TaxTMI 
TaxTMI 
2022 (1) TMI 111
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....aim of the Applicant/Plaintiff is really undisputed, and the Defendants have no real prospect of successfully defending the claim of the Applicant/Plaintiff. It is in these circumstances that a summary judgment is sought against the 1st Defendant Vessel. For the sake of convenience, I shall refer to the parties as they are arrayed in the suit. 2. The above suit is filed invoking the Admiralty Jurisdiction of this Court inter alia seeking a judgment and decree against the 1st Defendant Vessel - Tag-15 (IMO. 9705550) in the sum of Rs. 9,37,19,098/- as per the particulars of claim together with further interest @ 18% p.a. from 18th December, 2020 till payment and / or realization, plus poundage. For the sake of convenience, Mr. Kamat, the learned counsel appearing on behalf of the Plaintiff, has tendered a chart indicating the breakup of the Plaintiff's claim. The said breakup is as under: Heads of Claim 1^st period 13/2/2019 to 15/1/2020 (Till the filing of Suit) 2^nd Period 16/1/2020 to 29/10/2020 (Till sale of Vessel) 3^rd Period 30/10/2020 to 15/12/2020 Total (in Rs.) ....
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....ndant Vessel) by one R.H. Petroleum Ltd. under section 9 of the Insolvency and Bankruptcy Code, 2016 (for short the "IBC, 2016"). Pursuant thereto, one Mr. Pramod Mulgund was appointed as the Interim Resolution Professional ("IRP") for Tag Offshore Ltd. 7. Since, neither EXIM Bank nor the IRP took any measures to provide supplies, stores, bunker etc. to the said Vessel/ its crew, severe unrest broke out amongst the crew on board the 1st Defendant Vessel. Ultimately, on 7th May, 2019, the crew abandoned the said Vessel. 8. Thereafter, on 30th May 2019, the Committee of Creditors (for short the "CoC") of Tag Offshore Ltd. resolved to appoint Mr. Sudip Bhattacharya as the Resolution Professional ("RP"). The appointment of Mr. Sudip Bhattacharya (as the RP of Tag Offshore Ltd.) was confirmed by the NCLT vide its order dated 28th June 2019. 9. In the interregnum, on 16th June 2019, on account of strong winds and currents brought on by the monsoon, the 1st Defendant Vessel began drifting away from the Plaintiff's berth. The said Vessel broke her mooring rope, floated away and posed a serious threat to the port, its navigational channels, and the nearby village. In short, it was ....
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.... as Defendant No.2 in the above suit. I must mention that despite this Court allowing Defendant No.2 to sell the 1st Defendant Vessel, he was unable to do so. 13. In these circumstances, on 26th February 2020, the Plaintiff filed Interim Application No. 2 of 2020, inter alia seeking sale of the 1st Defendant Vessel. The ground on which sale was sought was that there was a severe risk of deterioration of the said Vessel which had been lying unmanned for a long period of time and the Plaintiff's maritime lien was likely to be prejudiced. On 9th March 2020, an order came to be passed in the said Application wherein the contentions of the Plaintiff that it had been incurring expenses since February 2019 were noted. This Court also recorded the undertaking and statements of Defendant No.2, who on instructions, stated that all costs / expenses incurred by the Plaintiff from 24th April 2019 till the 1st Defendant Vessel leaves the berth, including Berthing and Port charges as well as Salvage charges, shall be treated by the Liquidator as liquidation costs or IRP costs as contemplated under Section 53 (1) (a) of the IBC, 2016. It was further stated by Defendant No.2 that as far as t....
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....16. In this factual backdrop, Mr. Kamat, the learned counsel appearing on behalf of the Plaintiff, submitted that the Plaintiff has been raising its invoices on the 1st Defendant Vessel from time to time. Despite raising these invoices and though no dispute has been raised in relation thereto, no payment has been made by the Defendants. Mr. Kamat took me through Exhibit "E" of the Plaint which are the invoices for the period starting from 13th February 2019 (the date when the 1st Defendant Vessel first arrived at Plaintiff's port) to 15th January 2020 (the date of filing of the above suit). For the period from 16th January, 2020 to 31st August, 2020, the invoice is annexed at Exhibit "VV" and for the period from 1st September, 2020 to 30th September, 2020 is annexed at Exhibit "XX" of the Plaint. Finally, the invoice for the period from 1st October, 2020 till 29th October, 2020 (the date when the 1st Defendant Vessel was sold), is annexed at Exhibit "ZZ" to the Plaint. Mr. Kamat submitted that if one goes through the invoices annexed to the Plaint, they include Berth Hire charges, Penal Berth Hire charges, Port charges and Salvage charges. He submitted that a small amount of Rs. 37....
