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TMI Blog2022 (1) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. - INTERIM APPLICATION(L) NO. 112 OF 2021 IN COMMERCIAL ADMIRALTY SUIT(L) NO. 4 OF 2020 - - - Dated:- 3-1-2022 - B. P. COLABAWALLA, J. Mr.Prathamesh Kamat a/w Pooja Tidke, Krushi Barfiwala, Ryan Menedes i/b Parinam Law Associates, for the Applicant/Plaintiff. Mr. Amir Arsiwala, Mr. Dhrupad Vaghani, Ms. Naveli Reshamwalla, Mr. Ajiz M. K., Farzeen Pardiwalla, Nidhi Shah i/b Economic Law Practices, for Defendant No.2. JUDGMENT:- 1. The above Interim Application is filed under the provisions of Order XIII-A read with Order XII Rule 6 of the Code of Civil Procedure, 1908 (for short the CPC ) seeking a summary judgment against the 1st Defendant Vessel in the sum of ₹ 9,37,19,098/- together with interest @ 18% p.a. from 18th December, 2020 till payment and/or realization plus poundage. The basic premise on which the aforesaid relief is sought is that the Defendants have not only admitted/confirmed the dues of the Applicant/Plaintiff but in any event the claim of the Applicant/Plaintiff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/- VIII. Legal Costs 16,40,000/- GRAND TOTAL: 9,37,19,098/- 3. The suit as originally filed was only against the 1st Defendant Vessel and in fact the decree/judgment that is sought in the above Interim Application is also against the 1st Defendant Vessel only. Since the owners of the 1st Defendant Vessel (Tag Offshore Ltd.) went into liquidation, one Mr. Sudip Bhattacharya was appointed as the Liquidator of Tag Offshore Ltd. He was thereafter brought on record as Defendant No.2, pursuant to an order passed by this Court on 29th January, 2020. 4. The brief facts giving rise to the present controversy are this. On 13th February 2019, the 1st Defendant Vessel entered the Plaintiff s Port and started occupying berth space. The Plaintiff supplied the necessary berthing charges (as per its Tariff Booklet) to the said Vessel and thereafter raised invoices from time to time. 5. On 4th M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the Plaintiff, has yet not been paid. 10. Be that as it may, on 15th July 2019, the NCLT ordered the CoC to secure the assets of Tag Offshore Ltd and take possession of the 1st Defendant Vessel, if necessary, and proceed in terms of Sections 51 and 52 of the Merchant Shipping Act, 1958. It also directed the CoC to explore the liquidation option and inter alia move the 1st Defendant Vessel to a safer place without creating problems for the Port Trust. 11. Finally, on 26th September 2019, the NCLT ordered liquidation of Tag Offshore Ltd. and confirmed Mr. Sudip Bhattacharya as its Liquidator. It is the case of the Plaintiff that since its invoices remained unpaid, it finally approached this Court by filing the above suit on 20th January, 2020 against the 1st Defendant Vessel. On the very same date, this Court also ordered arrest of the said Vessel. 12. On 28th January 2020, Mr. Sudip Bhattacharya filed Interim Application No. 1 of 2020, inter alia, seeking modifications/ recall of the order of arrest dated 20th January 2020. Pertinently, Mr. Sudip Bhattacharya, in the said Application, confirmed that if the 1st Defendant Vessel is not sold, its value will diminish, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds the western coast of India where the Plaintiff s Port is located. The Plaintiff duly alerted and called upon Defendant No.2 to immediately make arrangements inter alia for crew and material to secure the 1st Defendant Vessel. During the discussions between the Plaintiff and Defendant No.2, Defendant No.2 indicated that he was not able to send the crew and/or ropes to secure the 1st Defendant Vessel. The Plaintiff, after discussing the terms of the requirement and costs, engaged Shore Watch Personnel/ Mooring Crew for attending rope and safety for the said Vessel for a total of seven days. 15. Finally, on 9th July 2020, this Court directed sale of the 1st Defendant Vessel. Pursuant thereto, on 22nd September 2020, this Court opened the bids received from the prospective buyers in presence of Defendant No.2 and the other stakeholders of the said Vessel/ CoC of Tag Offshore Ltd. After hearing the advocates for the Defendants and EXIM Bank, this Court confirmed the sale of the 1st Defendant Vessel in favour of J. T. Marine Services Pvt Ltd, for a consideration of ₹ 10,75,00,000/-. Defendant No.2 as well as EXIM Bank, who appeared through counsel, on instructions, stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aint). Mr. Kamat submitted that in the said order, a categorical statement of Defendant No.2 is recorded that Berth and Port charges of the Plaintiff are not disputed by Defendant No.2. Even as far as the Salvage charges are concerned, Mr. Kamat submitted that the fact that salvage operations were carried out is not disputed and a statement was made by the Liquidator (Defendant No.2) that the same would be treated as liquidation costs or IRP costs subject to scrutiny regarding its quantum. Mr Kamat submitted that Salvage operations have been duly carried out as reflected in Exhibit-Y to the Plaint and the amount claimed thereunder is as per the invoice issued by the Salvor (Vedant Ship Management) and which is annexed at Exhibit-Z to the Plaint. He submitted that when