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2024 (8) TMI 1156
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....sel on the ground that the Defendant - Vessel is beneficially owned by Defendant No. 2, who at that point in time chartered the aforementioned two Vessels as time charterer. 3. It is relevant to refer briefly to relevant dates and events which are as under: • The dates and events pertaining to the bunker supplies to the three Vessels are for convenience categorized as Supply-I, II & III : Supply I (Defendant No. 1-Vessel): (i) By an e-mail dated 28th February, 2019, the Plaintiff issued a confirmation to Defendant No. 3 for a supply of 110MT bunkers to be made to Defendant No. 1- Vessel. The Defendant No. 3 was the Ship Manager and Commercial Manager of Defendant No. 1-Vessel. The Bunker Confirmation recorded, "...Late receipt of funds will incur an interest charge of 2(two) percent per month pro-rated on a daily basis....". The Bunker Confirmation also recorded that it would be subject to the Plaintiff's standard terms and conditions of sale. (ii) On 2nd March 2019, the Plaintiff through its physical supplier (Shiny Shipping & Logistics P Ltd.) supplied 109.350MT of HF HSD to Defendant No. 1-Vessel at Mumbai Port. The supply was confirmed/ackno....
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....uld be subject to the Plaintiff's standard terms and conditions of sale. (ii) On 16th February, 2019, the Plaintiff, through its physical supplier (Bharat Petroleum Corporation Ltd.) supplied 148KL of HF HSD to M.V. ATH Melody at Mumbai Port. The supply was confirmed/acknowledged by the Chief Engineer of the Defendant-Vessel, as is reflected in the Bunker Delivery Note of even date. (iii) On 21st February, 2019, the Plaintiff raised an invoice (bearing no. S1901065) on Defendant No. 2 for the fuel supplied to the Vessel, AHT Sea Melody. (iv) The invoice was for a sum of USD 158,360/- and the due date under the invoice was 16th April 2019. The Defendant No. 2 failed to clear the dues owed under this invoice. • Other relevant dates and events: (i) By emails dated 29th May, 2019 and 30th January, 2020, the Plaintiff issued reminders for the sums overdue against the supply of bunker fuel made to Defendant No. 1- Vessel. (ii) By emails dated 02.05.2019 and 30.04.2020, the Plaintiff issued reminders for the sums overdue against the supply of bunker fuel made to M.V. Sea Jaguar and M.V. ATH Melody. (iii) In response to a r....
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....present Suit against the Defendant No. 2 is not maintainable in view of Section 14 of the IBC. He has submitted that it is well settled that in personam claims are to abide by the provisions of the IBC, including Section 14 thereof. He has placed reliance upon the Judgment of this Court in Raj Shipping Agencies v. Barge Madhwa & Anr. Judgment Dtd.12th February, 19th May, 2020 and in particular Paragraph 60 thereof. 7. Mr. Jumani has submitted that the Suit insofar as it pertains to the in personam claim against the Defendant No. 2 is bad in law, could not have been instituted and is not maintainable in view of Section 14 of the IBC. This is because a Petition under Section 9 of the IBC was admitted against the Defendant No. 2 by the NCLT, Mumbai vide Order dated 16th July, 2020 and the moratorium under Section 14 of the IBC was ordered to commence and in fact commenced on the date of admission of the said Petition. He has submitted that it is pertinent to point out here that the erstwhile management and board of directors stood suspended and divested from the management of the Defendant No. 2 from this date. 8. Mr. Jumani has submitted that the Suit having been affirmed on 13....
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.... therefore the same did not form part of the Resolution Plan. Upon the acceptance of the Resolution Plan, the Plaintiff's Suit claims, which did not form part of the Resolution Plan, stood extinguished on the date of approval of the Resolution Plan i.e. 29 September, 2022 and do not survive thereafter. 13. Mr. Jumani has submitted that the Plaintiff is not entitled to recover its claim and / or institute / continue any legal proceedings to recover the Suit claims, which have stood extinguished on 29 September, 2022. He has placed reliance upon the decisions of the Supreme Court in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. (2021) 9 SCC 657 at Paragraphs 67 to 69, 74, 93, 95 to 97, 102.1, 102.3, 138 & 139 ; Ruchi Soya lndustries v. Union of India & Ors. (2022) 6 SCC 343 at Paragraphs 11 & 12. 14. Mr. Jumani has submitted that for this reason alone, the Plaintiff's claims for Supply II and Supply III are liable to be dismissed forthwith, with costs. 15. Mr. Jumani has submitted strictly without prejudice to each of the above submissions, in any view of the matter, the Suit claims of the Plaintiff insofar as they pertain to Suppl....
