Calcutta High Court
Srei Equipment Finance Pvt. Ltd vs The Owners And Parties Interested In The ... on 9 April, 2019
Author: Arindam Sinha
Bench: Arindam Sinha
Judgment IN THE HIGH COURT AT CALCUTTA
Admiralty Jurisdiction
ORIGINAL SIDE
AS No.4 of 2013
GA No.3275 of 2013
GA No.591 of 2016
GA No.404 of 2017
With
GA No.1785 of 2013
SREI EQUIPMENT FINANCE PVT. LTD.
Versus
THE OWNERS AND PARTIES INTERESTED IN THE VESSELS M.V. KAMAL-XXIV
BEFORE:
The Hon'ble JUSTICE ARINDAM SINHA
For plaintiff : Mr. Ratnanko Banerjee Sr. Adv.
Mr. Swatarup Banerjee, Adv.
Mr. S. Kundu, Adv.
Mr. D. Sengupta, Adv.
For Mumbai Port Trust : Mr. Tilok Bose Sr. Adv.
Mr. Somnath Bose, Adv.
Heard on : 19th March, 2019 and 9th April, 2019.
Judgment on : 9th April, 2019.
Arindam Sinha, J. : This admiralty suit is by plaintiff financier against
two barges, M.V. Kamal - XXIII and M.V. Kamal - XXIV. Plaintiff extended
financial accommodation for purchase, by its borrower, the two barges, second
hand. Borrower paid three and a part of fourth instalments out of agreed
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number, towards part repayment of the accommodation. On default by borrower,
plaintiff terminated the agreement and claimed against the vessels, aggregate
instalments amount due, overdue compensation and cheque bouncing charges at
total sum of Rs.16,73,94,424/-, for decree. The vessels had caused accumulation
of dues in connection with charges levied by Mumbai Port Trust, which came and
got itself added as party defendant in the suit. Owners or persons interested in
the vessels stayed away. Several interlocutory orders were made by different co-
ordinate Benches, as referred hereinafter, for, inter alia, arrest, sale of the
vessels, addition of party and appointments of Commissioners.
Mr. Banerjee, learned senior advocate appears on behalf of plaintiff and
had on earlier occasion filed, inter alia, a brief containing interlocutory orders
passed in this suit. He demonstrates from order dated 29th June, 2016, made in
GA 591 of 2016, there was appointment of Commissioner for purpose of
recording evidence in the suit. Court notices said order was passed in presence
of added defendant. Mr. Banerjee submits, Commissioner filed report, taken on
record on 13th February, 2017. On perusal of the report Court finds, agreement
dated 3rd July, 2012 had been tendered in evidence as exhibit F. Deed of
hypothecation dated 3rd July, 2012, termination notice dated 18th March, 2015
including proof of service thereof on borrower as also statement of accounts and
other documents were tendered by plaintiff in evidence through its witness.
Exhibit F provides for overdue charges but clause 2.9 and sub-clauses
thereunder contemplate repayment, for overdue charges to be imposed. There
has not been repayment. The agreement also provides for consequences on
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default, being, inter alia, termination and financier's right to demand payment
thereupon.
Mr. Bose, learned senior advocate appears on behalf of added defendant
and submits, his client could avail statutory remedy for recovery of its dues but it
learnt the vessels had been arrested by this Court. Hence, it applied and got
itself added as party defendant. He relies upon order dated 6th December, 2013,
by which his client was added on observation made therein that his client has
paramount charge relating to sale proceeds.
His client's claim is for Rs.55,03,473.24 against the vessels, asserted by
GA 3275 of 2013. By the application his client applied to be added on praying for
payment of its said claim and other consequential prayers, all of which are set
out below.
"a) Leave be given to the applicant to intervene in the instant Admiralty Suit
no.4 of 2013.
b) If necessary, the applicant be added as a party defendant in the instant
suit.
c) An order directing the defendants to make payment of Rs.5503473.24p. to
the applicant.
d) Enquiry into further sum due and payable to the applicant and upon
enquiry being made and such sum being ascertained and order be made for
further payment.
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e) Injunction restraining the Plaintiff from utilizing any portion of the sale
proceed or the Receiver disbursing any part of the sale proceed without first
clearing the claim of the applicant herein.
f) Injunction restraining the Plaintiff and/or the Receiver from taking any
step pursuant to the order passed in the suit without making payment of
dues of the applicant.
g) Injunction restraining the Receiver from taking any step to hand over
possession of the defendant vessels to any person without first making
payment of the dues of the applicant.
h) The Plaintiff and/or the Receiver be directed to take steps to shift the said
two vessels to alternative Berths to be provided by the applicant upon
payment of shifting charges to the applicant.
i) Ad interim order in terms of prayers above.
j) Costs incidental to the application be paid by the Plaintiff.
k) Such further order or orders be made and/or direction or directions be
passed as this Hon'ble Court may deem fit and proper."
By order dated 8th May, 2014, made in his client's application, sale of the two
vessels at aggregate Rs.1.3 crores was made and proceeds directed to be invested
by Receiver.
He refers to order dated 29th June, 2016 pending adjudication of his
client's application to after plaintiff's examination. He then points out, another
Commissioner was appointed by order dated 16th September, 2016, in his client's
application, to examine his client's bills. Observation made in said order was,
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priority of the claim shall be decided at appropriate stage. Said Commissioner
also filed report on 5th January, 2017 and order of that date gave liberty to any
party to file exception by 31st January, 2017. Mr. Bose submits, this report is
not required to be proved in evidence before Court as, according to him, it is not
necessary. This is because his client has not claimed for decree. It is added
defendant. His client has priority on disbursement of sale proceeds. Its claim on
priority is fixed on provisions in section 9 of Admiralty (Jurisdiction and
Settlement of Maritime Claims) Act, 2017. He submits, his client's claim is one
covered by clause (n) under sub-section (1) of section 4. Having such a claim, his
client has priority also on maritime lien against the claim. Hence, priority lien
before and on sale, priority claim for disbursement.