one reads the said report (dated 16th June 2019) along with the invoice raised by the Salvor (dated 25th June 2019), it is clear that the Plaintiff is also entitled to be paid for the Salvage operations carried out in relation to the 1st Defendant Vessel. He, therefore, submitted that a judgment and decree be passed in favour of the Plaintiff and against the sale proceeds of the 1st Defendant Vessel in the sum of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application under Section 9 of the IBC, 2016 being Company Petition No. 54 of 2019. By an order dated 24th April 2019, the said Petition was admitted and the Corporate Insolvency Resolution Process of Tag Offshore Ltd (the Corporate Debtor) began. As there seemed little hope for its revival, the CoC of the Corporate Debtor chose to seek its liquidation by way of a resolution passed at its meeting held on 17th July 2019 with a 76.30% voting share. This decision was approved by the National Company Law Tribunal, Mumbai Bench ( NCLT ), by its order dated 26th September 2019. This order passed by the NCLT was under Section 33 of the IBC, 2016. In other words, by this order, Tag Offshore Ltd. (the Corporate Debtor) was ordered to be wound up. Once Tag Offshore Ltd was ordered to be wound up, Section 33 (5) of the IBC, 2016 also came into effect prohibiting the institution of any suit against Tag Offshore Ltd (the Corporate Debtor). Mr. Arsiwala submitted that a combined reading of Sections 33, 35, 36, 53, and 238 of the IBC, 2016 make it clear that the bar of jurisdiction is for the purposes of protecting the assets of the Corporate Debtor, including the 1st Defendant Vessel which belon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess under Section 56, as the case may be, does not receive a resolution plan under sub-section (6) of Section 30; or (b) rejects the resolution plan under Section 31 for the noncompliance of the requirements specified therein, it shall- (i) pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter; (ii) issue a public announcement stating that the corporate debtor is in liquidation; and (iii) require such order to be sent to the authority with which the corporate debtor is registered. (2) Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors approved by not less than sixty-six per cent of the voting share to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1). Explanation .-For the purposes of this sub-section, it is hereby declared that the committee of creditors may take the decision to liquidate the corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the said provision prohibits the institution of a suit or other legal proceeding against the Corporate Debtor only. It does not in any way prohibit the institution of a suit or other legal proceeding against a ship/Vessel owned by the Corporate Debtor when invoking the Admiralty Jurisdiction of this Court. I say this because under the Admiralty Act, the Vessel is treated as a separate juristic entity which can be sued without joining the owner of the said Vessel to the proceeding. The action against the Vessel under the Admiralty Act, is an action in rem and a decree can be sought against the Vessel without suing the owner of the said Vessel. Under the Admiralty Act, a ship, or a Vessel, as commonly referred to, is a legal entity that can be sued without reference to its owner. The purpose of an action in rem against the Vessel is to enforce the maritime claim against the Vessel and to recover the amount of the claim from the Vessel by an admiralty sale of the Vessel and for payment out of the sale proceeds. It is the Vessel that is liable to pay the claim. This is the fundamental basis of an action in rem. The Claimant/Plaintiff is not concerned with the owner, and neither is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 arrest of the Vessel, the Plaintiff would become a secured creditor to the extent of the value of the res only but not a secured creditor of the Corporate Debtor's other assets. Hence, this will not affect other secured creditors of the Corporate Debtor. However, 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. 24. I find that the decision in Raj Shipping Agencies v/s Barge Madhwa (supra) clearly answers the aforesaid argument canvassed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case, it is an admitted position that the Plaintiff submitted a claim in the amount of ₹ 3,72,99,376/- being the amount alleged to be outstanding and payable by the Corporate Debtor as on the liquidation commencement date. Defendant No.2 admitted the claim of the Plaintiff only to the extent of ₹ 1,72,99,376/-. This was for the simple reason that the Plaintiff had claimed an amount of ₹ 2,00,00,000/- towards reimbursement of Salvage charges but had not provided any supporting documentation for the same. Mr. Arsiwala submitted that the cause of action for the claim submitted by the Plaintiff to Defendant No. 2 was for Port charges, Berth Hire charges, Mooring charges, Penal Birth Hire charges, and Salvage charges relating to the 1st Defendant Vessel. In other words, the claim filed by the Plaintiff with Defendant No. 2 was based on the same cause of action as in the present suit, was the submission. 