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....ng for the sake of argument that the Defendant No. 2 was the owner of the Defendant No. 1-Vessel and requested the Plaintiff to supply bunker fuel to Sea Melody and Sea Jaguar, then in that event also, the Suit claims for Supply II and Supply III cannot be enforced against the Defendant No. 1-Vessel and/or its sale proceeds for the simple reason that the Defendant No. 2 was only a time charterer (and not a demise / bareboat charterer) of Sea Melody and Sea Jaguar. He has submitted that the Defendant No. 2 being time charterers of Sea Melody and Sea Jaguar is undisputed. Therefore, Sea Melody and Sea Jaguar are not sister ships of the Defendant No. 1-Vessel and any alleged claim in respect of supplies made to Sea Melody and Sea Jaguar cannot be recovered by arrest and sale of the Defendant No. 1-Vessel. He has placed reliance upon the Judgment of this Court in Continental Radiance Offshore Pvt. Lad. v. M. V. Lewek Altair2022 SCC Online Bom 931 at Paragraphs 2(b) & (d), 4, 18, 24, 30, 36, 43 & 44 in this context. 19. Mr. Jumani has submitted that the Plaintiff's entire case in the Plaint for seeking to enforce its alleged claim on account of Supply II and Supply III against th....
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....er the provisions of Section 5 (2) read with Section 5 (1) (a) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017. 23. Mr. Gandhi has submitted that the Defendant No. 2 in contending that the Plaintiff has sought to hold Defendant No. 2 liable in pesonam, has failed to understand that every maritime claim originates as an in personam claim. It is the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 ("the Admiralty Act") which allows an entity to proceed in rem against a res (in this case, Defendant No. 1-Vessel) in respect of a defined class of maritime claims (spelled out in Section 4). Just because a maritime claim originates as an in personam claim, does not mean that an admiralty action ceases to be an action in rem. 24. Mr. Gandhi has placed reliance upon the decision of this Court in Raj Shipping Agencies (supra) and in particular Paragraphs 12.1, 12.2, 12.4 and 12.5 thereof. He has submitted that in Paragraph 12.2, the learned Single Judge of this Court has held that although the owner must be liable in personam in respect of a maritime claim, the action in rem can proceed against the res independently of the owner and the c....
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....ntention is that Defendant No. 2 was the time charterer of these Vessels. 28. Mr. Gandhi has placed reliance upon Section 5 of the Admiralty Act which is arrest of a Vessel in rem and in particular relies upon Section 5 (2) read with Section 5 (1) (a) thereof. To maintain an arrest under Section 5 (1), the Plaintiff under Section 5 (1) (a) must establish that the person who owned the Vessel at the time when the maritime claim arose is liable for the claim and is the owner of the Vessel when the arrest is effected. Further, Section 5 (2) of the Admiralty Act permits arrest of any other Vessel other than the offending Vessel. This can arise in a plethora of circumstances. For instance, a time charterer may be in default of charter hire. This may give rise to a maritime claim under Section 4(1)(h) of the Admiralty Act. Likewise, a time charterer may be liable for bunkers supplied to a vessel taken by it on time charter (as in the facts of the present case). Situations such as these would give rise to a maritime claim wherein the time charterer is liable in personam. An arrest of the Vessel in respect of which the maritime claim arose would be counter-productive in these situations.....
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....rt must adopt a submission which is consistent the terms of Article 3 (2) of the Convention. 32. Mr. Gandhi has placed reliance upon the decision of the Supreme Court in Sunil B Naik v Geowave Commander [(2018) 5 SCC 505]. The Supreme Court while dealing with a situation where arrest was sought to be effected of a vessel taken on demise charter by a time charterer, rejected the proposition that such Vessel cannot be arrested. Thus, the Supreme Court upheld the proposition that a vessel owned by a time charterer could be arrested. He has submitted that the consistent position of law at the time of enactment of the Admiralty Act was that a vessel owned by a time charterer could be arrested to secure a maritime claim for which the time charterer was liable. 33. Mr. Gandhi has submitted that the Plaintiff's contention in this regard is also supported by the decision of a Division Bench of this Court in Altus Uber v Siem Offshore Rederi AS 2019 (5) Bom CR 256. He has submitted that in the facts of that case, the Division Bench of this Court has observed that any vessel can also be arrested for the purpose set out in sub-Section (1) of Section 5 where this Court has reason to belie....