Defendant's contention is of priority claim on disbursement of sale
proceeds. No doubt its claim is a maritime claim. It being so, said defendant's
contention of priority on maritime lien is irrelevant. Clause (b) under sub-section
(3) of section 9 provides for commencement of maritime lien such as of added
defendant. Sub-section (2) in section 9 limits subsistence of such maritime lien,
to be for a period of one year unless prior to 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. Court does not have facts regarding when said defendant's lien
commenced. On application of plaintiff, the vessels were arrested at Mumbai Port
and sold by order made in application of subsequently added defendant.
On consideration of provisions in section 10 for determining inter se priority
of maritime claims, Court finds, added defendant's claim has priority over
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plaintiff's claim, as the latter did not have maritime lien against its claim. Said
defendant, however, did not file counter claim in the suit, claiming decree on its
maritime claim. The report on examination of said defendant's bills was also not
tendered in evidence. This inspite of record in order dated 19th March, 2019, set
out below.
"Mr. Banerji, learned senior advocate appears on behalf of plaintiff and
submits, this suit was tried as "undefended suit". Evidence was laid by his
client. The vessels were sold. His client is entitled to costs of sale on priority
and decree on sum claimed as proved. Mr. Bose, learned senior advocate
appears on behalf of Mumbai Port Trust and submits, so far as his client's
claim is concerned, Court appointed Commissioner and, report has been
filed. His client claims decree for sum found by Commissioner as should be
decreed. On query from Court he submits, the report has not been proved. He
reiterates, the Commissioner was appointed by order of Court. Therefore,
proof of the report is not required. His client had tendered all bills to the
Commissioner for verification."
The Act of 2017 provides for admiralty jurisdiction as vested in respective
High Courts, to deal with, inter alia, maritime claims, arrest of vessels in support
of maritime claims, inter se priority on maritime lien and order of priority of
maritime claims. Section 12 makes applicable provisions of Code of Civil
Procedure, 1908 before High Courts, in so far as they are not inconsistent with or
contrary to provisions of the Act or rules made thereunder. Original Side Rules of
this Court and Order XXVI in Code of Civil Procedure provide for Commissions.
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Rules in both provide for return of Commission duly executed, together with
evidence taken under it to form part of record of the suit. This procedure had
been followed in Commission appointed for taking evidence laid by plaintiff.
However, the Original Side Rules do not provide for Commission such as to
examine or verify bills. Rule 11 in Order XXVI provides for Commission, to
examine or adjust accounts. Direction for examination and verification of bills of
added defendant appears to have been issued thereunder. Code of Civil
Procedure also provides for counter claim by defendant. No procedure prescribed
under the 2017 Act or rules framed thereunder was shown to Court as providing
procedure, to which aforesaid procedure is contrary.
In interlocutory order dated 5th January, 2017 there was liberty granted to
any party to file exception to the report on bills. Court too has to have
satisfaction. Report dated 25th November, 2016 of the Commissioner, on
examination of bills of added defendant, says, it was contended original bills had
been issued by mistake. Revised bills were then issued. Attached to the report
are some bills in respect of the vessels, marked original. Commissioner in the
report said as follows:-
"From the papers filed before me I find the physical existence of the several
Bills as also the Scale of Rates. The Bills/Revised Bills appears to be
properly raised, but I have not considered the correctness or otherwise of
any of the documents filed before me."
Added defendant neither took exception to the report nor laid evidence.
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This suit, though filed when India did not have its own enacted admiralty
law, is being dealt with per the 2017 Act, as an admiralty proceeding where, as
aforesaid, the owners or persons interested in the vessels stayed away. Where
there is no adversary opposing claims of plaintiff and added defendant, Court
was compelled to look into the documents. Plaintiff's claim is founded on exhibit
F, which is agreement dated 3rd July, 2012 between itself and customer who
obtained financial accommodation to purchase, as aforesaid, two second hand
barges. The customer is named in the agreement, having signed it. It is Jaisu
Dredging and Shipping Ltd. having registered office at room nos. 1 and 2, Kewal
Ramani House, Dinshaw Building Road near Customs House Kandla Port,
Gujarat-370220. Plaintiff alleges default against its said customer, on repayment
of financial accommodation granted. The customer was not made defendant by
name and admiralty jurisdiction of this Court invoked against the vessels, for
arrest of them in rem and thereafter sale. The customer is in Gujarat and the
vessels were in Mumbai Port. Copy bills bearing stamp 'original', disclosed to
Commissioner, were raised on Jaisu Dredging and Shipping Ltd.. The customer
having had paid only three and part of four instalments, on default did not take
pains to find out what happened to the barges.
Be that as it may, plaintiff has proved its claim against the vessels in this
admiralty proceeding, except overdue compensation and cheque bouncing
charges. Added defendant has not. The question of priority of claims, therefore,
does not arise to be answered. Since the vessels, against whom this proceeding,
have been sold and Court is in custody of the proceeds thereof, plaintiff do get a
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decree for encashment value of the investment made by Receiver less 3000 GMs
(Rs.51,000/-), being sale value of the vessels, included in it, sale costs incurred.
Receiver is directed to, on or soon after 15th May, 2019, encash the investment,
appropriate therefrom 3000 GMs as final remuneration, pay the rest to plaintiff
and thereafter be discharged on dispensation with filing accounts.
The suit and all applications are disposed of. There will be no order as to
costs. Decree be drawn up expeditiously.
(ARINDAM SINHA, J.
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