Bombay High Court
Slovesnov Vadym vs Osv Beas Dolphin (Imo No. 9413482) on 6 September, 2022
Author: N. J. Jamadar
Bench: N. J. Jamadar
IAL9499-2020INCOMAS62-2019.DOC
Santosh
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ADMIRALTY AND VICE ADMIRALTY JURISDICTION
IN ITS COMMERCIAL DIVISION
SANTOSH
SUBHASH
KULKARNI INTERIM APPLICATION (L) NO. 9499 OF 2020
Digitally signed by
SANTOSH
IN
SUBHASH
KULKARNI
Date: 2022.09.06
COMM ADMIRALTY SUIT (L) NO. 63 OF 2019
17:31:15 +0530
SLOVESNOV VADYM & Ors. ...Applicants/
Ori.Plaintiffs
In the matter between
SLOVESNOV VADYM & Ors. ...Plaintiffs
Versus
OSV BEAS DOLPHIN (IMO No.9413482) ...Defendant
WITH
INTERIM APPLICATION NO. 3312 OF 2022
IN
COMM ADMIRALTY SUIT NO. 23 OF 2021
Abhay Narayan Singh & ors. ...Applicants
In the matter between
Abhay Narayan Singh & ors. ...Plaintiffs
Versus
Sale Proceeds OSV BEAS DOLPHIN (IMO
No.9413482) ...Defendant
WITH
INTERIM APPLICATION NO. 3471 OF 2022
IN
COMM ADMIRALTY SUIT NO. 23 OF 2021
HAL Offshore Ltd. ...Applicant
In the matter between
Abhay Narayan Singh & ors. ...Plaintiffs
Versus
Sale Proceeds OSV BEAS DOLPHIN (IMO
No.9413482) ...Defendant
Mr. Prathamesh Kamat, a/w Osama Butt & Arpeeta
Panvalkar, i/b Renata Partners, for the Applicants/
Plaintiffs.
Ms. Apurva Phonerkar - Mehta, for the Applicants in
IA/3312/2022.
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IAL9499-2020INCOMAS62-2019.DOC
Mr. Prashant Pratap, Senior Advocate, a/w Mr. Pabitra Dutta,
i/b Bose and Mitra, for the Caveator in
COMAS/23/2021..
Ms. Sneha Pandey, i/b Motiwalla & Co., for the BPT/Caveator
in COMAS/23/2021.
CORAM: N. J. JAMADAR, J.
DATED : 6th SEPTEMBER, 2022
ORDER:-
1. The applicants/plaintiffs have taken out this application, inter alia, for the following reliefs:
"(a) In light of the decree obtained on 10th December, 2020, this Hon'ble Court be pleased to direct the Prothonotary and Senior Master to release all payments in favour of the applicants, in the accounts of their advcoates, Ganesh & Co.;
(b) This Hon'ble Court be pleased to direct the Prothonotary and Senior Master to release payments as per the specifications in the decree dated 10th December, 2020, to the extent of the principal amount being USD 108,810 along with interest calculated at 8% per annum from the date of filing the suit, i.e. 21st September, 2019 till the date of payment;
(c) This Hon'ble Court be pleased to direct the Prothonotary and Senior Master to release payments to the extent of USD 15,000 towards legal costs incurred by the plaintiffs;
(c1) That this Hon'ble Court be pleased to determine priorities as per Rule 1087 of the Bombay High Court, Original Side, Rules for Regulating The procedure and Practice in Cases brought before the High Court under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017."
2. The applicants are the erstwhile crew members of the defendant - vessel OSV Beas Dolphin (IMO No.9413482). The applicants had filed Notice of Motion (L) No.2261 of 2019 seeking disembarkation of applicant nos.1, 3, 4, 6, 7, 10 and 11 from the 2/12 IAL9499-2020INCOMAS62-2019.DOC defendant - vessel. By an order dated 24 th September, 2019 this Court was pleased to allow disembarkation of applicant nos.1, 3, 4, 6, 7, 10 and 11 and allowed P&I Club to incur the expenses towards disembarkation and repatriation of applicant nos.1, 3, 4, 6, 7, 10 and 11, which were to be treated as Sheriff's expenses. Pursuant to a subsequent order dated 6 th November, 2019, the remaining crew members on board the vessel were repatriated on 13th November, 2019. Eventually, the defendant - vessel was sold by an order of this Court dated 24 th September, 2020 for the consideration of INR 9,50,00,000/-. The sale proceeds, after deduction of Sheriff's expenses, stand deposited with the Prothonotary and Senior Master.