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....r to the enactment of the Admiralty Act. 37. Mr. Gandhi has submitted that the proposition that a Vessel under the beneficial ownership of an entity can also be arrested under the Admiralty Act has also been recognized (albeit implicitly) by a Division Bench of this Court in the Polygreen International DMCC v. M.T. Pamboor & Anr. Judgment dated 19th August, 2022 in Interim Application (L) No. 11655 of 2022 in Commercial Admiralty Suit (L) No. 10641 of 2022. He has placed reliance upon Paragraph 45 of this decision, where the Division Bench of this Court has recognized that an argument of beneficial ownership can in fact be canvassed under the Admiralty Act. The Division Bench of this Court in Paragraphs 56 and 57 has also considered whether in the facts of that case, beneficial ownership had been established. The Division Bench of this Court came to the conclusion that a plea of beneficial ownership had not been established. 38. Mr. Gandhi has submitted that the contention of the Defendant No. 2 that under the Admiralty Act only a Vessel under the registered ownership of an entity can be arrested, and not one under beneficial ownership is entirely misconceived. He has submitt....
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....endant No. 1 Vessel. 41. Mr. Gandhi has submitted that the Defendant No. 2 being a beneficial owner of Defendant Nos.3 and 4 is also established unequivocally by emails addressed from time to time. He has referred to the Email dated 14th August 2019 addressed in response to an Email dated 8th August 2019 issued by the Plaintiff and by which Mr. Navpreet Singh, Managing Director, Defendant No. 3, acknowledged that payments were due to the Plaintiff for bunkers supplied to Defendant No. 1-Vessel as well as to the Vessels M.V. Sea Jaguar and MV ATH Melody. The said email further goes on to state that the Plaintiff's outstandings would be cleared between August 2019 and October 2019. 42. Mr. Gandhi has submitted that the same gentleman, i.e. Mr. Navpreet Singh, had then addressed an email dated 7th January 2020 to the Plaintiff. However, this time around, he had signed off as the Joint Managing Director of Defendant No. 2. In this email, the said Mr. Navpreet Singh stated that dues were outstanding from Dolphin Offshore Enterprises and Dolphin Offshore Shipping, and that these dues would be cleared in two installments by 31st March 2020. These emails indicate that not only we....
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....d the same is a proportionate, more expeditious and less expensive means to achieve a fair and just result. Further, Rule 3 of Order XIIIA, CPC empowers the Court to grant a Summary Judgment against the Defendant where the Court considers that the Defendant has no real prospects of successfully defending the claim and there is no other compelling reason why the claim should not be disposed of before recording of oral evidence. 45. Mr. Gandhi has submitted that in the facts and circumstances of the present case the documentary evidence which would be required for this Court to adjudicate the Plaintiff's case is already on record. There is no question of fact which has arisen that would require oral evidence to be led. He has submitted that if this Court were to send the dispute to trial, it would not only be disproportionate, but also unduly expensive. Given that there has been an admission of liability on the part of Defendant Nos. 2, 3, and 4, the Defendants clearly lack any real prospect of successfully defending the Plaintiff's claim, even if the matter is sent to trial. He has submitted that no genuine issue which requires a trial has been raised in the present case. He has ....
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....he Admiralty Act. Thus, the Plaintiff has proceeded in rem against a res i.e. against the Defendant No. 1 vessel claimed to be beneficially owned by Defendant No. 2 in respect of defined class of maritime claim against the vessels viz. M.V. Sea Jaguar and M.V. ATH Melody under Section 4 of the Admiralty Act. This is permissible under Section 5 (2) of the Admiralty Act, which is subject to the provisions of sub Section (1) thereof. Under Section 5 (1), the Court may order arrest of the vessel in rem which is within its jurisdiction for the purpose of providing security against a maritime claim which is the subject of an admiralty proceeding, where under (a) the Court has reason to believe that the person who owned the vessel at the time when the maritime claim arose is liable for the claim and is the owner of the vessel when the arrest is effected. 49. In the present case, the Plaintiff had supplied bunkers to the vessels M.V. Sea Jaguar and M.V. ATH Melody and which had not been paid for by Defendant No. 2 (the time charterer of the aforementioned vessels). Accordingly, the Plaintiff has sought to enforce its maritime claims under Section 4(1) (h) of the Admiralty Act, against t....