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....iples of res judicata. In other words, the Plaintiff, having already filed its claim before Defendant No.2 (the Liquidator of Tag Offshore Ltd), was not entitled to file and prosecute the present suit as the amounts claimed before the Liquidator as well as in the present suit arose from the same cause of action; III. Without prejudice to the aforesaid arguments, the Plaintiff is not entitled to any amounts towards Penal Berth Hire as the same is in the nature of a penalty, and in terms of Section 74 of the Contract Act, 1872, the Plaintiff would be required to prove actual loss for which only reasonable compensation can be claimed. This, therefore, can never form the subject matter of a summary judgment under Order XIII-A of the CPC; IV. At least, the claim towards Salvage charges was not payable because the same was rejected by Defendant No.2 and the adjudication done by Defendant No.2 in relation thereto being quasi-judicial in nature, the same claim now could not be agitated in the present suit without challenging the said adjudication under the provisions of the IBC, 2016. Further, no particulars of the Salvage charges have been given by the Plaintiff to Defen....
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....e considering the clear provisions of Section 33(5) of the of the IBC, 2016. 20. It was the further submission of Mr. Arsiwala that merely because the suit was originally instituted by the Plaintiff only against the 1st Defendant Vessel, would not be of any assistance to overcome the jurisdictional bar. As per Section 12 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (for short the "Admiralty Act"), the provisions of the CPC would apply to Admiralty Suits. This would include the provisions of Order I Rules 3 & 9 of the CPC which make it mandatory for the Plaintiff to join all necessary parties. Defendant No.2, being the Liquidator of the owner of the 1st Defendant Vessel, would be a necessary party to the present suit, was the submission. He, therefore, submitted that the suit itself not being maintainable, there was no question of granting any summary judgment in favour of the Plaintiff. He, therefore, submitted that the Interim Application be dismissed on this ground alone. FINDINGS ON ARGUMENT - I: 21. I have heard the learned counsel for the parties at length and have perused the papers and proceedings in the above Interim Application. The ....
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....n order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of subsection (1). (4) On receipt of an application under sub-section (3), if the Adjudicating Authority determines that the corporate debtor has contravened the provisions of the resolution plan, it shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1). (5) Subject to Section 52, when a liquidation order has been passed, no suit or other legal proceeding shall be instituted by or against the corporate debtor: Provided that a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority. (6) The provisions of sub-section (5) shall not apply to legal proceedings in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (7) The order for liquidation under this section shall be deemed to be a notice of discharge to the officers, employees and workmen of the corporate debtor, except when the business of the corporate debtor is continued during the....
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....m those of the owner). The fundamental legal nature of an action in rem, as distinct from its eventual object, is that it is a proceeding against the res. Thus, when a Vessel represents such res as is frequently the case, the action in rem is an action against the Vessel itself. The action is a remedy against the corpus of the offending Vessel. It is distinct from an action in personam which is a proceeding inter-parties founded on personal service on the Defendant within jurisdiction of the Court, leading to a judgment against the person of the Defendant. In an action in rem, no direct demand is made against the owner of the res personally. What I have briefly stated above is succinctly explained by this Court in its decision in the case of Raj Shipping Agencies v/s Barge Madhwa & Anr [2020 SCC OnLine Bom 651]. 23. The aforesaid decision in Raj Shipping Agencies v/s Barge Madhwa (supra) has also examined the inter-play between the provisions of the Admiralty Act and the IBC, 2016. After examining the provisions of both the Acts, this Court has succinctly harmonized the provisions of the Admiralty Act viz-a-viz the provisions of the IBC, 2016. The discussion on the harmonious co....
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....Tag Offshore Ltd), the Plaintiff was not entitled to file and prosecute the present suit as the amounts claimed before the Liquidator as well as in the present suit arose from the same cause of action. As far as this argument is concerned, Mr. Arsiwala submitted that this issue is being raised without prejudice to the ground taken by Defendant No. 2 that the present suit is barred by virtue of Section 33(5) of the IBC, 2016. In support of this argument, Mr. Arsiwala submitted that in the facts of the present case, there is no qualitative difference between the claim made against Tag Offshore Ltd. (the Corporate Debtor) and the claim made against the 1st Defendant Vessel because the claim is based on the same cause of action. The claim made by the Plaintiff against Tag Offshore Ltd. (the Corporate Debtor), is based on an invoice dated 17th October, 2019 [page 42 of the Plaint]. This invoice overlaps with other invoices which form part of the claim in the present suit. However, it is an admitted position that the cause of action in the present suit is for unpaid Port / Berthing / Salvage charges etc, incurred by Tag 15 (the 1st Defendant Vessel), which is the same cause of action for....
