2024 (3) TMI 1192 - HC - Customs

Bank must issue No Due Certificate after vessel confiscation under Section 115 extinguishes mortgage rights

M/s. Kirmani Marine Through Proprietor Mahmamad Akram Nariya Versus Commissioner of Customs (Preventive) & Ors.

Gujarat HC held that when a vessel is confiscated under Section 115 of the Customs Act, 1962, it vests in the Central Government per Section 126, thereby ... Right of the Purchaser of confiscated vessel in an action - Vires of of Art. 14 and 19 of the Constitution of India - direction to issue No Due Certificate (NDC) in relation to subject vessel MSV Safina Al-Miraz to the Petitioner and permit the Petitioner to shift the Vessel from Salaya Port to Okha Port forthwith - seeking refund the amount paid by the Petitioner towards e-auction of MSV Safina Al-Miraz alongwith amount incurred by the Petitioner towards repairing of the Vessel, with interest - confiscation of vessel u/s 115 of the Customs Act, 1962 - HELD THAT:- It is not in dispute that the subject vessel was confiscated by the respondent Nos. 1 and 3 as per the provisions of the Customs Act and therefore in accordance with the provisions of Section 126 of the Act, the subject vessel would vest in the Central Government. Once such subject vessel vests in the Central Government, the mortgage of the respondent No. 4-GMB would come to an end and therefore the respondent No. 4-GMB is required to issue the ‘No Due Certificate’ qua the subject vessel which was auctioned to the petitioner by the Customs Authority in accordance with law. With regard to the reliance placed by the learned advocate for the respondent No. 4-GMB in the decision of the Supreme Court in case of O. Konavalov [2006 (3) TMI 145 - SUPREME COURT] is concerned, the said decision is rendered under the Maritime Laws under the provisions of the Merchant Shipping Act, 1958 in relation to the pre-existing right of the crewmen vis-a-vis Section 115 read with Section 126 of the Customs Act. The Hon’ble Apex Court in the facts of the said case applied the principles enshrined in Article 21 to a foreigner for holding that confiscation by the Government of Vessel cannot extinguish the pre-existing rights of the crewmen as India has become signatory to various international conventions honouring the social, political, civil and economic rights of human beings. It was further held that India has travelled very far from 1950 and the Courts have given way to dynamic constructive approach in the aspect of social justice while referring to international conventions, etc. - The reliance placed on the provisions of the Admiralty (Jurisdiction and Settlement Maritime Claims) Act, 2017 to submit that maritime claim means mortgage or charge of the same nature on a vessel with regard to exercise of jurisdiction by the High Court under said Act to hear and determine such question on maritime claim against the vessel. Therefore, the judgment rendered by the Apex Court vis-a-vis the pre-existing rights of the crewmen of the vessel would not apply to the facts of the present case. The respondent No. 4-GMB is directed to issue No Due Certificate to the petitioner so as to enable the petitioner to shift the vessel from Salaya Port to Okha Port - Petition allowed. Issues involved:The judgment involves issues related to the quashing of an impugned communication, issuance of a No Due Certificate for a vessel, refund of amounts, and award of costs, all under Article 226 of the Constitution of India.Quashing of Impugned Communication:The petitioner, engaged in marine parts supplies, participated in an auction for a vessel confiscated under Section 115 of the Customs Act, 1962. The petitioner was declared the successful buyer and made full payment. However, the Gujarat Maritime Board (GMB) declined to issue a No Due Certificate for shifting the vessel due to a mortgage issue. The petitioner contended that under Section 126 of the Act, once goods are confiscated, they vest in the Central Government, and the GMB was not justified in denying the certificate. The court held in favor of the petitioner, directing the GMB to issue the certificate.Refund and Costs:The petitioner also sought a refund of amounts paid and costs to be awarded. The court, after considering submissions from all parties, directed the GMB to issue the No Due Certificate to enable the petitioner to shift the vessel. The court made the rule absolute to this extent, without awarding any costs.Legal Analysis:The judgment referred to Sections 115 and 126 of the Customs Act, outlining the confiscation of conveyances and the vesting of confiscated goods in the Central Government. It emphasized that once a vessel is confiscated, any mortgage on it would cease, and the GMB was obligated to issue the No Due Certificate. The court differentiated the case from a Supreme Court decision related to maritime laws, stating that the principles applied in that case were not directly applicable here due to the absence of quantification of recoverable amounts by the GMB.Conclusion:In conclusion, the court allowed the petition, directing the GMB to issue the No Due Certificate for the vessel, enabling its transfer. The judgment did not award costs to any party and permitted direct service.