26. Mr. Arsiwala submitted that it is pertinent to note that as per Regulation 16 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, claims are filed as on the liquidation commencement date (which in the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the claim of the Plaintiff, and therefore, this Court cannot allow the Plaintiff to re-agitate its claim through the present proceedings; (iv) Even otherwise, the Plaintiff has already adopted the remedy under the IBC, 2016 by filing a claim with Defendant No.2. Therefore, the Plaintiff is estopped from pursuing the inconsistent remedy of filing the present Admiralty Suit. Mr. Arsiwala submitted that the Supreme Court in the case of Transcore v. Union of India [(2008) 1 SCC 125] has held that there are three elements to the Doctrine of Election, namely, (1) existence of two or more remedies, (2) inconsistencies between such remedies, and (3) choice of one of them. All three elements can be found in the present case, was the submission; (v) The Plaintiff first submitted its claim to Defendant No.2 in accordance with the provisions of the IBC, 2016. Being dissatisfied with the partial rejection of that claim, but not challenging the same through an Appeal, the Plaintiff instead proceeded to file the present suit under the Admiralty Act. The effect of filing the present suit and seeking an order of arrest and sale of the 1st Defendant Vessel was to take it out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim against the 1st Defendant Vessel. That apart, Section 11 of the CPC lays down the principles of res judicata. Section 11 reads thus:- 11. Res judicata.- No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between 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. Explanation I- The expression former suit shall denote a suit which has been decided prior to the suit in question whether or not it was instituted prior thereto. Explanation II.- For the purposes of this section, the competence of a Court shall be determined irrespective of any provisions as to a right of appeal from the decision of such Court. Explanation III.- The matter above referred to must in the former suit have been alleged by one party and either denied or admitted, expressly or impliedly, by the other. Explanation IV.- Any matter which migh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s between different parties. The view that I take is also supported by a decision of the Supreme Court in the case of Erach Boman Khavar v/s Tukaram Shridhar Bhat Anr [(2013) 15 SCC 655]. The relevant portion of this decision reads thus:- 39. From the aforesaid authorities it is clear as crystal that to attract the doctrine of res judicata it must be manifest that there has been a conscious adjudication of an issue. A plea of res judicata cannot be taken aid of unless there is an expression of an opinion on the merits. It is well settled in law that principle of res judicata is applicable between the two stages of the same litigation but the question or issue involved must have been decided at earlier stage of the same litigation. 30. In the facts of the present case, the claim of the Plaintiff adjudicated by Defendant No.2 was only pertaining to one invoice for the period 24th April 2019 to 26th September 2019. This invoice can be found at page 42 of the Plaint and is dated 17th October 2019. In this adjudication, Defendant No.2 allowed the claim of the Plaintiff for (i) Berth Hire charges, from 24th April 2019 to 26th September 2019 @ USD 500/- per day; (ii) Penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts or IRP costs as contemplated under Section 53 (1) (a) of the IBC, 2016. It was further stated that as far as Berth/Port charges are concerned, there was no dispute. As far as the Salvage charges were concerned, it was stated that the same would be treated as liquidation costs or IRP costs subject to scrutiny regarding its quantum by the Liquidator. It is pertinent to note that this statement has been made after the so-called adjudication by Defendant No.2 and which was prior to the order passed on 9th March 2020 recording the statement on behalf of Defendant No.2 as set out above. If in fact, Defendant No.2 was of the opinion that the claim for Salvage charges was barred by the principles of res judicata, Defendant No.2 would not have made a statement that Salvage charges would be treated as a liquidation costs or IRP costs subject to scrutiny regarding its quantum by the Liquidator . I, therefore, fail to see how Defendant No.2 can today canvass that the entire claim made in the above suit is barred by the principles of res judicata or constructive res judicata. This is apart from the fact that the claim made in the above suit and in the above Interim Application is not again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain to the period between 1st February,2019 to 2nd May, 2019. However, for the first time, the invoice dated 17th October, 2019 [page 42 of the plaint] sought Penal Berth Hire from 24th April, 2019 to 26th September,2019. The subsequent invoice dated 27th December 2019 [page 44 of the plaint] sought to retrospectively impose Penal Berth Hire from 13th February, 2019 to 31st February, 2019, which is contrary to the invoices at pages 30 to 41, and at page 42. For this reason, the present case requires further scrutiny and cannot be the subject matter of an Application for summary judgment under