2018 (5) TMI 1999 - HC - Indian Laws

Court rules against impleading sister vessels in maritime case, citing Admiralty Act. Plaintiff barred without proper leave.

Praxis Energy Agents SA Versus MT Pratibha Neera

The court dismissed the chamber summons, ruling that the plaintiff could not implead the sister vessels or their sale proceeds. Multiple arrests were ... Leave to amend the plaint - Whether plaintiff is entitled to proceed against sister vessels after having filed a Suit for arrest of one of the sister vessels M.T. PRATIBHA NEERA and after having obtained an order of arrest? - HELD THAT:- As provided in Article 3 plaintiff can arrest either a particular ship in respect of which the maritime claim arose or any other ship which is owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship. The position under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, which came into force on 1st April, 2018, may also be noted. Section 5 of the said Act makes it clear that the High Court may order arrest of any vessel in respect of a maritime claim if the person who owned vessel is liable for the claim and is the owner of the vessel when arrested. This means the particular vessel in question. Section 5(2) provides that the High Court may also order arrest of any other vessel in lieu of the vessel against which a maritime claim has been made. Thus, under this Act too, plaintiff can arrest either the particular vessel or a sister vessel. Only one vessel can be arrested and not multiple vessels. Considering the position under the Brussels Convention 1952, and also under the position under the Admiralty Act, 2017 it is clear that it is not open to plaintiff to arrest more than one vessel in respect of its claim. The plaintiff has already arrested the vessel MT PRATIBHA NEERA. Consequently, plaintiff is not entitled to arrest any of the other sister vessels. The purpose of impleadment is only to assert a claim against the sister vessels and seek a decree against the vessels and/or the sale proceeds. Consequently, if the relief of arrest of the sister ship cannot be granted then the sister ship or its sale proceeds cannot be proceeded against and a decree granted. Hence no question arises of impleadment of the sister vessels. The submission that plaintiff would not be able to stake its claim against sale proceeds of other defendant is fallacious. Plaintiff cannot obtain decree against sister ship of the offending vessel at all. Question of other creditors being prejudiced or not do not arise in as much as that has no bearing on the additional defendant being impleaded. Once the company goes into liquidation, all the properties of the company including various vessels become the “properties available to all” other than such claimant who has executed warrant of arrest against any vessel prior to commencement of liquidation proceedings. Chamber summons accordingly stands dismissed. Issues Involved:1. Plaintiff's request to amend the plaint to implead sister vessels and their sale proceeds.2. The applicability of Order 1 Rule 10 of the Code of Civil Procedure (CPC) for adding parties.3. The plaintiff's right to arrest multiple vessels or proceed against their sale proceeds under maritime law.4. The effect of the winding-up proceedings on the plaintiff's claims.5. The necessity of obtaining leave under Section 446 of the Companies Act before impleading sister ships or their sale proceeds.Issue-wise Detailed Analysis:1. Plaintiff's Request to Amend the Plaint to Implead Sister Vessels and Their Sale Proceeds:The plaintiff sought to amend the plaint to include sister vessels of the defendant vessel, m.t. Pratibha Neera, and their sale proceeds as defendants. The plaintiff argued that this amendment was necessary to secure satisfaction of its maritime claim in case the primary vessel's sale proceeds were insufficient. The plaintiff listed several vessels and their sale proceeds as proposed defendants.2. The Applicability of Order 1 Rule 10 of the CPC for Adding Parties:The court considered whether the proposed defendants were proper and necessary parties under Order 1 Rule 10 of the CPC. The plaintiff argued that the court has judicial discretion to add parties at any stage of the suit to settle all questions involved. However, the court noted that the plaintiff was not seeking to add a third party but the assets of the owner of the defendant vessel. The court acknowledged the contributions of the Amicus Curiae in this matter.3. The Plaintiff's Right to Arrest Multiple Vessels or Proceed Against Their Sale Proceeds Under Maritime Law:The plaintiff contended that it had a cause of action against the sister vessels and could execute its decree against them. The court examined the provisions of the 1952 Brussels Convention and the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017. Both legal frameworks indicated that a claimant could arrest either the particular vessel or a sister vessel, but not both. The court referenced the English Court of Appeal's decision in The Banco, which clarified that only one ship of the same owner might be arrested. The court also considered the 1999 Geneva Arrest Convention, which similarly restricted multiple arrests unless the provided security was inadequate.4. The Effect of the Winding-up Proceedings on the Plaintiff's Claims:The court noted that the winding-up proceedings of the ship-owning company had commenced, and all properties of the company vested with the official liquidator. The court referenced the Supreme Court's decision in Rajasthan State Financial Corporation, which held that the distribution of assets among creditors must comply with the Companies Act. The court concluded that the plaintiff could not arrest another ship or its sale proceeds once the company was in liquidation.5. The Necessity of Obtaining Leave Under Section 446 of the Companies Act Before Impleading Sister Ships or Their Sale Proceeds:The court agreed with the submission that leave under Section 446 of the Companies Act was necessary before impleading sister ships or their sale proceeds. The court cited the English Court's decision in In re Aro Co. Ltd., which supported this requirement. The court emphasized that such leave was essential to proceed against the assets of a company in liquidation.Conclusion:The court dismissed the chamber summons, concluding that the plaintiff could not implead the sister vessels or their sale proceeds. The court held that multiple arrests were not permissible under the applicable maritime conventions and the Admiralty Act, 2017. The court also noted that the plaintiff could not proceed against the sister vessels or their sale proceeds without obtaining leave under Section 446 of the Companies Act. The court allowed the plaintiff to lodge its claim for any shortfall with the official liquidator of the company. The chamber summons was dismissed with no order as to costs.