Gujarat High Court
Credit Suisse Ag vs M.V. Sam Hawk on 4 February, 2021
Author: Biren Vaishnav
Bench: Biren Vaishnav
C/AS/17/2020 ORDER
IN THEHIGHCOURTOF GUJARATAT AHMEDABAD
R/ADMIRALTYSUITNO. 17 of 2020
With
CIVILAPPLICATIONNO. 4 of 2020
In R/ADMIRALTYSUITNO. 17 of 2020
==========================================================
CREDITSUISSEAG Versus M.V. SAMHAWK ========================================================== Appearance:
DHRUVTOLIYA(9249)for the Defendant(s)No. 1
MRHARSHN PAREKH(6951)for the Plaintiff(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE BIREN VAISHNAV Date: 04/02/2021 COMMONORALORDER
1. The Plaintiff has filed the instant Suit for securing, protecting and recovering the Plaintiff's maritime claim as a registered mortgagee of the Defendant Vessel MV Sam Hawk secured by a First Preferred Liberian Ship Mortgage dated 24 th July 2015 pursuant to the Loan Agreement dated 20th December 2012 executed between the Plaintiff and the Registered Owners of the Defendant Vessel i.e. M/s. SPV Sam Hawk Inc. and M/s. SPV Sam Jaguar Inc, both of whom are jointly and severally liable for the Plaintiff's claim and has filed the present Suit, inter alia, seeking the arrest/ sequestration/ condemnation and sale of the Defendant No.1 Vessel for the satisfaction of the Plaintiff's claim in the Suit for the principal amount with costs of USD 23,658,293.24 plus accrued interest amounting to USD 456,118.03 and USD 25,000 for costs filing this suit aggregating to USD 24,143,731.38 with further Page 1 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER interest at the rate of 12% per annum from the date of filing of the Suit till the date of decree and further interest at 12% per annum from the date of decree till payment and/or realization as per particulars of claim.
2. This Court vide its order of 13.05.2020 passed an order of arrest against the Defendant Vessel. Thereafter, this Court passed orders for sale of the Defendant Vessel. The Defendant Vessel came to be sold by order dated 07.08.2020 passed by this Court for the sum of USD 10,655,000.00 to M/s. Lavera Shipping Inc. and the sale proceeds came to be deposited with the Court.
3. Subsequently, one M/s. SPV Sam Hawk Inc., the Registered Owner of the Defendant Vessel filed its Written Statement to the Plaint in the Suit wherein it admitted to the Plaintiff's claim in its entirety and confirmed that the Plaintiff is the registered mortgagee of the Defendant Vessel.
4. The Plaintiff has thereafter filed an application seeking summary judgment under Order XIII-A of Code of Civil Procedure, 1908 as inserted by the virtue of the Commercial Courts Act, 2015. M/s. SPV Sam Hawk Inc., the Registered Owner of the Defendant Vessel have also filed their reply to the said Application, admitting to the dues as mentioned in the Plaint in the Suit and confirming that the Plaintiff was the registered mortgagee of the Defendant vessel. At this stage, no Page 2 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER relief for disbursement of the sale proceeds with the Court Registry are being pressed by the Plaintiff.
