Madras High Court
Pratibha Shipping Company Limited (In ... vs Praxis Energy Agents S.A
Author: Vineet Kothari
Bench: Vineet Kothari, C.V.Karthikeyan
Judgment dt. 09.08.2019 in OSA No.20 / 2018
etc. batch [Pratibha Shipping Company
Limited v. Praxis Energy Agents SA]
1 / 36
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 19.7.2019
PRONOUNCED ON: 09.08.2019
CORAM
THE HON'BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON'BLE MR.JUSTICE C.V.KARTHIKEYAN
OSA Nos.20, 317 to 349, 363 & 364 of 2018
&
W.A.Nos.738 to 751 of 2013
OSA No.20 of 2018
Pratibha Shipping Company Limited (In Liquidation)
Owner of MT Pratibha Cauvery
Through Official Liquidator of the Hon'ble Bombay High Court
Owners and Parties interested in the
Vessel M.T.Pratibha Cauvery
Presently berthed at the Port of Chennai
and is represented herein by its Master. .. Appellants
Vs.
1. Praxis Energy Agents S.A.
Having its registered Office at
PO Box 146 - Wikhams Cay
Road Town Tortola
British Virgin Islands
And Branch Office at
Swiss Tower, Suit 1603
Jumeirah Lake Towers
P.O.Box 215503, Dubai, U.A.E.
rep. herein by its Power of Attorney Agent
Mr.Ravindra Kumbhar
Having office at 415, Vardhaman Chambers
17 Caswasji Patel Street, Fort
Mumbai 400 001.
http://www.judis.nic.in
Judgment dt. 09.08.2019 in OSA No.20 / 2018
etc. batch [Pratibha Shipping Company
Limited v. Praxis Energy Agents SA]
2 / 36
2. Mr.Shanmugam Rajasekar
No.39, Salangara Street
Parangipettai Post
Tamil Nadu rep. by his
Power Agent Mr.R.Vetrivel
3. M/s. Cosmos Co-operative Bank Ltd.
No.269/270 Shaniwarpeth
Pune 411 030
Having its Regional Office at
No.36/1, Maruniketan
D.L. Vaidya Road, Dadar West
Mumbai 400 028. .. Respondents
[R3 impleaded vide order dated
16.8.2018 in CMP No.13335/2018]
-----
Appeal filed under Order 36, Rule 2 of Madras High Court OS Rules
read with Clause 15 of the Letters Patent, against the order dated
03.01.2018 made in Application No.5973 of 2013 in C.S.No.89 of 2013.
-----
For Appellants in all OSAs : Mr.V.Prakash, S.C.
For M/s. Shubharanjani Ananth
For R-1 in OSA Nos.
20/18 : Mr.R.S.Mohan
318/18 (Chennai Port) : Mr.R.Karthikeyan
319-323, 326, 328-331,
325 & 332/18 : Mr.S.R.Raghunathan
339/2018 : Mr.Ratnanko Banerji, S.C.
For Mr.Amitava Majumdar
347/18 - Bank : Mr.N.V.Srinivasan
For M/s. NVS & Associates
http://www.judis.nic.in
Judgment dt. 09.08.2019 in OSA No.20 / 2018
etc. batch [Pratibha Shipping Company
Limited v. Praxis Energy Agents SA]
3 / 36
363 & 364/18 : M/s. Joy Thattil Itoop
For M/s. K.M.Anand
For R2 in OSA No.
20/18 : Mr.S.Vasudevan
For R3 in OSA No.
20/18 - Bank : Mr.N.V.Srinivasan
-----
JUDGMENT
Dr.Vineet Kothari,J A short, but interesting question of law arises in the present Appeals filed against the order of the learned Single Judge of this Court dated 03.01.2018, namely "Whether in Admiralty suits filed in the original jurisdiction of this Court, the leave of the High Court / Tribunal under Section 446 of the Companies Act, 1956 (now Section 279 of new Companies Act, 2013) to file or proceed with such a suit is required to be obtained by the plaintiffs or not, after the Winding Up Order is passed by the Court and an Official Liquidator or Provisional Liquidator is appointed by that Court / Tribunal?".
2. The facts leading to the filing of the present Appeals arose in http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 4 / 36 the following context. A ship or vessel, MT Pratibha Cauvery, when anchored at the shore near Chennai was caught in the eye of cyclonic storm named 'Neelam' around 27.12.2012. The said vessel drifted towards the shore and in the said natural calamity, some of the crew members jumped into the sea and six of them lost their lives and one of the crew members was rescued by the Indian Coast Guard on 01.11.2012, who filed a civil suit, i.e. C.S.No.89 of 2013 invoking the original Admiralty Jurisdiction of this Court and seeking a Decree and judgment against the Ship, viz. owners and parties interested in the Vessel MT Pratibha Cauvery for a sum of Rs.3.59 Lakhs together with compensation for pain and suffering.
