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TMI Blog2001 (5) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... n of this Court. It is further stated that the claim of the plaintiffs against the defendant No. 3 is on the basis of the loan agreements executed by the defendant No. 3. It is further stated that the claim against the defendant Nos. 4 to 7 is on the basis of deed of joint, several and personal guarantee executed by them. The plaintiffs have valued their claim at ₹ 4,16,15,421/-. It is further stated that the defendant Nos. 1 and 2 vessels are in the admiralty jurisdiction of this Court as the said vessels are within the territorial waters of India. It is further stated that the loan agreements and the guarantee agreements between the plaintiffs and the defendant Nos. 3 to 7 were executed at Bombay, the amounts were advanced at Bombay, the loan was also repayable at Bombay. Therefore, a part of the cause of action has arisen at Bombay and the plaintiffs are entitled to file this suit in the admiralty jurisdiction of this Court as the plaintiffs claim is secured by statutory mortgage of the vessels. The plaintiffs seek an order of arrest of the vessels, it also claims money decree against the defendant No. 3 as also the defendant Nos. 4 to 7. 2. On the basis of the written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 18 of the said Act ousts the jurisdiction of all Courts including this Court to exercise any jurisdiction in relation to the matters specified in Section 17. It is urged that as the claim made in this suit by the plaintiffs is a debt within the meaning of Section 2(g) of the said Act and as the plaintiffs are a Bank or financial institution in terms of provisions of Section 17, it is the Tribunal constituted under the D.R.T. Act which will have jurisdiction to entertain this suit and as it is the Tribunal under the D.R.T. Act which has jurisdiction to entertain this suit, the jurisdiction of this Court to entertain the suit is barred by the provisions of Section 18 of the said Act. It is further urged on behalf of the defendants that the provisions of the D.R.T. Act have been given overriding effect over all the laws for the time being in force and therefore, relying on the provisions of Section 34 of the said Act, it is urged that the statutes conferring admiralty jurisdiction on this Court will cease to have any effect insofar as the claims which are within the jurisdiction of the Tribunal constituted under the D.R.T. Act. 5. On behalf of the plaintiffs, in reply, it is urge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction of the Courts. The D.R.T. Act cannot be termed, according to the plaintiffs, as an enactment made by the Union Parliament under Entry 95 List I of Schedule VII and therefore, it cannot be said that it takes away the jurisdiction of this Court. It is further submitted that the Parliament has enacted the Merchant Shipping Act, 1956. Section 2 of that Act, lays down that unless otherwise expressly provided the provisions of the Merchant Shipping Act apply to any vessel which is registered in India. It is further urged that the provisions of the Merchant Shipping Act also apply to the vessels which are not registered in India and the vessels which are not owned wholly by persons who are citizens of India or Companies or Body Corporates which are incorporated in India. Thus the provisions of the Merchant Shipping Act also apply to the vessels which are not registered in India or are not owned by the citizens of India or Body Corporates incorporated in India while such vessels are within India including territorial waters thereof. It is urged that the D.R.T. Act is a general legislation providing for recovery of debts by Banks and financial institutions generally. The Merch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of vessel. By virtue pf that procedure, when a vessel is sold in the admiralty jurisdiction, the buyer of the vessel gets a clear title to the ship or vessel and by virtue of the provisions of Section 41 of the Evidence Act, the decree passed by this Court and the sale certificate issued in favour of the owner is conclusive proof of his ownership of the vessel. Because of this procedure, when a vessel is sold in the admiralty jurisdiction, the price that it fetches is the real market price because a buyer gets clear title to the vessel. That will not be so in relation to a sale of a vessel by the D.R.T. and therefore, for this reason also, the jurisdiction conferred on the D.R.T. cannot be said to be a substitute of the admiralty jurisdiction of this Court. It is further urged that it is clear from the preamble of the D.R.T. Act that the Act has been brought into force for establishment of Tribunals for expeditious adjudication and recovery of debts due to the Banks and financial institutions. The admiralty jurisdiction of this Court affords to the claimants including the Banks more expeditious and effective remedy for recovery of its claims against the vessels if the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and the laws is exercised by the High Court as a superior Court of record, administering justice in relation to persons and things within its jurisdiction. Section 51 of the Merchant Shipping Act reads as under :-- 51(1) Where there is only one registered mortgagee of a ship or share, he shall be entitled to recover the amount due under the mortgage by selling the mortgaged ship or share without approaching the High Court. Provided that nothing contained in this Sub-section shall prevent the mortgagee from recovering the amount so due in the High Court as provided in Sub-section (2). (2) Where there are two or more registered mortgagees of a ship or share they shall be entitled to recover the amount due under the mortgage in the High Court, and when passing a decree or thereafter the High Court may direct that the mortgaged ship or share be sold in execution of the decree. (3) Every registered mortgagee of a ship or share who intends to recover the amount due under the mortgage by selling the mortgaged ship or share under Sub-section (1) shall give an advance notice of fifteen days relating to such sale to the registrar of the ship's port of registry. (4) The n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial institutions. The term 'Debt' has been defined by Section 2(g) of the D.R.T. Act which reads thus:-- (g) 'debt' means any liability (inclusive of interest) which is alleged as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or whether payable under a decree or order of any Civil Court or otherwise and subsisting on, and legally recoverable on, the date of the application. It is clear from the