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....19) 4 SCC 17]. He submitted that in paragraph 90 of this decision, the Supreme Court has clearly held that when the Liquidator determines the value of a claim submitted by a creditor, then, that determination is a decision which is quasi-judicial in nature and can be challenged before the Adjudicating Authority under Section 42 of the IBC, 2016. Thus, in the present case, Defendant No. 2 has made a quasi-judicial determination of the debt owed to the Plaintiff on account of the services rendered to the 1st Defendant Vessel as on 26th September 2019. In these circumstances, Mr. Arsiwala submitted that: (i) The larger principles of res judicata are a matter of public policy and apply even to quasi-judicial determinations or decisions made under special statutes - [Smt Ujjam Bai v. State of Uttar Pradesh [AIR 1962 SC 1621]; (ii) The claim of the Plaintiff for Port charges, Berth Hire, Penal Berth Hire, Mooring charges, and Salvage charges in relation to the 1st Defendant Vessel have already been considered by Defendant No.2 and quantified at Rs. 1,72,99,376/- as on 26th September, 2019. This is a quasi-judicial determination which the Plaintiff has not challenged by ....
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....ciples of res judicata and hence there was no question of granting any relief to the Plaintiff in the above Interim Application. FINDINGS ON ARGUMENT - II:- 28. As mentioned earlier, the second argument canvassed by Mr. Arsiwala was that the suit is barred by the principles of res judicata. This argument proceeded on the basis that (i) there is no qualitative difference between the claim made against the Corporate Debtor and the claim made against the 1st Defendant Vessel because the claim is based on the same cause of action. Firstly, I do not think that this argument is correct, in view of the decision pronounced by this Court in the case of Raj Shipping Agencies v/s Barge Madhwa (supra). In the said decision, this Court has clearly made a distinction between the claim made against the Vessel which is an action in rem and the claim made against the owner of the Vessel (in the present case the Corporate Debtor - Tag Offshore Ltd.), and which is a claim in personam. Be that as it may, the aforesaid argument was pressed on the basis that the Plaintiff has submitted an invoice dated 17th October, 2019 to Defendant No.2. That invoice was adjudicated by Defendant No.2 and was onl....
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.... section, be deemed to claim under the persons so litigating. Explanation VII.- The provisions of this section shall apply to a proceeding for the execution of a decree and references in this section to any suit, issue or former suit shall be construed as references, respectively, to proceedings for the execution of the decree, question arising in such proceeding and a former proceeding for the execution of that decree. Explanation VIII.-An issue heard and finally decided by a Court of limited jurisdiction, competent to decide such issue, shall operate as res judicata in a subsequent suit, notwithstanding that such Court of limited jurisdiction was not competent to try such subsequent suit or the suit in which such issue has been subsequently raised." 29. As can be seen from the said Section, the principles of res judicata would apply when the matter in issue in a previously instituted suit is directly and substantially in issue in the subsequent suit between the same parties, or between the parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been sub....
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....arges as the same has been adjudicated upon by Defendant No.2 and rejected. This however does not mean that any other claim is also hit by the principles of res judicata. It is also important to note, and I must mention, that the claim for Salvage charges has not been rejected by Defendant No.2 on merits. The claim has been rejected on the basis that not enough supporting documentation is provided to substantiate the claim under the heading "Salvage charges". 31. In the facts of the present case, it is not in dispute that the 1st Defendant Vessel stayed at the Plaintiff's berth from 13th February 2019 (i.e. the date when the Vessel came into the port of the Plaintiff) till 29^th October, 2020 (i.e. the date when the said Vessel was sold pursuant to orders of this Court). It is, therefore, clear that the period from 13th February 2019 to 23rd April 2019 and 27th September 2019 to 29th October 2020 were not the subject matter of adjudication by Defendant No.2 at all. What is also important to note is that by an email dated 15th October 2019, Defendant No.2 sought charges (with break up) for the period from 24th April 2019 to 26th September 2019 only and it is for this reason that ....
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....barred by the principles of res judicata. 32. Before parting on this issue, I must mention that as far as the argument of Mr. Arsiwala regarding the Doctrine of Election is concerned, I find that the said argument, in the facts and circumstances of the present case, is wholly misconceived. The Doctrine of Election cannot and does not arise in the facts and circumstances of this case at all. This being the position, I do not see any reason to deal with the decisions relied upon by Mr. Arsiwala on the Doctrine of Election. ARGUMENT - III SUBMISSIONS:- 33. The third argument canvassed by Mr. Arsiwala was that in any event the Plaintiff was not entitled to any summary judgement in relation their claim for Penal Berth Hire. In this regard, Mr. Arsiwala submitted that the Plaintiff has sought "Penal Berth Hire" @ of USD 500 per day from 24th April, 2019 onwards. He submitted that the Plaintiff claims to be entitled to this amount based on its Tariff Booklet and specifically Cl. III of Section A thereof [page 130 of plaint]. Cl. III of Section A of the Tariff Booklet contains the heading "Penal Berth Hire" and prescribes three eventualities when it is leviable @ USD 1000 per day.....