3. A writ petition W.P.No.31942 of 2012 was also filed by the same plaintiff in C.S.No.89 of 2013 seeking an enquiry into the incident in respect of the vessel MT Pratibha Cauvery and to take appropriate action against the owner of the said vessel, namely M/s. Pratibha Shipping Company Limited, Mumbai. In that writ petition, an interim order was passed by a learned Single Judge of this Court on 28.11.2012, recording an Undertaking of the owner company to deposit interim compensation of Rs.30.00 Lakhs by http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 5 / 36 05.12.2012 and thereafter, on 21.12.2012, after hearing the parties interested in the said matter, the Court directed the Company, M/s. Pratibha Shipping Company Limited, Mumbai, to deposit the admitted sum of Rs.87,45,300/- as an interim compensation for the legal heirs of the deceased crew members. A further direction was issued to deposit either a further sum of Rs.5.00 Crores or provide a bank guarantee for the said sum of Rs.5.00 Crores for a period of three years or to furnish immovable property as security for satisfaction of such claims.
4. In the aforeaid C.S.No.89 of 2013, the learned Single Judge of this Court, on 18.4.2013, directed the sale of the said vessel MT Pratibha Cauvery, which was salvaged by one M/s. Smit India Marine Services Private Limited of Bombay and finally, the said Vessel was sold for a total consideration of Rs.15,64,80,000/- and the said sum is lying in deposit with this Court. In the course of time, several claim petitions have been filed by various claimants in the Admiralty Jurisdiction of this Court.
5. In the meanwhile, winding up proceedings were initiated http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 6 / 36 against the owner company M/s. Pratibha Shipping Company Ltd. in Mumbai High Court in Company Petition No.128 of 2013 and a Provisional Liquidator came to be appointed by the Bombay High Court on 28.07.2014.
6. With the appointment of the Official Liquidator in the said winding up proceedings before the Bombay High Court, the Official Liquidator raised an objection in this regard in the pending Civil Suit No.89 of 2013 that the said suit and other similar claim petitions in Admiralty Jurisdiction cannot be proceeded with, without obtaining the prior leave of the Bombay High Court in terms of Section 446 of the Companies Act, 1956, whereas the claimants pursuing their claims under the Admiralty jurisdiction of this Court have opposed the said stand of the Official Liquidator on the ground that the proceedings under the Admiralty jurisdiction are proceedings-in-rem against the vessel in question and to satisfy their maritime lien, they not only had the right to seek the arrest of the ship MT Pratibha Cauvery, but they can also go ahead for determination of their claims without seeking any such leave of the Bombay High Court, as the Admiralty jurisdiction exercised by this Court under the recently enacted Admiralty http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 7 / 36 (Jurisdiction and Settlement of Maritime Claims) Act, 2017, which came into effect on 01.4.2018, being a Special Law, did not provide for any such requirement for obtaining leave from the Company Court and the said Special Law will prevail over the General law, namely the provisions of the Companies Act, 1956 or even later Companies Act of 2013 and therefore, they cannot be compelled to obtain any such leave or permission from the Bombay High Court and they can proceed to satisfy their claims against the Vessel in the Admiralty jurisdiction cases, which are proceedings in rem and not action in personem.
7. They relied upon the decision of the Supreme Court in the case of M.V.Elisabeth v. Harwan Investment and Trading Private Limited [AIR 1993 SCC 1014], which is the leading judgment on the exercise of Admiralty jurisdiction by High Courts even prior to enactment of new Act of 2017, which replaced and repealed the old enactments of English Rule time, namely Admiralty Jurisdiction (India) Act, 1860 and Admiralty Court Act 1861 and in this context, the aforesaid short, but interesting question of law has arisen for our consideration.
http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 8 / 36
8. At the outset, it may be stated that while the learned Single Judge of this Court in the order under appeal before us on 3rd January 2018 has held in favour of the claimants that they need not obtain the leave of the Company Court or Bombay High Court under Section 446 of the Companies Act, 1956, the only other contra view available and cited before us is that of another learned Single Judge of Bombay High Court in the case of Praxis Energy Agents SA v. MT Pratibha Neera in Chamber Summons No.1126 of 2014 in Admiralty Suit No.6 of 2013 decided on 04th May 2018, in which, the learned Single Judge of Bombay High Court, while dealing with the application for impleadment of sister vessels of the said Company in the said admiralty suit, by way of obiter, observed that such leave under Section 446 of the Companies Act would be necessary before impleadment of sister vessels can be allowed, since the purpose of seeking such impleadment is to seek a decree against the sister vessel also in the pending admiralty suit.
9. Heard Mr.V.Prakash, learned counsel appeared for the Official Liquidator of Bombay High Court and Mr.Ratanko Banerji, learned http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 9 / 36 Senior Counsel for the Salvage Company M/s. Smit India Marine Services Private Limited and Mr.S.R.Raghunathan and Mr.S.Vasudevan, learned counsel appeared for the family members of crew and Mr.N.V.Srinivasan, learned counsel appeared for the Cosmos Bank.