definition of the term 'debt' that debt means any liability which is claimed as due by Bank or financial institution from any person. The D.R.T. Act does not define the term 'person' but the term is defined by the General Clauses Act. The definition is to be found in Section 3(42) of the General Clauses Act which reads as under :-- 3(42) --'person' shall include any company or association or body of individuals, whether incorporated or not. It is thus clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Section 51 of the Merchant Shipping Act which empowers a High Court to entertain a claim by a mortgagee for recovery of his dues by sale of the mortgaged ship. Now, a vessel or a ship is a movable property, therefore, under the provisions of the Transfer of Property Act, it is incapable of being mortgaged. Thus, mortgage of a movable property viz. ship is a special feature of the Merchant Shipping Act. Section 2 of the Merchant Shipping Act reads as under :-- 2. (1) Unless otherwise expressly provided, the provisions of this Act which apply to :-- (a) any vessel which is registered in India; or (b) any vessel which is required by this Act to be so registered; or (c) any other vessel which is owned wholly by persons to each of whom any of the descriptions specified in Clause (a) or in Clause (b) or in Clause (c), as the case may be, of Section 21 applies. shall so apply wherever the vessel may be. (2) Unless otherwise expressly provided, the provisions of this Act which apply to vessels other than those referred to in Sub-section (1) shall so apply only while any such vessel is within India; including the territorial waters thereof. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... speedy recovery of the mortgage money by a person who is holding mortgage over a ship or a vessel. Similarly, a special provision for recovery of the amounts advanced by the State Finance Corporation has been made by Section 29 of the State Finance Corporation Act 1951. Perusal of the provisions of Sub-section (2) of Section 34 of the D.R.T. Act shows that the D.R.T. Act has not been given overriding effect over the State Finance Corporation Act 1951. In my opinion, for the same reason for which overriding effect has not been given to the provisions of the D.R.T. Act over the provisions of the State Finance Corporation Act, the provisions of the D.R.T. Act cannot be allowed to prevail over the provisions of Section 51 of the Merchant Shipping Act. It is further to be seen here that the admiralty jurisdiction of this Court extends even to the recovery of amounts advanced by the Banks and other financial institutions for purchase of the riggs, which are most of the time installed in the economic Zone. The jurisdiction of the D.R.T. Act, in my opinion, cannot be extended to the economic zone which lies beyond the territorial waters of India. 10. It is further to be seen here that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court and of members thereof sitting alone or in Division Courts, shall be the same as immediately before the Commencement of this Constitution. It is clear from the provisions of Article 225 of the Constitution that the powers and jurisdiction exercised by the High Courts at the commencement of the Constitution are subject only to the provisions of the Constitution and to any law of the appropriate Legislature made by virtue of powers conferred on that Legislature by this Constitution. Now, exercise of admiralty jurisdiction by this Court is not definitely contrary to any of the provisions of the Constitution. The only enquiry that is to be made is whether the provisions of the D.R.T. Act can be termed as law of the appropriate Legislature made by virtue of powers conferred on that Legislature by this Constitution. It is to be seen that so far as the subject of admiralty is concerned, by Schedule Seventh, List I Entry 95 of the Constitution, legislative competence has been conferred on the Union Parliament to make law in relation to admiralty jurisdiction. Therefore, unless and until the Union Parliament, in exercise of its powers under Entry 95, List I of the Seventh Sched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the claim of the plaintiff is secured firstly by arrest of the ship and secondly, when the ship is released from arrest by the security furnished. Thus, the procedure that is followed by this Court in its admiralty jurisdiction is efficacious and effective procedure than the procedure provided by the D.R.T. Act. It is clear from the preamble of that Act that that Act has been enacted for providing speedy recovery of the claims of the Banks and financial institutions. Thus, it cannot be said that in enacting the D.R.T. Act, it was the intention of the Legislature deprive the Banks and financial institutions of an existing more effective and efficacious remedy. In my opinion therefore, requiring the Banks and financial institutions to go to the D.R.T. for recovering of their claims against the vessels would defeat the purpose for which the D.R.T. Act has been enacted and therefore, in my opinion, it cannot be said that the suit of the plaintiffs is not maintainable. 12. It is well known that the Banks and financial institutions do not have their claims merely against the vessels which are registered in India and are owned by the Indian citizens or Indian companies. The Banks and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n not be instituted against the vessel itself before the D.R.T. The owner of such a vessel in most of the cases may not have property in India. Therefore, it would be very difficult for the Bank to recover its claim. In my opinion, it can never be said that the intention of the Legislature in enacting the D.R.T. Act was to create problems and difficulties for the Banks and financial institutions in recovering their claims. In any case it cannot be said that in enacting the D.R.T. Act it was the intention of the legislature to deprive the banks and the Financial Institution of an effective remedy available to them under the existing law. For all these reasons, therefore, in my opinion, it has to be held that the provisions of the D.R.T. Act do not oust the jurisdiction of this Court to entertain the suit. 13. Now, so far as the question whether the suit is maintainable in this Court because the vessel is registered in Andhra Pradesh and is also lying at Visakapatnam is concerned, as observed above, this suit has been filed in the admiralty jurisdiction of this Court pursuant to the provisions of Section 51 of the Merchant Shipping Act. Therefore, in terms of the provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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