Order XIII-A of the CPC, was the submission. Mr. Arsiwala further submitted that Section 74 of the Contract Act, 1872, has been interpreted by the Supreme Court in Oil Natural Gas Corporation Ltd v. Saw Pipes Ltd [(2003) 5 SCC 705], and in Kailash Nath Associates v. Delhi Development Authority [(2015) 4 SCC 136]. Relying on these decisions, Mr. Arsiwala submitted that it is the unequivocal position of law that where a liquidated amount is stated to be payable by way of damages, the same can only be payable if it is a genuine pre-estimate of damages fixed by both parties and found to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the First Line ashore ( Actual time of berthing- ATB ) to All cast off (Actual time of un-birthing- ATUB) III. Penal Birth Hire Applicable when vessel is unable to commence cargo operations within 2 hours of all fast time $ 1000 Applicable when vessel is not ready to sail (i.e. fail to book outward pilot memo) after 2 hours the time of completion of cargo Applicable when vessel discontinues cargo operations (Loading / discharging) for vessels own reasons 37. As can be seen from the aforesaid table, Penal Berth Hire charges, in addition to the Berth Hire charges, become payable (i) when the Vessel is unable to commence cargo operations within 2 hours of all fast time (i.e. the time after which the Vessel is completely moored and secured at the port); or (ii) when the Vessel is not ready to sail after two hours from the time of completion of cargo operations; or (iii) when the Vessel discontinues cargo operations for its own reasons. In the facts of the present case, it is not in dispute that the 1st Defendant Vessel was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the aforesaid invoice, Defendant No.2 accepted Berth Hire Charges as well as Penal Berth Hire charges, for the period from 24th April 2019 to 26th September 2019. Once having accepted that these amounts are payable to the Plaintiff, Defendant No.2, cannot today argue that the Plaintiff is not entitled to any Penal Berth Hire Charges as it is nothing but a penalty which will be required to be proved. 39. Another factor that goes against Defendant No.2 is that on 9th March 2020, Defendant No.2 made a statement before this Court that as far as Berth charges and Port charges are concerned, there is no dispute. The relevant portion of the order dated 9th March 2020 reads thus:- 6. Learned senior counsel appearing on behalf of the Liquidator (defendant No.2), on instructions, has stated that all costs/expenses incurred by the plaintiff from 24th April, 2019 till the 1st defendant-vessel leaves the berth including the berthing/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 |Code, 2016. It is stated that as far as the berth/port charges are concerned there is no dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % towards Salvage Cost for securing the vessel during broken mooring rope . However, another invoice dated 27th December 2019 [page 44 of the plaint] seeks payment of an amount of ₹ 1.85 Crores + 18% GST for Salvage Operations for Tag 15 . Thus, there is an anomaly in this regard. Mr. Arsiwala then submitted that the basis of the claim of the Plaintiff is that emergency Salvage operations were carried out at its behest to secure the 1st Defendant Vessel during a spell of bad weather. It is the case of the Plaintiff that Salvage operations were carried out by TUG SHAMBHAVI and a report was prepared by its Master [pages 85-87 of plaint]. The Plaintiff has also relied upon an invoice dated 25th June 2019 [page 88 of plaint] issued by one Vedant Ship Management in the amount of ₹ 1.85 Crores + 18 % GST. Based on these documents, Mr. Arsiwala submitted: (i) There is no correlation between the report of the Master of TUG SHAMBHAVI and the invoice of Vedant Ship Management. Neither does the salvage report mention that TUG SHAMBHAVI is owned by Vedant Ship Management, nor does the invoice at page 88 of the Plaint mention the name TUG SHAMBHAVI; (ii) Thus, there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been produced in support of this claim was a report dated 16th June 2019 [page 85 of the Plaint] and an invoice issued by one Vedant Ship Management dated 25th June 2019 [page 88 of the Plaint] in the sum of ₹ 2,18,30,000/- (inclusive of GST). There is absolutely no breakup given as to how Vedant Ship Management has come to the aforesaid figure of ₹ 2,18,30,000/- for the salvage operations carried out by it in relation to the 1st Defendant Vessel. Further, I find that there is nothing on record to suggest that the invoice at page 88 of the Plaint has any correlation with the Salvage report at page 85, nor is there any material to substantiate the Salvage report itself, which does not bear the name of the person who signed it. In these circumstances, I am unable to grant the claim towards Salvage costs/operations under the provisions of Order XIII-A. This is a claim that the Plaintiff will have to prove at the trial of the above suit. 46. In view of the foregoing discussion, there will be a summary judgement and a decree in favour of the Plaintiff and only against the sale proceeds of the 1st Defendant Vessel in the sum of ₹ 5,51,00,016/-, the breakup of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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