10. Mr.V.Prakash, learned Senior Counsel appearing for the Official Liquidator submitted that even though the proceedings under the Admiralty Jurisdiction are Action-in-rem, once the owner company enters the lis, it gets converted into Action-in-personam against the company and therefore, the plaintiffs cannot be allowed to proceed against the Vessel treating the same as a juristic person, ignoring the owner company and since in the present case, the winding up order has been against the owner company by the Bombay High Court and the Official Liquidator has been appointed as its Provisional Liquidator, Section 446 of the Act would stand attracted and that provision does not permit any suit against the company under winding up to lie or to be proceeded with, without obtaining the leave of the Court, as the assets of the company are in the custody of that Company Court and the Court being the custodia legis in respect of the companies under http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 10 / 36 winding up, the Official Liquidator is entitled to take charge of all the assets of the company and realise the value thereof and then distribute the proceeds to the creditors in accordance with the priorities and rankings of claim prescribed under the provisions of the Companies Act.
11. The learned senior counsel, Mr.V.Prakash, further submitted that the very purpose of providing for need to obtain a leave from Court and providing further under Section 446(2) that the Company Court can transfer any such legal proceedings or suits to itself and try the same, is to protect the assets of the company under supervision and control of one Court and not to allow the assets of the company to be taken away by different Courts which have passed such Decrees against the company under winding up, including the Ships or Vessels in the case of a shipping company like the present company involved and therefore, Section 446 of the Act will prevail and without obtaining the leave of the Bombay High Court, the plaintiffs in the present Admiralty suit pending in Madras High Court cannot be proceeded with. He has relied upon certain case laws to support his contentions which would be dealt with hereinafter.
http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 11 / 36
12. Per contra, Mr.S.R.Raghunathan, learned counsel appearing for the claimants and plaintiffs under Admiralty jurisdiction of this Court vehemently opposed the submissions of Mr.V.Prakash, learned senior counsel and submitted that the admiralty jurisdiction of this Court under a Special Law is not subject to the General Law like the provisions of the Companies Act, 1956 and the suits for recovery against the vessel is an action-in-rem against the particular vessel and the claimants and decree holders are entitled to realise their claims by arrest of the ship in particular, without impleading the owner company of such ship as a party defendant in such suits and therefore, the plaintiffs are not obliged to seek any such leave from the Bombay High Court for pursuing their remedy in the admiralty jurisdiction before the Madras High Court.
13. The learned counsel appearing for the Salvage company M/s. Smit India Marine Services Private Limited, Port Trust of Chennai, plaintiffs and claimants representing crew members and their family members etc., all in unison, opposed the said submissions of the learned counsel for the Official Liquidator attached with Bombay High http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 12 / 36 Court. These learned counsel also contended that with the passing of new Insolvency Law in the form of the Insolvency and Bankruptcy Code, 2016, which has come into effect from 01.4.2016, the concept of winding up of Corporate Body or limited company has altogether changed and the winding up process of the companies by the High Court has been now transferred to the National Company Law Tribunal (NCLT) under the provisions of the said Act and in view of Section 434 of the new Companies Act, 2013, as amended by the Companies (Amendment) Act, 2017 any creditor can apply to the High Court for transfer of even the pending winding up proceedings, after service of the summons on the respondent company and even after the admission of the winding up petition, to transfer such winding up petitions to the National Company Law Tribunal, which has to proceed there, first for rehabilitation and revival of the company and if it is not found to be feasible by the Insolvency Professional, as envisaged as per the provisions of the said new Insolvency and Bankruptcy Code, 2016, then to liquidate the company in accordance with the further provisions therein.
14. Therefore, they submitted that it is too late in the day to now http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 13 / 36 contend that in the old pending winding up petitions where Official Liquidator attached with the High Court were appointed as Provisional Liquidators, to insist upon the need of the leave of the Company Court to proceed with any suit or legal proceedings against the company under winding up, which may be in other parts of the country other than the State where winding up order has been passed by the High Court or such compensation claims including maritime claims and liens like under the Admiralty Act, 2017 are being tried under such Special Law.
15. It is also contended that the provisions of the Companies Act in Section 446 of the Act do not have a Non obstante clause and therefore, the said provisions will not override and prevail over the special law like Admiraty Act, 2017 and thus, such suits and claims can be adjudicated upon and tried even without any leave of the Company Court and the action-in-rem against the vessel under the Admiralty Act can continue without the intervention of the owner company. They submitted that even if such action in rem becomes or partly becomes an action in personam against owner company, it does not alter the position for the claimants and adjudication of such claims under the http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 14 / 36 Special Law, Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, which can take place even without obtaining the prior leave of the Company Court as contended. Therefore, they submitted that the pending trials of such claims in this regard in the Admiralty jurisdiction of this Court should be allowed to be proceeded without intervention of the Official Liquidator of the Bombay High Court or leave of the Bombay High Court under Section 446 of the Companies Act, 1956.
