TaxTMI 
TaxTMI 
TaxTMI 
1998 (4) TMI 437
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....eunder by the appellant. In view of the Port Trust charges which remained unpaid, the appellant Port Trust arrested the said vessel in exercise of its rights under section 64 of the Major Port Trust Act, 1963. It issued a public notice on 14-8-1987, for the auction sale of the said vessel. 4. Thakur Shipping Co. Ltd. challenged the proposed auction sale by filing a writ petition in the Bombay High Court which was summarily dismissed. In appeal, however, as Thakur Shipping Co. Ltd. undertook to pay all the charges due and payable to the appellant, the auction was stayed. The charges, however, were not paid by Thakur Shipping Co. Ltd. Thereafter, further attempts were made by the appellant to sell the vessel which were again held up on account of the litigation initiated at the instance of Thakur Shipping Co. Ltd. While the said ship remained under arrest by the appellant, in 1990, a Company Petition No. 5 of 1990 was filed by the 1st respondent, petitioning creditor, in the Patna High Court against Thakur Shipping Co. Ltd. In the company petition, official liquidator was appoint-ed. An order of winding up was passed in respect of Thakur Shipping Co. Ltd. in the said company petitio....
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....ct to the estates of persons adjudged insolvent. The proviso to section 529(1) sets out that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of the workmen to the extent of the workman's portion therein, in the manner set out in that section and section 529A. The position, however, of the appellant Port Trust is somewhat different from the position of a secured creditor in winding up. The vessel which in one of the properties of the company in winding up, has been arrested by the appellant in the exercise of its statutory right to arrest the vessel for recovery of its rates and charges under the Major Port Trust Act, 1963, and the rules framed thereunder. Section 64 of the Major Port Trusts Act, 1963, provides as follows: "64. Recovery of rates and charges by distraint of vessel-(1) If the master of any vessel in respect of which any rates of penalties are payable under this Act, or under any regulations or orders made in pursuance thereof, refuses or neglects to pay the same or any part thereof on demand, the Board may distrain or arrest such vessel and the tackle, apparel and furniture belonging thereto, or any part there....
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....ity can arrest the vessel while it is anchored in the harbour and recover its dues in respect of that vessel by sale of the vessel if the dues are not paid. This lien of the harbour authority over the vessel is paramount. The lien cannot be extinguished or the vessel sold by any other authority under the directions of the court or otherwise, unless the harbour authority consents to such sale. Thus, in the case of Ashok Arya v. M.V. Kapitan Mitsos AIR 1988 Bom 329, the Bombay High Court relied upon the decision in The Emile Million [1905] 2 KB 817 (CA), infra, and held that the lien given by statute to a dock or harbour authority cannot be extinguished by court unless it be done with the authority's express or implied consent. 10. In British Shipping Laws Series, Vol. 14, on 'Maritime Liens 'by Dr. D.R. Thomas, paragraph 414, states: "414: By a public or private Act of Parliament an undertaking such as a port, dock or harbour authority may expressly be given a power to detain and sell a ship and possibly also her cargo. Such a power is customarily created so as to provide a security for unpaid dues and charges, or for damage done by a vessel or necessary services rende....
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....e winding up court. Attachment or distraint without the intervention of the court are not under the purview of winding up proceedings [see also (1996) 4 SCC 165]. 13. Therefore, the lien of a harbour authority over the vessel is a paramount lien and realisation of its dues by the harbour authority by the sale of the vessel is above the priorities of secured creditors. In other words, the statutory lien of a harbour authority has paramountcy even over the claims of secured creditors in a winding up. In exercise of its right under section 64 the appellant is, therefore, entitled to sell the vessel without the intervention of the court. In exercise of that paramount right which overrides the claims of all other creditors including secured creditors, the appellant has a right to arrest the vessel and sell it. Without the consent of the appellant, this right cannot be transferred to the sale proceeds of the vessel. 14. In the case of Emile Million (supra), the Court of Appeal in England considered a similar provision under section 253 of the Mersey Dock Acts Consolidation Act, 1858. It held that the right of the Harbour Board to cause such vessel to be detained until all such rates ha....