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2022 (1) TMI 111 - HC - Insolvency and BankruptcyMaintainability of suit considering the bar contained in Section 33(5) of the IBC, 2016 - Liquidation proceedings - Seeking a summary judgment against the 1st Defendant Vessel - Defendants having no real prospect of successfully defending the claim of the Applicant/Plaintiff - principles of res-judicata - Penal Berth Hire charges - penal charges or not - HELD THAT - An action in rem is not against the Corporate Debtor but against the Vessel. The Vessel is a distinct juridical entity and the action proceeds without reference to the owner who is not a party to the suit when filed. Liquidation of the Corporate Debtor does not affect the ownership of the res so as to defeat a maritime claim in respect of the Vessel. The res continues to be in the ownership of the Corporate Debtor and the Liquidator merely acts as a custodian. The status of the res does not change. Hence, the action in rem can be entertained even at the stage of liquidation of the Corporate Debtor as the claim is against the res and not against the Corporate Debtor - by not permitting the action in rem and arrest of the Vessel, the rights in rem given to a maritime claimant under the Admiralty Act would be defeated and denied. The entire purpose of these rights (whether a maritime lien or a maritime claim) is to enable such a claimant to have his claim perfected in law by arrest of the Vessel. If a claimant is not permitted to do so, then his right in rem may stand extinguished and be lost forever. Principles of res judicata - HELD THAT - 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 subsequently raised, and has been heard and finally decided by such Court. In other words, for the subsequent suit to be barred by the principles of res judicata, the matter directly and substantially in issue in the subsequent suit (i) has been directly and substantially in issue in the former suit; (ii) must be between the same parties, or between the parties under whom they or any of them claim, litigating under the same title; and (iii) the former suit has been heard and finally decided on merits. What follows therefrom is that the principles of res judicata would not apply if (a) there is no decision on merits; or (b) if it is between different parties. Considering that the claim made in the present suit is not against Defendant No.2 at all but against the sale proceeds of the 1st Defendant Vessel and which continues to be an action in rem, any adjudication done by Defendant No.2 regarding a claim made by the Plaintiff against Defendant No.2, cannot attract the principles of res judicata qua the present suit, which is seeking a decree only against the 1st Defendant Vessel - the claim in the present suit is not barred by the principles of res judicata. Levy of Penal Berth Hire charges - penal in nature or not - HELD THAT - The 1st Defendant Vessel agreed to pay these charges when it engaged the services of the Plaintiff Port. Once 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 - 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. When Defendant No.2 stated that as far as the berth/port charges are concerned there is no dispute it meant that it included all Berth charges/Port Charges including Penal Berth Hire charges - Mr. Arsiwala s contention that the Plaintiff is not entitled to any amount towards Penal Berth Hire charges, cannot be argued with. This argument, therefore, stands rejected. There will also be a decree in favour of the Plaintiff and only against the sale proceeds of the 1st Defendant Vessel for interest @ 18% per annum on the said sum of ₹ 5,51,00,016/- from 18th December 2020 till payment and/or realization. For the reasons recorded earlier, the claim towards Salvage operations is not granted at this stage and will have to be proved at the trial of the suit - The Plaintiff shall, along with their claim for Salvage operations, also be entitled to agitate their claim for interest prior to 18th December 2020, and legal costs, at the trial of the suit. Application disposed off.
Issues Involved:
1. Maintainability of the suit in light of Section 33(5) of the IBC, 2016. 2. Bar of res judicata concerning the Plaintiff's claim. 3. Entitlement to Penal Berth Hire charges. 4. Entitlement to Salvage charges. Detailed Analysis: Issue 1: Maintainability of the Suit in Light of Section 33(5) of the IBC, 2016 The Defendant argued that the suit was not maintainable due to Section 33(5) of the IBC, 2016, which prohibits the institution of any suit against a corporate debtor once a liquidation order has been passed. The Court found that Section 33(5) prohibits suits against the corporate debtor but does not extend to actions in rem against a vessel owned by the corporate debtor. The Court emphasized that under the Admiralty Act, a vessel is treated as a separate juristic entity and can be sued independently of its owner. The Court referenced the case of Raj Shipping Agencies v/s Barge Madhwa, which clarified that the bar under Section 33(5) applies to suits in personam against the corporate debtor, not to actions in rem against the vessel. Therefore, the suit was found to be maintainable. Issue 2: Bar of Res Judicata Concerning the Plaintiff's Claim The Defendant contended that the suit was barred by res judicata, arguing that the Plaintiff had already filed a claim before the Liquidator, which was partially adjudicated. The Court noted that the principles of res judicata apply when the matter in issue has been directly and substantially decided in a previous suit between the same parties. However, the Court found that the claim adjudicated by the Liquidator pertained only to a specific invoice and period, and did not cover the entire duration for which the Plaintiff sought charges. Additionally, the Court highlighted that the claim in the present suit was against the sale proceeds of the vessel, not against the corporate debtor, thus distinguishing it from the claim adjudicated by the Liquidator. Consequently, the suit was not barred by res judicata. Issue 3: Entitlement to Penal Berth Hire Charges The Defendant argued that Penal Berth Hire charges were in the nature of a penalty and required proof of actual loss under Section 74 of the Contract Act, 1872. The Court examined the Tariff Booklet, which set out the conditions under which Penal Berth Hire charges would apply. It found that these charges were not penal but were additional charges agreed upon contractually for specific contingencies. The Court also noted that the Liquidator had previously accepted these charges in an adjudication, and no distinction was made between Berth Hire and Penal Berth Hire charges. Therefore, the Plaintiff was entitled to these charges without needing to prove actual loss. Issue 4: Entitlement to Salvage Charges The Defendant challenged the Plaintiff's claim for Salvage charges on the grounds of insufficient documentation and discrepancies in the amounts claimed. The Court found that the Plaintiff had not provided adequate documentation to substantiate the Salvage charges. Specifically, there was no detailed breakdown of the costs, and the correlation between the Salvage report and the invoice was unclear. As a result, the Court did not grant the claim for Salvage charges at this stage, stating that the Plaintiff would need to prove this claim at trial. Judgment: The Court granted a summary judgment and decree in favor of the Plaintiff for the sum of ?5,51,00,016/- against the sale proceeds of the 1st Defendant Vessel, broken down as follows: - Port Charges: ?17,29,728/- - Berth Hire Charges: ?2,24,63,700/- - Penal Berth Hire Charges: ?2,24,63,700/- - Mooring Crew: ?37,800/- - GST: ?84,05,088/- The Court also awarded interest at 18% per annum on the sum of ?5,51,00,016/- from 18th December 2020 until payment and/or realization. The claim for Salvage charges and interest prior to 18th December 2020, as well as legal costs, were not granted at this stage and would need to be proved at trial. The Interim Application was disposed of without any order as to costs.
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