16. First, we can have a look at the relevant case laws cited at the Bar firstly, on the scope of the Admiralty jurisdiction and then the legal position about the requirement of obtaining leave of the Company Court under the provisions of the Companies Act, while dealing with special original jurisdiction cases like under the Admiralty jurisdiction of specified High Courts.
17. The lead case on the scope of admiralty jurisdiction is undoubtedly, the one propounded in M.V.Elisabeth v. Harwan Investment and Trading Private Limited [AIR 1993 SCC 1014], in which, the relevant extract from the Head Note, extracting portions http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 15 / 36 from various parts of various judgments are culled out herein below for ready reference:
"Maritime law is as much a part of the general legal system as any other branch of law. It is within the competence of the appropriate Indian Courts to deal, in accordance with the general principles of maritime law and the applicable provisions of statutory law, with all persons and things found within their jurisdiction. The power of the court is plenary and unlimited unless it is expressly or by necessary implication curtailed. Absent such curtailment of jurisdiction, all remedies which are available to the courts to administer justice are available to a claimant against a foreign ship and its owner found within the jurisdiction of the High Court concerned. This power of the court to render justice must necessarily include the power to make interlocutory orders for arrest and attachment before judgment. Power to enforce claims against foreign ships is an essential attribute of admiralty jurisdiction and it is assumed over such ships while they are within the jurisdiction of the High Court by arresting and detaining them. This jurisdiction can be assumed by the High Court concerned, whether or not the defendant resides or carries on business, or the cause of action arose wholly or in part, within the local limits of its jurisdiction. Once a foreign ship is arrested within the local limits of the http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 16 / 36 jurisdiction of the High Court, and the owner of the ship has entered appearance and furnished security to the satisfaction of the High Court for the release of the ship, the proceedings continue as a personal action.
Actions in rem were resorted to by courts in England and U.S. and a device to overcome the difficulty of personal service on the defendant by compelling him to enter appearance and accept service of summons with a view to furnishing security for the release of the res; or, in his absence, proceed against the res itself, by attributing to it a personality for the purpose of entering a decree and executing the same by sale of the res. This is a practical procedural device developed by the courts with a view to rendering justice in accordance with substantive law not only in cases of collision and salvage, but also in cases of other maritime liens and claims arising by reason of breach of contract for the hire of vessels or the carriage of goods or other maritime transactions, or tortious acts, such as conversion or negligence occuring in connection with the carriage of goods. Where substantive law demands justice for the party aggrieved, and the statute has not provided the remedy, it is the duty of the court to devise procedure by drawing analogy from other systems of law and practice.
The admiralty action in rem, as practised in England or in the United States, is unknown to the civil law. In http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 17 / 36 countries following the civil law, all proceedings are initiated by actions in personam. The President of the Court having competence in the matter has the power to order an attachment of the ship if he is convinced that the plaintiff is likely to lose his security unless the ship is detained within jurisdiction. His hands are not fettered by the technicalities of an action in rem and the scope of the proceedings are not limited to maritime liens or claims. The real purpose of arrest in both the English and the Civil Law systems is to obtain security as a guarantee for satisfaction of the decree, although arrest in England is the basis of assumption of jurisdiction, unless the owner has submitted to jurisdiction.
Once a foreign ship is arrested in Indian waters by an order of the High Court, in exercise of the admiralty jurisdiction vested in it by statute, or inherent in it as a court of record, in respect of any maritime claim against its owner, wherever the cause of action may have arisen, and whether or not the ship is subsequently released by the owner furnishing security, proceedings must continue in personam against the owner as in any other suit. All actions in the civil law - whether maritime or not - are in personam, and arrest of a vessel is permitted even in respect of non-maritime claims, and the vessel is treated as any other property of the owner, and its very presence within jurisdiction is sufficient to clothe the competent tribunal with jurisdiction over the http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 18 / 36 owner in respect of the claim.
The arrest of the vessel while in Indian waters by an order of the High Court concerned, as defined under the Merchant Shipping Act, 1958 [Section 3(15)] attracts the jurisdiction of the competent court to proceed with the trial, as in the case of any other suit, as an action against the owner, and any decree obtained by the plaintiff is executable against any property of the owner available within jurisdiction, including the security furnished by him for release of the vessel. The Act being essentially regulatory in character, the various authorities, tribunals and Courts entrusted with the administration and enforcement of its provisions are specifically stated. In view of Section 3(15) a foreign ship falls within the jurisdiction of the High Court where the vessel happens to be at the relevant time - i.e., at the time when the jurisdiction of the High Court is invoked, or, where the cause of action wholly or in part arises."