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.... of the Tariff Booklet as a clause stipulating a penalty. In such a case, Mr Arsiwala submitted that the Plaintiff would have to prove the amount, and would not be entitled to summary judgment under Order XIII-A of the CPC. FINDINGS ON ARGUMENT - III:- 35. The third argument canvassed by Mr. Arsiwala was that the Plaintiff is not entitled to any Penal Berth Hire charges as they were in the nature of a penalty and therefore have to be proved. Hence, the claim for Penal Berth Hire charges, cannot form the subject matter of an Application for summary judgement, was the submission. 36. To understand this argument, one must understand on what basis the Plaintiff has charged Penal Berth Hire charges to the 1st Defendant Vessel. The charges that the 1st Defendant Vessel would incur are set out in the Tariff Booklet of the Plaintiff. It is not in dispute that any Vessel, once it engages the services of the Plaintiff - Port, would be contractually obligated to pay for those services as per the Tariff Booklet of the Plaintiff (Exhibit "KK" to the Plaint). The relevant portion of this Booklet relating to the charges for Berth Hire and Penal Berth Hire are reproduced hereunder:- ....
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....the 1st Defendant Vessel contractually agreed to pay these additional charges, Defendant No.2, as the Liquidator of Tag Offshore Ltd. (the owner of the 1st Defendant Vessel), cannot resile from this contractual obligation on the specious ground that Penal Berth Hire charges are really nothing but a penalty and will therefore have to be proved. These charges are nothing but additional charges in the event the contingencies mentioned above are triggered. I am therefore of the view that Penal Berth Hire charges are not a penalty that would be required to be proved by the Plaintiff before it can seek to recover these charges. 38. I have come to this conclusion also because this is exactly how Defendant No.2 also understood the nature of Penal Berth Hire charges. As mentioned earlier, Defendant No.2 adjudicated the invoice of the Plaintiff dated 17th October 2019 (page 42 of the Plaint). This invoice was for a total sum of Rs. 3,72,99,376/- (inclusive of GST). This amount inter alia was for (i) Berth Hire charges from 24th April 2019 to 26th September 2019 @ USD 500/- per day; (ii) Penal Berth Hire charges for the same period @ USD 500/- per day; (iii) Port dues amounting to USD 6,60....
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....rges. I say this because when it came to Salvage charges, Defendant No.2 qualified his statement by stating that "as far as the salvage charges are concerned the same would be treated as a liquidation costs or IRP costs subject to scrutiny regarding its quantum by the liquidator." 41. In these circumstances and for the all the reasons set out earlier, I am unable to agree with Mr. Arsiwala's contention that the Plaintiff is not entitled to any amount towards Penal Berth Hire charges. This argument, therefore, stands rejected. ARGUMENT - IV SUBMISSIONS:- 42. The last argument canvassed by Mr. Arsiwala was that the Plaintiff is not entitled to any amount claimed towards Salvage costs/operations. At the outset, Mr. Arsiwala fairly stated that Defendant No.2 stands by his statements made before this Court on 9th March, 2020 and Defendant No.2 does not deny that Salvage operations were carried out and nor does Defendant No.2 oppose payment of the same, subject to the Salvage expenses being proved with adequate documentation. Mr. Arsiwala submitted that the Plaintiff is claiming these alleged charges which were incurred during the course of emergency Salvage operations carried o....
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....reasons, while the Plaintiff may very well have a claim on account of Salvage operations, the documents on record are not sufficient for this Court to grant a summary judgment under Order XIII-A of the CPC. This claim therefore cannot be allowed at this stage, was the submission of Mr. Arsiwala. FINDINGS ON ARGUMENT - IV:- 44. The last argument canvassed by Mr. Arsiwala is that the Plaintiff is not entitled to any Salvage charges as claimed in the amended Plaint or in the above Interim Application. He sought to dispute this claim on two counts. Firstly, Mr. Arsiwala submitted that the Plaintiff is not entitled to this claim because it made this claim vide its invoice dated 17th October 2019 and which was adjudicated upon by Defendant No.2. On adjudicating the aforesaid claim, Defendant No.2 rejected the claim of the Plaintiff towards Salvage charges. Not having challenged the said adjudication under the provisions of the IBC, 2016, the Plaintiff now cannot agitate the aforesaid claim before this Court. The second ground on which the aforesaid claim was sought to be disputed by Defendant No.2 was the fact that no proper documentation was produced by the Plaintiff to substantia....