5. Mr. Majumdar, Learned Counsel for the Plaintiff submits that M/s. Sam Hawk Inc., the Registered Owner of the Defendant Vessel have filed their Written Statement and a Reply to the present Application taken out by the Plaintiff for summary judgment. It is stated that it is evident from the Written Statement [at para (5)] and the reply [at para (5)] to the Application under Order XIII-A of the Code of Civil Procedure, 1908 that the Registered Owner of the Defendant Vessel has admitted to the entirety of the Plaintiff's claim and to the fact that the Plaintiff has a registered mortgage over the Defendant Vessel. Mr. Majumdar submits that Registered Owner of the Defendant Vessel has also admitted to all the averments and documents of the Plaint filed in the Suit at para (3) of Written Statement. It is also further submitted that the Plaintiff with its Plaint has submitted all the supporting documents in support of the claim which have not been disputed and have been admitted by the Defendant. A list of the admitted and undisputed documents which the Plaintiff has placed reliance on in the support of its claim in the Plaint are set out below:
Sr. Document Relevant Relevant
No. Annexure Page
in the No. in
Plaint the
Plaint
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C/AS/17/2020 ORDER
1 Certificate of Ownership and Encumbrance of B 54
the Defendant Vessel dated 20 th April 2020
issued by the Liberian Registry
2 Loan Agreement dated 20th December 2012 D 58-122
between the Plaintiff and the Registered Owner of the Defendant Vessel and one M/s. SPV Sam Jaguar Inc., registered owner of the vessel MV Sam Jaguar 3 Notice of Drawdown dated 27th December 2012 E 123 4 Notice of Drawdown dated 25th January 2013 F 124-126 5 Debit Note issued by the Plaintiff dated 28 th G 127 December 2012 6 Debit Note issued by the Plaintiff dated 28 th H 128 January 2013 7 SWIFT Advice evidencing the remittance of the I 129-130 sum of USD 13,011,750 to the Shipbuilders dated 28th January 2013 8 Credit Note of USD 107,750 issued to the J 131 Borrowers dated 31st January 2013 by the Plaintiff 9 Deed of General Assignment dated 31 st January K 132-151 2013 10 Deed of Covenants dated 31st January 2013 L 152-175 11 Certificate of Encumbrance and Mortgage dated M 176 31st January 2013 12 International Swaps and Derivatives Association N 177-216 2002 Master Agreement dated 31st January 2013 13 Notice of Drawdown dated 15th March 2013 O 217 14 Notice of Drawdown dated 8th July 2013 P 218 15 Notice of Drawdown dated 11th September 2013 Q 219-221 16 Debit Note dated 15th March 2013 R 222 17 Debit Note dated 12th July 2013 S 223 18 Debit Note 12th September 2013 T 224 19 SWIFT receipt of the 12th September 2013 U 225-226 20 Bank Account Statement evidencing the V 227 Page 4 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER remittance of the sums under the second tranche of the Loan Agreement from the Plaintiff to the Bank Account(s) of M/s. SPV Sam Jaguar Inc dated 1st October 2013 21 Amendment to the Loan Agreement dated 3 rd W 228-240 June 2015 22 Mortgage Agreement dated 24th July 2015 X 241-267 23 Amendment No. 2 to the Loan Agreement dated Y 268-283 17th August 2016.
24 Letter dated 6th November 2019 from the Plaintiff Z 284-285 to the Borrowers 25 Letter dated 31st January 2020 from the Plaintiff AA 286-287 to the Borrowers 26 Letter dated 11th February 2020 from the Plaintiff BB 288-290 to the Borrowers 27 Letter dated 6th March 2020 from the Plaintiff to CC 291-293 the Borrowers 28 Email received by the Plaintiff from the DD 294 Borrowers dated 11th March 2020, requesting for restructuring the loan agreement 29 Reply email sent by the Plaintiff to the Borrowers EE 295 dated 11th March 2020 30 Outstanding Overview of the SAM Shipping FF 296-298 Group evidencing the total outstanding amount as on 12th March 2020 31 Notice of Acceleration and Demand dated 1st GG 299-301 April 2020 from the Plaintiff to the Borrowers 32 Letter dated 14th April 2020 sent by the Plaintiff HH 302-303 calling upon the Borrowers to immediately pay all sums due as mentioned in the Notice of Acceleration and upon which default interest Page 5 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER would continue.