18. The above judgment of M.V.Elisabeth was followed by the Hon'ble Supreme Court later on in various cases and one amongst them being in the case of M.V.Al Quamar v. Tsavliris Salvage (International) Ltd. [(2000) 8 SCC 278], in which, the Supreme Court, while holding that the High Courts of Calcutta, Bombay and http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 19 / 36 Madras have such Admiralty Jurisdiction like the English Courts had under the provisions of Colonial Courts of Admiralty Act, 1890, the Andhra Pradesh High Court, being the successor of High Court of Madras as some territories of erstwhile State of Madras were included in the State of Andhra Pradesh, also will have such Admiralty jurisdiction. The relevant extract from the Head Note of SCC, extracting the portions from paragraphs 10 to 12 of the judgment are culled out herein below for ready reference.
"By and under the provisions of Colonial Courts of Admiralty Act, 1890 the High Courts of the three presidency towns viz. Calcutta, Bombay and Madras were conferred with the same jurisdiction as was vested in the High Court of England and the High Courts were declared to be otherwise competent to regulate their procedure and practice as would be deemed necessary corresponding to the Indian perspective in exercise of the admiralty jurisdiction by way of Rules framed in that regard. There is thus no manner of doubt that there existed or is existing any fetter in regard to the exercise of admiralty jurisdiction insofar as the three High Courts at Calcutta, Bombay and Madras are concerned. In terms of provisions of the Andhra State Act of 1953 (Act 30 of 1953) certain territories from erstwhile State of Madras were included in the State of Andhra Pradesh and the Court at http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 20 / 36 Andhra Pradesh was redesignated as the High Court of Andhra Pradesh when the State was so named under the States Reorganisation Act, 1956. The Andhra Pradesh High Court "being the successor" of the High Court of Madras (presently Tamil Nadu) has thus the similar jurisdiction as was so vested in the Madras High Court prior to the transfer. Since Visakhapatnam is also included in the State of Andhra Pradesh, the port of Visakhapatnam falls within the admiralty jurisdiction of the High Court of Andhra Pradesh. There is thus no scope to conclude that the admiralty jurisdiction of the Andhra Pradesh High Court stands "frozen" or "atrophied" in any way whatsoever."
(emphasis supplied)
19. After the enactment of 2017 Admiralty Act in India by the Parliament, the Hon'ble Supreme Court had the occasion to deal with a controversy under the Admiralty jurisdiction in the case of Chrisomar Corporation v. MJR Steels (P) Ltd. [(2018) 16 SCC 117], decided on 14th September 2017, in which, explaining the history of the Admiralty jurisdiction, maritime claims and maritime lien, while relying upon the decision in the case of M.V.Elisabeth supra, the Court also explained the difference between Action-in-rem in Admiralty http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 21 / 36 jurisdiction and Action-in-personam. The following extract from the Head Note of Chrisomar case would be useful, which is quoted below.
"Admiralty Law in England, and India, which is based thereon, is derived from the laws of Oleron and other ancient maritime codes like the Rhodian Sea Law, the Basilika, the Assizes of Jerusalem, the Baltic Laws of Wisbuy and the Hanseatic Code. In England, the Admiralty Court Act, 1840 was the first of a series of statutes extending and defining the jurisdiction of the High Court of Admiralty in England. This was followed by the 1861 Admiralty Court Act and various subsequent enactments which were consolidated by the Supreme Court of Judicature (Consolidation) Act, 1925. By the Administration of Justice Act, 1956, the admiralty jurisdiction of the High Court was further widened and the Supreme Court Act, 1981 now defines what the admiralty jurisdiction of the High Court in England is. In India, the Admiralty Law of the chartered High Courts has historically been traced to the Charters of 1774 and 1798 as subsequently extended and clarified by the Letters Patents of 1823, 1862 and 1865. The Admiralty Court Acts, 1840 and 1861, and the Colonial Courts of Admiralty Acts, 1890 and 1891 essentially stated what the Admiralty Law in this country is, and these enactments continue in force as existing laws under Article 372 of the Constitution.
http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 22 / 36 Though Indian statutes lag behind international law in this context, the principles in International Conventions derived from the common law of nations, will be treated as a part of the common law of India. These Conventions include the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, Brussels, 1924 (called the Hague Rules, and later amended and known as the Hague-Visby Rules adopted by the Brussels Protocol of 1968), the United Nations Convention on the Carriage of Goods by Sea, 1978 adopting the Hamburg Rules, the International Convention Relating to the Arrest of Sea-going Ships, Brussels, 1952, the International Convention on Certain Rules concerning Civil Jurisdiction in Matters of Collision, Brussels, 1952, the International Conventions for the Unification of Certain Rules relating to Maritime Liens and Mortgages, Brussels, 1926, and the Revised Convention on Maritime Liens and Mortgages, Brussels,1967. India seems to be lagging behind many other countries in ratifying and adopting the beneficial provisions of various conventions intended to facilitate international trade. Although these conventions have not been adopted by legislation, the principles incorporated in the conventions are themselves derived from the common law of nations as embodying the felt necessities of international trade and are as such part of the common law of India and applicable for the enforcement http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 23 / 36 of maritime claims against foreign ships.