3. The applicants assert that, by a judgment and order dated 10th December, 2020, a decree has been passed in favour of the applicants - plaintiffs to the extent of the principal sum of USD 108,810 along with interest at the rate of 8% p.a. from the date of the institution of the suit till payment, and costs quantified at USD 15000. Since the claim of the applicants in the suit constitutes a maritime lien under Section 2(1)(g) read with Section 9(1)(a) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 ("the Admiralty Act. 2017"), the applicants claim commands highest priority. Hence, this 3/12 IAL9499-2020INCOMAS62-2019.DOC application to release the payment in favour of the applicants in terms of the decree dated 10th December, 2020.
4. While passing the said decree in favour of the applicants, this Court had granted liberty to the plaintiffs to file an application seeking payment from the sale proceeds of the defendant - vessel. Armed with the said liberty the plaintiffs - applicants preferred Interim Application (L) No.15479 of 2021. By an order dated 29th July, 2021, this Court directed the Sheriff of Mumbai to publish a notice in newspaper "Free Press Journal" (English) and "Navashakti" (Marathi) as contemplated under Rule 1087 Admiralty Rules specifying, inter alia, that the order of priority of claims against the sale proceeds of the vessel will not be determined until after the expiration of period of 90 days from the date of publication of the notice and that any person having a claim against the ship or proceeds of sale thereof shall file a suit to prove his claim before the expiration of the said period. Pursuant thereto, the notice seems to have been published in the newspaper on 30th August, 2021. 90 days period stipulated in the notice expired on 30th November, 2021.
5. When this application was taken out for hearing, the learned Counsels for the other decree holders, against the sale 4/12 IAL9499-2020INCOMAS62-2019.DOC proceeds of the defendant - vessel, appeared and were heard. In addition, three of the claimants have instituted the suits being Commercial Admiralty Suit Nos.40/2021, 47/2021 and 83/2021. Hal Offshore Limited, also asserted a right to be paid out of the sale proceeds of the defendant - vessel though it had yet not instituted the suit.
6. Hal Offshore Limited filed an affidavit-in-reply to the effect that in accordance with the terms of re-export Bond, Hal Offshore is likely to be saddled with the liability to pay an amount of Rs.4,49,35,190/-. A demand had already been made on Hal Offshore of the Customs Authorities and, thus, the said amount of Rs.4,49,35,190/-, being in the nature of IGST demand, is a statutory due related to the vessel and, therefore, constitutes a maritime lien on the vessel and/or its sale proceeds. It was asserted that Hal offshore was in the process of instituting the suit against the sale proceeds of the defendant - vessel in respect of its claim which constitutes a maritime lien under Section 9(1)(d) of the Admiralty Act, 2017.
7. It would be contextually relevant to note that when the application was posted for passing orders on 26 th July, 2022 Mr. Prashant Pratap, the learned Senior Advocate for Hal Offshore Limited appeared and raised objection to the tenability of the 5/12 IAL9499-2020INCOMAS62-2019.DOC application on the ground that the application does not seek the determination of the priorities in accordance with Admiralty Rules. Thereupon, Mr. Prathamesh Kamat, the learned Counsel for the plaintiffs, sought leave to amend the application and, leave having been granted, prayer clause (c1), extracted above, seeking determination of priorities came to be added.
8. In the intervening period, Hal Offshore Limited claims to have instituted Commercial Admiralty Suit (L) No.26884 of 2022 against the sale proceeds of the defendant - vessel. Paragraphs 14 and 16 of the plaint in the said suit read as under:
"14. The plaintiff's claim for the sum of INR 4,49,35,190/- (Rupees Four Crores Forty-nine Lakh Thirty-five Thousand One Hundred Ninety only) as Customs duty and penalty in the said amount along with interest thereon constitutes a maritime lien as defined under Section 2(g) read with Section 9(d) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, as "any other statutory dues related to the vessel".
....