33 Invoice for the Defendant Vessel and the vessel II 304-305 MV Sam Jaguar from M/s. BankServe Insurance Services for Mortgagees Additional Perils Insurance dated 2nd August 2019 34 Invoice for the Defendant Vessel and the vessel JJ 306-307 MV Sam Jaguar from M/s. BankServe Insurance Services for Mortgagees Interest Insurance dated 20th August 2019 35 SWIFT receipt evidencing a remittance of USD KK 308 3,234.96 to BMS Group Ltd Client Money Account by the Plaintiff towards payment of the premiums for the Mortgagees Additional Perils Insurance and the Mortgagees Interest Insurance dated 30th April 2020 36 Revised invoice dated 30th April 2020 from M/s. LL 309-310 BankServe Insurance Services for the Mortgagees Additional Perils Insurance for the sum of USD 470.85 for the Defendant Vessel 37 Revised invoice dated 30th April 2020 from M/s. MM 311-312 BankServe Insurance Services for the Mortgagees Interest Insurance to USD 1,147.70 for the Defendant Vessel 38 Revised invoice dated 30th April 2020 from M/s. NN 313-314 BankServe Insurance Services for the Mortgagees Additional Perils Insurance to USD 487.18 for the vessel MV Sam Jaguar 39 Revised invoice dated 30th April 2020 from M/s. OO 315-316 BankServe Insurance Services for the Page 6 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER Mortgagees Interest Insurance to USD 1,187.51 for the vessel MV Sam Jaguar 40 SWIFT receipt evidence the remittance of the PP 317 differential increase in the premium for the insurance covers for both the vessels by the Plaintiff to BMS Group Ltd Client Money Account on 4th May 2020 for the sum of USD 58.28 41 Working statement for the total outstanding sums TT 328-329 including interest with respect to the loan extended towards the Defendant Vessel and the vessel MV Sam Jaguar as on 12th May 2020
6. Learned Counsel Mr. Majumdar urges this Court to pass a summary judgment in terms with Order XIII-A of the Code of Civil Procedure, 1908 or in the alternative pass a decree/judgment on admission by the Defendant pursuant to Order XII Rule 6 of the Code of Civil Procedure, 1908. Mr. Majumdar places reliance on the following decisions in support of his submissions:
a. Su-Kam Power Systems Ltd. v. Kunwer Sachdev and Another [(2019) SCC Online Del 10764] (Paras 90-92); and b. Karan Kapahi v. Lal Chand Public Charitable Trust [(2010) 4 SCC 753 (Paras 37 to 40, 42, 45, 46 and 48).
7. Mr. Majumdar relying on these decisions and the relevant paragraphs thereto, along with the various admissions of the Registered Owner of the Defendant Vessel submits that a decree/summary judgment be Page 7 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER passed in favour of his clients. Mr. Majumdar also submits that the Plaintiff is presently not seeking any decree as per para 53(c) of the Plaint for pay out and will take out a separate application under Section 9 and 10 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 for determination of priorities. Mr. Sanjanwala, Learned Senior Advocate appearing for the Defendant supports the arguments of Mr. Majumdar and also requests this Court to pass a decree/summary judgment in favour of the Plaintiffs.
8. Having heard the learned counselsconsidering the submissions advanced by them for the respective parties, what needs to be determined is whether a decree can be passed in favour of the Plaintiff.
The Delhi High Court in the Su-kam Power (supra) whilst granting the Plaintiff a summary judgment under Order XIII A of the Code of Civil Procedure, 1908 made the following observations in relation to the principles governing the same:
""90. To reiterate, the intent behind incorporating the summary judgment procedure in the Commercial Court Act, 2015 is to ensure disposal of commercial disputes in a time-bound manner. In fact, the applicability of Order XIIIA, CPC to commercial disputes, demonstrates that the trial is no longer the default procedure/norm.
91. Rule 3 of Order XIIIA, CPC, as applicable to commercial disputes, empowers the Court to grant a summary judgement Page 8 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER against the defendant where the Court considers that the defendant has no real prospects of successfully defending the claim and there is no other compelling reason why the claim should not be disposed of before recording of oral evidence. The expression ―real directs the Court to examine whether there is a ―realistic as opposed to ―fanciful prospects of success. This Court is of the view that the expression ―no genuine issue requiring a trial in Ontario Rules of Civil Procedure and ―no other compelling reason.....for trial in Commercial Courts Act can be read mutatis mutandis. Consequently, Order XIIIA, CPC would be attracted if the Court, while hearing such an application, can make the necessary finding of fact, apply the law to the facts and the same is a proportionate, more expeditious and less expensive means of achieving a fair and just result.
