TaxTMI 
TaxTMI 
2019 (8) TMI 1487
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....or proceed with such a suit is required to be obtained by the plaintiffs or not, after the Winding Up Order is passed by the Court and an Official Liquidator or Provisional Liquidator is appointed by that Court / Tribunal?". 2. The facts leading to the filing of the present Appeals arose in the following context. A ship or vessel, MT Pratibha Cauvery, when anchored at the shore near Chennai was caught in the eye of cyclonic storm named 'Neelam' around 27.12.2012. The said vessel drifted towards the shore and in the said natural calamity, some of the crew members jumped into the sea and six of them lost their lives and one of the crew members was rescued by the Indian Coast Guard on 01.11.2012, who filed a civil suit, i.e. C.S.No.89 of 2013 invoking the original Admiralty Jurisdiction of this Court and seeking a Decree and judgment against the Ship, viz. owners and parties interested in the Vessel MT Pratibha Cauvery for a sum of Rs. 3.59 Lakhs together with compensation for pain and suffering. 3. A writ petition W.P.No.31942 of 2012 was also filed by the same plaintiff in C.S.No.89 of 2013 seeking an enquiry into the incident in respect of the vessel MT Pratibha Cauvery a....
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....the right to seek the arrest of the ship MT Pratibha Cauvery, but they can also go ahead for determination of their claims without seeking any such leave of the Bombay High Court, as the Admiralty jurisdiction exercised by this Court under the recently enacted Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, which came into effect on 01.4.2018, being a Special Law, did not provide for any such requirement for obtaining leave from the Company Court and the said Special Law will prevail over the General law, namely the provisions of the Companies Act, 1956 or even later Companies Act of 2013 and therefore, they cannot be compelled to obtain any such leave or permission from the Bombay High Court and they can proceed to satisfy their claims against the Vessel in the Admiralty jurisdiction cases, which are proceedings in rem and not action in personem. 7. They relied upon the decision of the Supreme Court in the case of M.V.Elisabeth v. Harwan Investment and Trading Private Limited [AIR 1993 SCC 1014], which is the leading judgment on the exercise of Admiralty jurisdiction by High Courts even prior to enactment of new Act of 2017, which replaced and repealed the o....
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....h, without obtaining the leave of the Court, as the assets of the company are in the custody of that Company Court and the Court being the custodia legis in respect of the companies under winding up, the Official Liquidator is entitled to take charge of all the assets of the company and realise the value thereof and then distribute the proceeds to the creditors in accordance with the priorities and rankings of claim prescribed under the provisions of the Companies Act. 11. The learned senior counsel, Mr.V.Prakash, further submitted that the very purpose of providing for need to obtain a leave from Court and providing further under Section 446(2) that the Company Court can transfer any such legal proceedings or suits to itself and try the same, is to protect the assets of the company under supervision and control of one Court and not to allow the assets of the company to be taken away by different Courts which have passed such Decrees against the company under winding up, including the Ships or Vessels in the case of a shipping company like the present company involved and therefore, Section 446 of the Act will prevail and without obtaining the leave of the Bombay High Court, the ....
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....ons of the said new Insolvency and Bankruptcy Code, 2016, then to liquidate the company in accordance with the further provisions therein. 14. Therefore, they submitted that it is too late in the day to now contend that in the old pending winding up petitions where Official Liquidator attached with the High Court were appointed as Provisional Liquidators, to insist upon the need of the leave of the Company Court to proceed with any suit or legal proceedings against the company under winding up, which may be in other parts of the country other than the State where winding up order has been passed by the High Court or such compensation claims including maritime claims and liens like under the Admiralty Act, 2017 are being tried under such Special Law. 15. It is also contended that the provisions of the Companies Act in Section 446 of the Act do not have a Non obstante clause and therefore, the said provisions will not override and prevail over the special law like Admiraty Act, 2017 and thus, such suits and claims can be adjudicated upon and tried even without any leave of the Company Court and the action-in-rem against the vessel under the Admiralty Act can continue without the in....
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.... while they are within the jurisdiction of the High Court by arresting and detaining them. This jurisdiction can be assumed by the High Court concerned, whether or not the defendant resides or carries on business, or the cause of action arose wholly or in part, within the local limits of its jurisdiction. Once a foreign ship is arrested within the local limits of the jurisdiction of the High Court, and the owner of the ship has entered appearance and furnished security to the satisfaction of the High Court for the release of the ship, the proceedings continue as a personal action. Actions in rem were resorted to by courts in England and U.S. and a device to overcome the difficulty of personal service on the defendant by compelling him to enter appearance and accept service of summons with a view to furnishing security for the release of the res; or, in his absence, proceed against the res itself, by attributing to it a personality for the purpose of entering a decree and executing the same by sale of the res. This is a practical procedural device developed by the courts with a view to rendering justice in accordance with substantive law not only in cases of collision and salvage,....
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....it, as an action against the owner, and any decree obtained by the plaintiff is executable against any property of the owner available within jurisdiction, including the security furnished by him for release of the vessel. The Act being essentially regulatory in character, the various authorities, tribunals and Courts entrusted with the administration and enforcement of its provisions are specifically stated. In view of Section 3(15) a foreign ship falls within the jurisdiction of the High Court where the vessel happens to be at the relevant time - i.e., at the time when the jurisdiction of the High Court is invoked, or, where the cause of action wholly or in part arises." 18. The above judgment of M.V.Elisabeth was followed by the Hon'ble Supreme Court later on in various cases and one amongst them being in the case of M.V.Al Quamar v. Tsavliris Salvage (International) Ltd. [(2000) 8 SCC 278], in which, the Supreme Court, while holding that the High Courts of Calcutta, Bombay and Madras have such Admiralty Jurisdiction like the English Courts had under the provisions of Colonial Courts of Admiralty Act, 1890, the Andhra Pradesh High Court, being the successor of High Court of....