16. The plaintiff has filed Writ Petition (L) No.23511 of 2022 in this Hon'ble Court challenging the order dated 25 January 2022 passed by Defendant No.2 claiming duty of INR 4,49,35,190.00 from the plaintiff being the duty equivalent to the IGST payable in respect of the vessel calculated at the rate of 5% of the assessable value of the vessel and also penalty and interest. One of the grounds urged in the said Writ Petition is that Defendant No.2 ought to claim the duty amount from the sale proceeds of the Defendnat vessel which are sufficient to satisfy the demand in full being statutory dues in relation to the said vessel and constituting a maritime lien. The said petition is pending as on the date of this suit. The present suit is filed entirely without prejudice to the plaintiff's rights and contentions and submissions in the said writ petition."
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IAL9499-2020INCOMAS62-2019.DOC
9. Interim Application No.3312 of 2022 in COMAS/23/2021 is taken out by another set of crew members of the defendant - vessel for determination of the priorities.
10. The said suit came to be decreed by an order dated 23 rd August, 2021 in terms of prayer Clause (a) of the Interim Application No.1557 of 2021 thereby decreeing the claim of applicants - plaintiffs therein in the sum of Rs.22,53,753/- along with interest on the sum of Rs.19,67,496/- at the rate of 8% p.a. from the date of the suit till the date of payment. Costs of USD 2,500 i.e. INR Rs.1,85,000/- (at the rate of Rs.74 per USD) were also awarded.
11. At the outset, it may be expedient to extract Sections 9 and 10 of the Admiralty Act, 2017, which read thus:
"9. Inter se priority on maritime lien.--(1) Every maritime lien shall have the following order of inter se priority, namely:
(a) claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;
(b) claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel;
(c) claims for reward for salvage services including special compensation relating thereto;
(d) claims for port, canal, and other waterway dues and pilotage dues and any other statutory dues related to the vessel;
(e) claims based on tort arising out of loss or damage caused by the operation of the vessel other than loss or damage to cargo and containers carried on the vessel.7/12
IAL9499-2020INCOMAS62-2019.DOC (2) The maritime lien specified in sub-section (1) shall continue to exist on the vessel notwithstanding any change of ownership or of registration or of flag and shall be extinguished after expiry of a period of one year unless, prior to the expiry of such period, the vessel has been arrested or seized and such arrest or seizure has led to a forced sale by the High Court:
Provided that for a claim under clause (a) of sub- section (1), the period shall be two years from the date on which the wage, sum, cost of repatriation or social insurance contribution, falls due or becomes payable. (3) The maritime lien referred to in this section shall commence--
(a) in relation to the maritime lien under clause (a) of sub-section (1), upon the claimant's discharge from the vessel;
(b) in relation to the maritime liens under clauses (b) to
(e) of sub-section (1), when the claim arises, and shall run continuously without any suspension or interruption:
Provided that the period during which the vessel was under arrest or seizure shall be excluded.
(4) No maritime lien shall attach to a vessel to secure a claim which arises out of or results from--
(a) damage in connection with the carriage of oil or other hazardous or noxious substances by sea for which compensation is payable to the claimants pursuant to any law for the time being in force;
(b) the radioactive properties or a combination of radioactive properties with toxic, explosive or other hazardous properties of nuclear fuel or of radioactive products or waste.
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.
(2) The following principles shall apply in determining the priority of claims inter se--
(a) if there are more claims than one in any single category of priority, they shall rank equally;
(b) claims for various salvages shall rank in inverse order of time when the claims thereto accrue."8/12
IAL9499-2020INCOMAS62-2019.DOC
12. Section 9, prescribes priority of maritime liens in the order of inter se precedence. In other words, the claim of a claimant falling in Clause (a) of Sub-section (1) of Section 9 would rank high in priority to that of the claim of a claimant falling in Clause (b) and the succeeding order. Clauses (a) and (e) of Sub- section (1) of Section 9 thus provide the highest priority to the claims for wages and other sums due to the crew members and lowest priority to claims based on tort arising out of loss or damage caused by the operation of the vessel other than the loss or damage to the cargo and containers carried on the vessel, respectively. The rest of the claims, which constitute maritime lien, as defined in Section 2(1)(g) of the Act fall in between. A claim which falls in entry (a) stands on a higher pedestal than the one falling in Clause (b) which, in turn, gets priority over the one falling in Clause (c) and so forth.