92. Accordingly, unlike ordinary suits, Courts need not hold trial in commercial suits, even if there are disputed questions of fact as held by the Canadian Supreme Court in Robert Hryniak (supra), in the event, the Court comes to the conclusion that the defendant lacks a real prospect of successfully defending the claim."
9. Upon perusal of the documents annexed by the Plaintiff in support of its claim as enumerated above and in view of the admissions of the Registered Owner of the Defendant Vessel, it is evident that Plaintiff Page 9 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER has made out a case for grant of summary judgment in its favour. Consequently, no purpose would be achieved by leading oral evidence as from the pleadings and materials on record, it is apparent that the Defendant Vessel has no prospect of defending the allegations of the Plaintiff and there are no reasons for the parties to be compelled to trial. The Defendant has no real prospect of succeeding and therefore directing the Plaintiff to undergo a full-fledged trial would be grossly unfair and there is no compelling reason for the same especially when the Registered Owner of the Defendant Vessel has admitted its liability and has also in [Para (6] the Written Statement and [Para (6)] of the Reply to the application admitted to the passing of a decree for the sums as claimed by the Plaintiff in the Suit and for the declaration that the Plaintiff is the registered mortgagee of the Defendant Vessel.
10. Even otherwise, the Plaintiff has made out a case for grant of judgment on admission. The Supreme Court in Karan Kapahi (supra) laid down the following principles in relation to judgment on admission under Order XII Rule 6 of the Code of Civil Procedure, 1908:
"37. The principles behind Order 12 Rule 6 are to give the plaintiff a right to speedy judgment. Under this Rule either party may get rid of so much of the rival claims about `which there is no controversy' [See the dictum of Lord Jessel, the Master of Rolls, in Thorp versus Holdsworth in (1876) 3 Chancery Division 637 at 640].
Page 10 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER
38. In this connection, it may be noted that order 12 Rule 6 was amended by the Amendment Act of 1976. Prior to amendment the Rule read thus:-
"6. Judgment on admissions. - Any party may, at any stage of a suit, where admissions of facts have been made, either on pleadings or otherwise, apply to the Court for such judgment or order as upon such admission he may be entitled to, without waiting for the determination of any other question between the parties and the Court may upon such application make such order or give such judgment, as the Court may think just."
39. In the 54th Law Commission Report, an amendment was suggested to enable the Court to give a judgment not only on the application of a party but on its own motion. It is thus clear that the amendment was brought about to further the ends of justice and give these provisions a wider sweep by empowering judges to use it `ex debito justitial, a Latin term, meaning a debt of justice. In our opinion the thrust of the amendment is that in an appropriate case, a party, on the admission of the other party, can press for judgment, as a matter of legal right. However, the Court always retains its discretion in the matter of pronouncing judgment.
40. If the provision of order 12 Rule 1 is compared with Order 12 Rule 6, it becomes clear that the provision of Order 12 Rule 6 is wider in as much as the provision of order 12 Rule 1 is limited to admission by `pleading or otherwise in writing' but in Order 12 Page 11 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER Rule 6 the expression `or otherwise' is much wider in view of the words used therein namely: `admission of fact.........either in the pleading or otherwise, whether orally or in writing'. ...
42. In the case of Uttam Singh Duggal & Co. Ltd., v. United Bank of India and others, (2000) 7 SCC 120, this Court, while construing this provision, held that the Court should not unduly narrow down its application as the object is to enable a party to obtain speedy judgment.
...