The Republic of India has finally woken up to the need for updating its Admiralty Law. The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 has been made by Parliament and has received the assent of the President on 9.8.2017, though it has not yet been brought into force. In this Act, "maritime claim" is defined in Section 2(1)(f) as being a claim referred to in Section 4 and a "maritime lien" is defined in clause (g) of Section 2(1). Under Section 5 of the 2017 Act, the High Court may order for the arrest of a vessel which is within its jurisdiction for the purpose of providing security against a maritime claim. Under Section 6 of the said Act, the High Court may also exercise admiralty jurisdiction by an order in personam in respect of the maritime claims referred to in Section 4.
An admiralty action in the courts of India commences against a vessel to enforce what is called a "maritime claim". How maritime claims are enforced, is that Admiralty Law confers upon the claimant a right in rem to proceed against the ship or cargo in addition to a right in personam to proceed against the owner. A personal action may be brought against the defendant if he is either present in the country or submits to jurisdiction. If the foreign owner of an arrested ship appears before the court and deposits security as bail for the release of his ship against which http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 24 / 36 proceedings in rem have been instituted, he submits himself to jurisdiction.
An action in rem is directed against the ship itself to satisfy the claim of the plaintiff out of the res. The ship is for this purpose treated as a person. Such an action may constitute an inducement to the owner to submit to the jurisdiction of the court, thereby making himself liable to be proceeded against by the plaintiff in personam. It is, however, imperative in an action in rem that the ship should be within jurisdiction at the time the proceedings are started. A decree of the court in such an action binds not merely the parties to the action but everybody in the world who might dispute the plaintiff's claim.
It is by means of an action in rem that the arrest of a particular ship is secured by the plaintiff. He does not sue the owner directly and by name; but the owner or any one interested in the proceedings may appear and defend. The writ is issued to "owners and parties interested in the property proceeded against". The arrest of the ship is regarded as a mere procedure to obtained security to satisfy judgment.
A successful plaintiff in an action in rem has a right to recover damages against the property of the defendant. The liability of the shipowner is not limited to the value of the res primarily proceeded against. An action though originally http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 25 / 36 commenced in rem, becomes a personal action against a defendant upon appearance, and he becomes liable for the full amount of a judgment unless protected by the statutory provisions for the limitation of liability. The foundation of such an action in rem in Admiralty Law, which is a peculiarity of the Anglo-American law, arises from a maritime lien or a maritime claim imposing a personal liability upon the owner of the vessel. A defendant in an admiralty action in personam is liable for the full amount of the plaintiff's established claim. Likewise, a defendant acknowledging service in an action in rem is liable to be saddled with full liability even when the amount of the judgment exceeds the value of the res or of the bail provided."
(emphasis supplied)
20. The unique concept of Admiralty Law is a sui generis, but for practical purposes, maritime lien can be considered as a charge on the maritime property. It was so observed by the Hon'ble Supreme Court in O.Konavalov v. Commander Coast Guard Region [(2006) 4 SCC 620] in paragraphs 22 to 24, which are quoted below for ready reference.
"22. The most unique concept of all in admiralty law is the maritime lien. It is a concept which is sui generis, but http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 26 / 36 for practical purposes it may be considered as a charge upon maritime property, arising by operation of law and binding the property even in the hands of a bona fide purchaser for value and without notice, but which can only be enforced by an admiralty claim in rem.
23. A maritime lien:
“adheres to the ship from the time that the facts happened which gave the maritime lien, and then continues binding on the ship until it is discharged, either by being satisfied or from the laches of the owner, or in any other way which, by law, it may be discharged. It commences and there it continues binding on the ship until it comes to an end.”
