subsequent to the said order, Port Officer, Gujarat Maritime Board, Magdalla (Surat) Port addressed a communication dated 08.01.2016 to its Vice Chairman and Chief Executive Officer and Page 8 of 13 C/AS/31/2015 IA JUDGMENT requested for shifting of the defendant Vessel and copy thereof was served to the present applicant. The gist of the said letter reads as under:
"With reference to the above subject and the referred order of Hon. High Court, we have to shift the vessel to a safe berth. The nearest safe berth available is of Essar.
M/s. Essar was requested for the berth and they have agreed to provide the berth and also agreed to shift the vessel at their berth. They have also given a quotation for the same which is enclosed herewith. The payment for shifting the vessel and keeping the same at Essar berth safely will be reimbursable to Essar through Gujarat Maritime Board as and when the orders are issued by the Hon. Court."
In view of the above, Vessel was shifted and applicant gave berth to the said Vessel. If the paragraph 3 of the order dated 01.01.2016 is perused, it was made clear that Gujarat Maritime Board shall have first priority with regard to reimbursement of the expenditure.
[10.1] Since the condition of the Vessel was deteriorating, the Court was again moved for auction of the Vessel. Accordingly, an order dated 16.03.2016 was passed permitting advertisement etc. with regard to auction of the Vessel. By passing the said order, following observations were made in paragraph 11.
"11. The Officers so deputed shall open sealed valuation report and bids and thereupon hold inter se Bid, and proceed to complete the Sale Proceedings and direct the successful Bidder to deposit remaining purchase price which the applicant Board shall deposit with the registry of this Court within a week from receipt of entire purchase price. The Officers so deputed shall hand over the possession of the Vessel M.V. BULK ROSE only upon receipt of full Sale price. The expenses incurred so far by Page 9 of 13 C/AS/31/2015 IA JUDGMENT Gujarat Maritime Board and expenses that may be incurred for publishing the advertisements, charges of valuer or any other expenses by the Gujarat Maritime Board shall be considered as expenses in the course of Sale procedure and shall be paid first. All these expenses shall be first appropriated from sale proceeds on confirmation of Sale and before disbursement of any other payment or to any other Claimant."
Subsequent thereto, during the proceedings of the said suits and applications, opponent No.9 filed Admiralty Suit No.34/2016 and the said suit was tagged together with other suits and applications.
[10.2] Subsequent to the auction proceedings, an order was passed by the coordinate Bench on 26.09.2016 and the bid of M/s. Providence Shipping Corporation of USD 311,600 was accepted and accordingly, the Vessel was handed over to the said party. In those proceedings, present opponent No.9 and all other opponents were party, however at no point of time, they had raised any objection about the observations made in the orders dated 01.01.2016 and 16.03.2016. While accepting the bid, in the oral order dated 26.09.2016, the coordinate Bench has reproduced certain paragraphs of the earlier orders by which it has been declared that the Gujarat Maritime Board will have priority over the claim since expenditure were made to maintain the Vessel.
[10.3] It is true that section 10 of the Admiralty Act provides an order of priority of maritime claims, however section 47 of the Gujarat Maritime Board Act, 1981 provides priority over all other liens and claims. Section 47 of the Gujarat Maritime Board Act, Page 10 of 13 C/AS/31/2015 IA JUDGMENT 1981 reads as under:
"47. Board's lien for rates. (1) For the amount of all rates leviable by the Board under this Act in respect of any goods and for the rent due to the Board for any building, plinths, stacking areas or other premises on or in which any goods may have been placed, the Board shall have a lien on such goods and may seize and detain the same until such rates and rents are full paid.
(2) Such lien shall have priority over all other liens and claims, except for general average and for the shipowner's lien upon the said goods for freight and other charges where such lien exists and has been preserved in the manner provided in subsection (1) of section 48 and for money payable to the Central Government under any law for the time being in force, relating to customs other than by way of penalty or fine and to the State Government under any law for the time being in force."
In view of the above facts and in view of the aforesaid provision, when the applicant through Gujarat Maritime Board and the present applicant at the instance of the Gujarat Maritime Board have incurred expenses to maintain the Vessel and have given berth for considerable long time, priority is required to be given with regard to the claim put forward by Gujarat Maritime Board or its agencies.
[10.4] In case of Board of Trustees, Port of Mumbai (Supra), the Hon'ble Supreme Court in paragraph 9 has held as under:
"9. The statutory right under Section 64 embodies this overriding right of the harbour authority over the vessel for the recovery of its dues. This right stands above the rights of secured and unsecured creditors of a company in winding up - in the present case, the shipping company which owns the vessel. The harbour authorities allow ships national or foreign to anchor and avail of the Page 11 of 13 C/AS/31/2015 IA JUDGMENT services provided by them. For payment they look to the vessel. The owner may be foreign or even unknown to the harbour authority. The latter's right to recover its dues is not affected by any pending proceedings against the owner in any court whether in winding up or otherwise. The harbour authority can arrest the vessel while it is anchored in the harbour and recover its dues in respect of that vessel by sale of the vessel if the dues are not paid. This lien of the harbour authority over the vessel is paramount. The lien cannot be extinguished or the vessel sold by any other authority under the directions of the court or otherwise, unless the harbour authority consents to such sale. Thus, in the case of Ashok Arya v. M.V. "Kapitan Mitsos", the Bombay High Court relied upon the decision in The Emilie Millon and held that the lien given by statute to a dock or harbour authority cannot be extinguished by the court unless it be done with authority's express or implied consent."
The aforesaid ratio laid down by the Hon'ble Supreme Court, in my view, is applicable to the facts of the case on hand.
[10.5] I have also gone through the report submitted by the Chartered Accountant who was appointed pursuant to the order passed by this Court. The report justifies the claim put forward by the applicant.
It is also pertinent to note that the opponent No.9 is aware above several orders passed in the present proceedings, however none of the order is challenged by way of filing any application.
[11.0] In view of above discussion, present application is allowed. Registry is hereby directed to transfer the amount of Rs.6,99,60,138/ (Rupees Six Crore Ninetynine Lakh Sixty Page 12 of 13 C/AS/31/2015 IA JUDGMENT Thousand One Hundred and Thirtyeight Only) to the account of Gujarat Maritime Board after 10.05.2019 but before 17.05.2019 and the Gujarat Maritime Board shall reimburse the said amount to the applicant within a period of one week thereafter. Rule is made absolute to the aforesaid extent.
Sd/ (A.J. DESAI, J.) Ajay Page 13 of 13