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....rem in Admiralty jurisdiction and Action-in-personam. The following extract from the Head Note of Chrisomar case would be useful, which is quoted below. "Admiralty Law in England, and India, which is based thereon, is derived from the laws of Oleron and other ancient maritime codes like the Rhodian Sea Law, the Basilika, the Assizes of Jerusalem, the Baltic Laws of Wisbuy and the Hanseatic Code. In England, the Admiralty Court Act, 1840 was the first of a series of statutes extending and defining the jurisdiction of the High Court of Admiralty in England. This was followed by the 1861 Admiralty Court Act and various subsequent enactments which were consolidated by the Supreme Court of Judicature (Consolidation) Act, 1925. By the Administration of Justice Act, 1956, the admiralty jurisdiction of the High Court was further widened and the Supreme Court Act, 1981 now defines what the admiralty jurisdiction of the High Court in England is. In India, the Admiralty Law of the chartered High Courts has historically been traced to the Charters of 1774 and 1798 as subsequently extended and clarified by the Letters Patents of 1823, 1862 and 1865. The Admiralty Court Acts, 1840 and 1861, an....
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....y also exercise admiralty jurisdiction by an order in personam in respect of the maritime claims referred to in Section 4. An admiralty action in the courts of India commences against a vessel to enforce what is called a "maritime claim". How maritime claims are enforced, is that Admiralty Law confers upon the claimant a right in rem to proceed against the ship or cargo in addition to a right in personam to proceed against the owner. A personal action may be brought against the defendant if he is either present in the country or submits to jurisdiction. If the foreign owner of an arrested ship appears before the court and deposits security as bail for the release of his ship against which proceedings in rem have been instituted, he submits himself to jurisdiction. An action in rem is directed against the ship itself to satisfy the claim of the plaintiff out of the res. The ship is for this purpose treated as a person. Such an action may constitute an inducement to the owner to submit to the jurisdiction of the court, thereby making himself liable to be proceeded against by the plaintiff in personam. It is, however, imperative in an action in rem that the ship should be within j....
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....o the ship from the time that the facts happened which gave the maritime lien, and then continues binding on the ship until it is discharged, either by being satisfied or from the laches of the owner, or in any other way which, by law, it may be discharged. It commences and there it continues binding on the ship until it comes to an end." 24. Admiralty jurisdiction mall over the world recognise the existence of maritime liens which have evolved over years of State and judicial practice. The existence and enforceability of such liens outside statute law is well established. The statutory law in regard to admiralty or maritime claims is not exhaustive of the subject. The courts recognise and applied such members of maritime liens as capable of enforcement through admiralty. MV Elisabeth case [MV Elisabeth v. Harwan Investment and Trading (P) Ltd., 1993 Supp (2) SCC 433] : the above judgment very elaborately deals with the admiralty powers of the High Courts in India." (emphasis supplied) 21. On the exclusion of the need to obtain leave from the Company Court, the Hon'ble Supreme Court in the case of Allahabad Bank v. Canara Bank [(2000) 4 SCC 406], while upholding the exclusiv....
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....e amount. The certificate granted under Section 19(22) has, to be executed only by the Recovery Officer. No dual jurisdictions at different stages are contemplated. Further, Section 34 of the Act clearly state that the RDB Act overrides other laws to the extent of "inconsistency". Obviously, the prescription of an exclusive Tribunal both for adjudication and execution is a procedure clearly inconsistent with realisation of these debts in any other manner. Moreover, the Tiwari Committee which recommended the constitution of a Special Tribunal in 1981 for recovery of debts due to banks and financial institutions stated in its report that the exclusive jurisdiction of the Tribunal must relate not only in regard to the adjudication of the liability but also in regard to the execution proceedings. Thus, the adjudication of liability and the recovery of the amount by execution of the certificate are respectively within the exclusive jurisdiction of the Tribunal and the Recovery Officer and no other court or authority much less the civil court or the Company Court can go into the said questions relating to the liability and the recovery except as provided in the Act. The Company Cou....
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....riority of maritime liens. Section 10 provides for orders of priority of maritime claims and Section 11 gives protection of owner, demise charterer, Manager or Operator or crew of vessel arrested. Sections 12 and 13 deal Procedures and Section 14 deals with Appeals. While Section 15 talks of transfer of proceedings by Supreme Court from one High Court to another High Court, Section 16 talks of power of the Central Government to make Rules. Section 17 is for Repeal and Savings, whereunder the Admiralty Court Act, 1840, the Admiralty Court Act, 1861, the Colonial Courts of Admiralty Act, 1890, the Colonial Courts of Admiralty (India) Act, 1891, and the provisions of the Letters Patent, 1865 in so far as they apply to the admiralty jurisdiction of the Bombay, Calcutta and Madras High Courts, were repealed while saving the earlier proceedings or orders. 25. Thus, the said short enactment is now in force in India, with effect from 1st April 2018, is the Special Law, now governing the adjudication of the maritime claims by the various coastal High Courts, including the Madras High Court. 26. From the conspectus of the aforesaid legal provisions, statutory provisions and case laws, we a....