45. Order 12 Rule 6 of the Code has been very lucidly discussed and succinctly interpreted in a Division Bench judgment of Madhya Pradesh High Court in the case of Shikharchand and others Vs. Bari Bai.G.P. Singh (as His Lordship then was) in a concurring judgment explained the aforesaid rule, if we may say so, very authoritatively at page 79 of the report. His Lordship held: (AIR Para 19) "... I will only add a few words of my own. Rule 6 of Order 12 of the Code of civil Procedure corresponds to Rule 5 of Order 32 of the Supreme Court Rules (English), now rule 3 of Order 27, and is almost identically worded (see Annual Practice 1965 edition Part I. p. 569). The Supreme Court Rule came up for consideration in Ellis v. Allen (1914) Ch 904. In that case a suit was filed for ejectment, mesne profits and damages on the ground of breach of covenant against sub-letting. Lessee's Page 12 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER solicitors wrote to the plaintiff's solicitors in which fact of breach of covenant was admitted and a case was sought to be made out for relief against forfeiture. This letter was used as an admission under rule 5 and as there was no substance in the plea of relief against forfeiture, the suit was decreed for ejectment under that rule. Sargant, J. rejected the argument that the rule is confined to admissions made in pleadings or under rules 1 to 4 in the same order (same as ours) and said:
"The rule applies wherever there is a clear admission of facts in the face of which it is impossible for the party making it to succeed."
Rule 6 of Order 12, in my opinion, must bear the same construction as was put upon the corresponding English rule by Sargent, J. The words "either on the pleadings or otherwise" in rule 6 enable us not only to see the admissions made in pleadings or under Rules 1 to 4 of the same order but also admissions made elsewhere during the trial." (emphasis added)
46. This Court expresses its approval of the aforesaid interpretation of Order 12 Rule 6 by Justice G.P. Singh (as His Lordship then was). Mulla in his commentary on the Code has also relied on ratio in Shikharchand (supra) for explaining these provisions.
...
48. However, the provision under Order 12 Rule 6 of the Code is enabling, discretionary and permissive and is neither Page 13 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER mandatory nor it is peremptory since the word "may" has been used. But in the given situation, as in the instant case, the said provision can be applied in rendering the judgment."
11. Though the Plaintiff has not made its application under Order XII Rule 6 of the Code of Civil Procedure, 1908, on a bare reading of the provision and the powers of the Court under Section 151 of the Code of Civil Procedure, 1908, this Court is of the opinion that it may on its motion pass a decree in favour of the Plaintiff basis the admission of the Registered owners of the Defendant vessel of the Plaintiff's Claim in its entirety in its Written Statement. M/s. SPV Sam Hawk Inc., the Registered Owners of the Defendant Vessel have admitted in [para (3)] of the Written Statement and [para (3)] of the Reply that the Plaintiff Bank has a registered mortgage as is evident from the Certificate of Ownership and Encumbrance issued by the Liberian Registry and annexed as Annexure B to the Plaint and admitted the entire claim of the Plaintiff being USD 24,143,731.38 being due and payable by them to the Plaintiff Bank in para (5) of the Written Statement and in para (5) of the Reply to the Plaintiff's application seeking summary judgment. In view of the same, a case has also been made out for passing a judgment/decree in favour of the Plaintiff basis the said admissions.
12. The suit is within limitation. Resultantly, the present suit is decreed as below:
a. That there be an order and a decree in favour of the Plaintiff for a sum of USD 24,143,731.38 (United States Dollars Twenty-Four Million Page 14 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021 C/AS/17/2020 ORDER One Hundred Forty-Three Thousand Seven Hundred and Thirty One and Thirty Eight Cents only) which is inclusive of interest till the date of filing of the Suit, together with further interest at the rate of 12% p.a., from the date of the filing of the suit till the date of decree and further interest at 12% p.a. from the date of decree till date of payment and/or realisation and further order b. That there be an order and decree that the claim of the Plaintiff in the Suit is secured in favour of the Plaintiff by a valid and subsisting first priority mortgage over the Defendant Vessel M.V. SAM HAWK registered with the Liberian Flag dated 24 th July 2015
13. There shall be no order as to costs. Connected civil application also stands disposed of.
(BIRENVAISHNAV,J) *** VATSAL Page 15 of 15 Downloaded on : Sun Feb 21 08:19:39 IST 2021