13. Section 10 of the Admiralty Act, 2017, on the other hand, regulates the order of maritime claims in determining the inter se priority. Under Clause (a) of Sub-section (1) the claim on the vessel, where there is a maritime lien, gets first priority: followed by registered mortgages and charges of same nature on the vessel (Clause-b) and then rank all other claims (Clause-c). Sub-section (2) of Section 10 incorporates the principles which 9/12 IAL9499-2020INCOMAS62-2019.DOC shall govern the determination of priority of claims inter se. First, if there are more claims than one in any single category of priority, they shall rank equally (Clause-a). Second, claims for various salvages shall rank in inverse order of time when the claims thereto accrue.
14. For the purpose of determination of the priorities the relative position of the claims of each of the claimants against the sale proceeds of the defendant - vessel may be appreciated, in a proper prospective, if the claims are compared and contrasted in a tabular form, and, thereafter, the aforesaid principles are applied. Thus, the following position emerges as regards the nature of the maritime lien/claim qua each of the claimants.
Sr. Suit No. Plaintiff Status of Amounts in Caveat Nature of
No. name the suit INR (USD = (payment the claim
INR 75.55) out)
1. COMASL/ Slovesnov Decreed 1,09,59,226.33 Maritime
63/2019 Vadym& Lien
ors. Under
Section
9(1)(a)
2. COMAS/ Abhay Decreed 26,28,495.08 2141, 2142, Maritime
23/2021 Narayan 2143 and Lien
Singh & 2145 of Under
ors. 2021 Section
9(1)(a)
3. COMAS/ AHM Pending 2,82,75,852.96 1438/2021 Maritime
40/2021 Marine Claim
LLC Under
Section
4(1)(n)
4. COMAS/ COCKETT Pending 6,06,27,968.4 2551/2021 Maritime
47/2021 MARINE Claim
10/12
IAL9499-2020INCOMAS62-2019.DOC
OIL DMCC Under
Section
4(1)(n)
5. COMAS/ The Board Pending 1,85,39,163 ---- Maritime
83/2021 of Trustees Lien
of the Port Under
of Mumbai Section
9(1)(d)
6. COMASL/ Hal Pending 9,08,70,380 2365/2021 Maritime
26884/ Offshore Lien
2022 Ltd. Under
Section
9(1)(d)
15. Having determined the nature of the claim of each of the claimants, and upon application of the mandate in the matter of determination of priorities, contained in Section 9 read with Section 10 of the Admiralty Act, 2017, the priorities would be as under:
Suit No. Plaintiff Status Amounts in Caveat Nature Remark Name of the INR (USD = of the s suit INR 75.55) claim COMASL/ Slovesno Decreed 1,09,59,226.33 Mariti 63/2019 v me Vadym& Lien ors. Under Section 9(1)(a) Ist Equally COMAS/ Abhay Decreed 26,28,495.08 2141, Mariti ranked 23/2021 Narayan 2142, me Singh & 2143 Lien ors. and Under 2145 of Section 2021 9(1)(a) COMAS/ The Pending 1,85,39,163 ---- Mariti 83/2021 Board of me Trustees Lien of the Under Port of Section Mumbai 9(1)(d) IInd COMASL/ Equally Hal Pending 9,08,70,380 2365/2 Mariti ranked 26884/2022 Offshore 021 me Ltd. Lien Under Section 11/12 IAL9499-2020INCOMAS62-2019.DOC 9(1)(d) COMAS/ AHM Pending 2,82,75,852.96 1438/20 Mariti 40/2021 Marine 21 me LLC Claim Under Section 4(1)(n) IIIrd Equally COMAS/ COCKE Pending 6,06,27,968.4 2551/20 Mariti ranked 47/2021 TT 21 me MARINE Claim OIL Under DMCC Section 4(1)(n)
16. With the aforesaid determination of the priorities, at this stage, I deem it appropriate to hear the parties on the aspect of paying out. Therefore, the suits and applications be re-notified for hearing on the aspect of paying out, on 27 th September, 2022.
17. It is, however, clarified that the aforesaid consideration is restricted to the determination of priorities and it would not imply that the Court has admitted the claims against the sale proceeds of the defendant - vessel, which are yet to be proved.
18. In view of the determination of the priorities, Interim Application No.3471 of 2022, in which a prayer for extension of time for determination of priorities was made, stands disposed, as, in the intervening period, the applicant has instituted the suit and the said claim is considered in the above determination of the priorities.
[N. J. JAMADAR, J.] 12/12