24. Admiralty jurisdiction all over the world recognise the existence of maritime liens which have evolved over years of State and judicial practice. The existence and enforceability of such liens outside statute law is well established. The statutory law in regard to admiralty or maritime claims is not exhaustive of the subject. The courts recognise and applied such members of maritime liens as capable of enforcement through admiralty. MV Elisabeth case [MV Elisabeth v. Harwan Investment and Trading (P) Ltd., 1993 Supp (2) SCC 433] : the above judgment very elaborately deals with the admiralty powers of the High http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 27 / 36 Courts in India." (emphasis supplied)
21. On the exclusion of the need to obtain leave from the Company Court, the Hon'ble Supreme Court in the case of Allahabad Bank v. Canara Bank [(2000) 4 SCC 406], while upholding the exclusive jurisdiction of the Debt Recovery Tribunal and Recovery Officer under the provisions of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, (hereinafter referred to as the "RDB Act"), held that the Debt Recovery Tribunal has exclusive jurisdiction under the said Special Enactment of 1993 and no leave of Company Court is necessary for initiating such proceedings under the RDB Act nor the Company Court can transfer to it or otherwise interfere with such proceedings. Explaining the importance of such special jurisdiction to prevail over the general law of Companies Act, the Apex Court held as under:
"The jurisdiction of the Tribunal in regard to adjudication is exclusive. The RDB Act requires the Tribunal alone to decide applications for recovery of debts due to banks or financial institutions. Once the Tribunal passes an order that the debt is due, the Tribunal has to issue a certificate under Section 19(22) to the Recovery Officer for http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 28 / 36 recovery of the debt specified in the certificate. It appears that basically the Tribunal is to adjudicate the liability of the defendant and then it has to issue a certificate under Section 19(22). Under Section 18, the jurisdiction of any other court or authority which would otherwise have had jurisdiction but for the provisions of the Act, is ousted and the power to adjudicate upon the liability is exclusively vested in the Tribunal. (This exclusion does not however apply to the jurisdiction of the Supreme Court or of a High Court exercising power under Articles 226 or 227 of the Constitution.) This is the effect of Sections 17 and 18 of the Act. Therefore, the provisions of Sections 17 and 18 of the RDB Act are exclusive so far as the question of adjudication of the liability of the defendant to the appellant Bank is concerned.
Even in regard to "execution", the jurisdiction of the Recovery Officer is exclusive. Now a procedure has been laid down in the Act for recovery of the debt as per the certificate issued by the Tribunal and this procedure is contained in Chapter V of the Act and is covered by Sections 25 to 30. It is not the intendment of the Act while the basic liability of the defendant is to be decided by the Tribunal under Section 17, the banks/financial institutions should go to the civil court or the Company Court or some other authority outside the Act for the actual realisation of the amount. The http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 29 / 36 certificate granted under Section 19(22) has, to be executed only by the Recovery Officer. No dual jurisdictions at different stages are contemplated. Further, Section 34 of the Act clearly state that the RDB Act overrides other laws to the extent of "inconsistency". Obviously, the prescription of an exclusive Tribunal both for adjudication and execution is a procedure clearly inconsistent with realisation of these debts in any other manner.
Moreover, the Tiwari Committee which recommended the constitution of a Special Tribunal in 1981 for recovery of debts due to banks and financial institutions stated in its report that the exclusive jurisdiction of the Tribunal must relate not only in regard to the adjudication of the liability but also in regard to the execution proceedings.
Thus, the adjudication of liability and the recovery of the amount by execution of the certificate are respectively within the exclusive jurisdiction of the Tribunal and the Recovery Officer and no other court or authority much less the civil court or the Company Court can go into the said questions relating to the liability and the recovery except as provided in the Act.
The Company Court cannot decide the claims of banks and financial institutions. Therefore, there is no need for the appellant to seek leave of the Company Court to proceed with its claim before the Debts Recovery Tribunal or in http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 30 / 36 respect of the execution proceedings before the Recovery Officer. Nor can they be transferred to the Company Court. Thus, Sections 442, 446 and 537 cannot be applied against the Tribunal." (emphasis supplied)
22. The Court explained the difference between the Special Law and General Law and latter law to prevail in case the Court comes across a conflict between a Special Law versus another Special Law, the Court held that latter Special Law will prevail in such cases. The Court further observed that:
"At the same time, some High Courts have rightly held that the Companies Act is a general Act and does not prevail under the RDB Act. There can be a situation in law where the same statute is treated as special statute vis-a-vis one legislation and again as a general statute vis-a-vis yet another legislation.
Alternatively, the Companies Act, 1956 and the RDB Act can both be treated as special laws, and the principle that when there are two special laws, the latter will normally prevail over the former if there is a provision in the latter special Act giving it overriding effect, can also be applied. Such a provision is there in the RDB Act, namely, Section 34. Therefore, in view of Section 34 of the RDB Act, the said Act http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 31 / 36 overrides the Companies Act, to the extent there is anything inconsistent between the Acts." (emphasis supplied)
23. The provisions of the Admiralty Act, 2017 enacted by Parliament in India also defines the terms like Admiralty jurisdictions, Admiralty proceedings, arrest of ships, maritime claim and maritime lien, vessel, territorial waters, etc. The said enactment also confers Admiralty jurisdiction now upon all the coastal High Courts like High Court of Calcutta, Bombay, Madras, Karnataka, Gujarat, Orissa, Kerala, Hyderabad, Andhra Pradesh or any other High Court which may be notified by the Central Government.