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....endant No. 2 establishing itself as the owner of the Defendant No. 1 vessel. 53. Accordingly, I do not find any merit in the contention of the Defendant No. 2 that the claim of the Plaintiff against Defendant No. 2 stood extinguished in the NCLT proceedings as the Plaintiff has not submitted its Suit Claim with the Resolution Professional and upon approval of the Resolution Plan, the Plaintiff's claim stood extinguished and will not survive thereafter. Further, the decisions relied upon by the Defendant No. 2 in support thereof, namely, Ghanashyam Mishra & Sons Pvt. Ltd. (Supra) and Ruchi Soya Industries (Supra) are inapplicable in the present case. This is in view of the above finding that the Plaintiff has an independent action in rem and can proceed against the res, although the Plaintiffs' claim was initially instituted as an in personal claim against Defendant No. 2. 54. It has been held in Raj Shipping Agencies (Supra) that an action in rem against the ship and / or sale proceeds thereof is not an action against the owner of the ship who may be corporate debtor as defined under the IBC. Further, the principle that an action in rem continues as an action in rem notwithst....
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....n (1): Provided that no vessel shall be arrested under this sub-section in respect of a maritime claim under clause (a) of sub-section (1) of section 4." 56. Section 5 (1) of the Admiralty Act provides for arrest of a vessel in rem and for maintaining an arrest, the Plaintiff must (i) identify an offending vessel, (ii) establish that the owner of the Offending Vessel is liable for a maritime claim and (iii) the Owner continues to be the owner when the arrest is effected. Further, Section 5 (2) permits arrest of any other vessel other than the offending vessel. In order to invoke Section 5 (2), the Plaintiff must, (a) establish a maritime claim under Section 4 of the Admiralty Act; (b) Identify the time charterer who is liable for the maritime claim; (c) Identify a vessel which is owned by the said time charterer and (d) Establish that the vessel is owned by that time charterer when the arrest is affected. 57. Although, the contention was raised on behalf of the Defendant No. 2 that, Section 5 (2) does not contemplate a scenario wherein a vessel owned by a time charterer can be arrested. Such contention in my view is misconceived. T....
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.... Plaintiffs in that case had a claim against the time charterer and not a demise charterer and therefore could arrest any other ship owned by the time charterer and not a ship of the demise charterer. 59. Thus, in order to affect an arrest under Section 5 (1) (a) read with Section 5 (2), the owner of the vessel must be liable for a maritime claim and must be the owner of the vessel sought to be arrested when the arrest is effected. There is no restriction in so far as a time charterer is concerned who is liable for a maritime claim provided that the time charterer is the owner of the other vessel when the arrest is affected. Accordingly, the defence raised by the Defendant No. 2 that a vessel owned by a time charterer cannot be arrested is rejected. 60. The third defense raised by the Defendant No. 2 is that arrest of vessel under the beneficial ownership of an entity is not permissible under the Admiralty Act and a plea of beneficial ownership cannot be canvassed under Order 13A of the Code of Civil Procedure, 1908 as amended by the Commercial Courts Act, 2015. 61. In Section 5 (1) (a) of the Admiralty Act, the words used are "the person who owned the vessel at the time w....
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....Supra) that in order to arrest a ship not owned by the registered owner but by a beneficial owner who is liable for the maritime claim, it would be for the Plaintiff to establish that the registered owner is not the real owner and that the beneficial owner is the real owner. 65. I am of the view that it is not sufficient for Defendant No. 2 to merely place reliance upon the Lloyd's Report which shows the Defendant No. 2 to be the beneficial owner of Defendant No. 1 vessel. Accordingly, I find that it would be necessary for Plaintiff to establish its case of looking beyond the registered owner of the Defendant Vessel and / or for lifting the corporate veil and considering Defendant No. 2 who is alleged to be the beneficial owner as the real owner of the Defendant vessel. 66. Accordingly, I am of the considered view that the Plaintiff cannot seek summary judgment in respect of supplies II and III without evidence being led and a full fledged trial for establishing that the Defendant No. 2 is the real owner of the Defendant No. 1 vessel. 67. Accordingly, the Summary Judgment must fail against Defendant No. 2 in respect of Supplies II and III for which the Plaintiff has a mari....