24. Section 4 deals with maritime claims while Section 5 deals with arrest of vessel in rem. Section 6 defines Admiralty jurisdiction in personam and Section 7 deals with restrictions on actions in personam in certain cases. Section 8 deals with vesting of rights on sale of vessels while Section 9 talks of inter-se priority of maritime liens. Section 10 provides for orders of priority of maritime claims and Section 11 gives protection of owner, demise charterer, Manager or Operator or crew of vessel arrested. Sections 12 and 13 deal with http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 32 / 36 Procedures and Section 14 deals with Appeals. While Section 15 talks of transfer of proceedings by Supreme Court from one High Court to another High Court, Section 16 talks of power of the Central Government to make Rules. Section 17 is for Repeal and Savings, whereunder the Admiralty Court Act, 1840, the Admiralty Court Act, 1861, the Colonial Courts of Admiralty Act, 1890, the Colonial Courts of Admiralty (India) Act, 1891, and the provisions of the Letters Patent, 1865 in so far as they apply to the admiralty jurisdiction of the Bombay, Calcutta and Madras High Courts, were repealed while saving the earlier proceedings or orders.
25. Thus, the said short enactment is now in force in India, with effect from 1st April 2018, is the Special Law, now governing the adjudication of the maritime claims by the various coastal High Courts, including the Madras High Court.
26. From the conspectus of the aforesaid legal provisions, statutory provisions and case laws, we are of the opinion that the adjudication of the admiralty claims by the Madras High Court in its original Admiralty jurisdiction, while trying the civil suit and other http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 33 / 36 maritime claims, the plaintiff do not require any leave of the Bombay High Court, in view of the winding up order passed against the owner company M/s. Pratibha Shipping Company Limited and such maritime claims deserve to be adjudicated and proceeded further without any intervention of the Official Liquidator attached with Bombay High Court, in pursuance of the winding up order passed by the Bombay High Court in the winding up petition filed against the owner company.
27. Only if the decree holders/plaintiffs are unable to satisfy their claims out of the realisation on the sale of the vessel in question, viz. M.T.Pratibha Cauvery, which has already been sold as stated above, in accordance with the priorities of their inter se claims as stipulated in the Admiralty Act of 2017 and they want to recover the balance amount, if any, from the owner company itself in action-in-personam, they will be at liberty to approach the Official Liquidator in the aforesaid winding up proceedings against the owner company, where in accordance with the provisions of the Companies Act, they may be entitled to receive the balance amount on the distribution of realisation on sale of the other assets of the company under winding up, by the saidOfficial Liquidator, attached with Bombay High Court. We cannot http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 34 / 36 agree with the obiter observation of the learned Single Judge of the Bombay High Court, while we affirm the view of the learned Single Judge of this Court in the order under appeal before us.
28. In view of the subsequent developments of law, in the field of recovery of dues from the corporate entities, we are of the opinion that putting the requirement of obtaining prior leave to undertake these proceedings under these enactments or Special Laws from the winding up Court or Company Court, is not envisaged in the Scheme of the development of laws and therefore, any contra opinion on that would lead to unnecessary obstacles and hindrance in the exercise of special jurisdictions by the special Tribunals or Courts under these special recovery laws as well as the special law like the Admiralty jurisdiction of this Court.
29. We are further fortified in our view by the enactment of recent Insolvency and Bankruptcy Code, 2016, which also is another Special Law in sequence for recovery of dues in Banks and Financial Institutions, after the RDB Act and SARFAESI Act, 2002. The Insolvency and Bankruptcy Code, 2016, further empowers the National http://www.judis.nic.in Judgment dt. 09.08.2019 in OSA No.20 / 2018 etc. batch [Pratibha Shipping Company Limited v. Praxis Energy Agents SA] 35 / 36 Company Law Tribunal to undertake the rehabilitation process of such defaulter companies in accordance with the provisions of Insolvency and Bankruptcy Code, 2016 and the said Act read with Section 434 of the Companies Act, 2013, now amended, envisages transfer of even pending winding up proceedings from the Company Court, viz. High Court to the National Company Law Tribunal.
30. We, therefore, answer the aforesaid question of law in negative and hold that the leave of the Company Court / Tribunal under the provisions of Section 446 of the Companies Act, 1956 or Section 279 of the new Companies Act, 2013, is not required to institute or proceed with the suit / trial under the Special Law like under Admiralty Jurisdiction of this Court.
31. We dispose of the appeal accordingly. No costs. Consequently, connected miscellaneous petitions are closed.
Index : Yes (V.K.J.) (C.V.K.J.)
Order : Speaking 09.8.2019
kpl
http://www.judis.nic.in
Judgment dt. 09.08.2019 in OSA No.20 / 2018
etc. batch [Pratibha Shipping Company
Limited v. Praxis Energy Agents SA]
36 / 36
DR.VINEET KOTHARI,J,
and
C.V.KARTHIKEYAN,J
kpl
Judgment in
OSA Nos.20, 317 to 349, 363 & 364
of 2018 & W.A.Nos.738 to 751 of 2013.
09.8.2019.
http://www.judis.nic.in