The main legal point established in the judgment is that the sale of a vessel under Admiralty jurisdiction vests the vessel in the purchaser free from all encumbrances, and therefore, the liability for charges accrued prior to the sale should be borne by the previous owners or from the sale proceeds.

JUDGMENT :

INDIRA BANERJEE, J.

1. Leave granted.

2. This appeal is against a judgment and order dated 12th February 2021 passed by the Commercial Appeal Division of the Bombay High Court (Division Bench) allowing Commercial Appeal (L) No. 1557 of 2021 filed by the Respondent No. 1, hereinafter referred to as the “Port Trust” and setting aside an interim order dated 6th January 2021 passed by the Commercial Division (Single Bench) of the same High Court disposing of Interim Application No. 6531 of 2020 filed by the Appellant M/s NKD Maritime Limited, hereinafter referred to as “NKD.”

3. The Vessel M.V. Karnika, hereinafter referred to as the “Vessel” was owned by Jalesh Cruises Mauritius Limited, hereinafter referred to as “Jalesh” and had been sailing under the flag of the Bahamas.

4. At the request of Jalesh, Glander International Bunkering DMCC, hereinafter referred to as “Glander” had supplied bunkers to the Vessel. The charges for the bunkers supplied by Glander to the Vessel were not paid.

5. On 24th September, 2020, Glander filed an Admiralty Suit being Commercial Admiralty (L) Suit No. 3579 of 2020 against the owners and parties interested in the Vessel for recovery of USD $2,213,320, being the charges for the bunkers along with accrued interest before the Commercial Division of the Bombay High Court.

6. By an order dated 7th October 2020, the Commercial Division of the High Court directed the Sheriff of Mumbai to sell the Vessel through public auction by issuing newspaper advertisements.

7. Pursuant to auction notices published in newspapers on 28th October 2020, on the directions of the High Court, 13 bidders including NKD submitted their bids. NKD’s bid of Rs. 11.65 million was the highest and the same was accordingly accepted.

8. On or about 7th November 2020, NKD paid the purchase price for the Vessel after which a Bill of Sale was drawn in favour of NKD on 9th November 2020 by the Prothonotary and Senior Master of the High Court. The Bill of Sale clearly states that the Vessel was sold free from all encumbrances. On 11th November 2020, delivery of the Vessel was given to NKD.

9. The Vessel had initially arrived at the Port of Mumbai on 23rd March 2020. When NKD was going to remove the Vessel, the Respondent No. 1 raised bills in respect of Anchorage charges and Respondent No. 4 raised bills in respect of Light Dues Charges.

10. It is the case of NKD that NKD has purchased the Vessel in an auction conducted through Sheriff Report No. 53 of 2020 in Commercial Admiralty Suit (L) No. 3579 of 2020 for the purpose of demolition of the Vessel. The terms and conditions of sale are set out in the order of the High Court, dated 28th October 2020 on Sheriff Report No. 53 of 2020 in Commercial Admiralty Suit (L) No. 3579 of 2020 are, inter-alia, set out herein-below for convenience:

“10. Needless to clarify that the sale of the defendant vessel having confirmed in favour of M/s. NKD Maritime Limited, it shall be handed over to the said M/s. NKD Maritime Limited, free from all encumbrances. This, of course is subject to the entire sale consideration being received by the office of the Sheriff of Mumbai within the stipulated time as mentioned earlier.”

11. It is not in dispute that the Bill of Sale also mentions that the bill was being sold free of all encumbrances. However, the successful bidder would be liable to pay the costs, charges, fees and expenses of any kind involved in removing the Vessel. According to NKD, the Respondent No. 4, i.e. the Customs Authorities raised a bill on NKD levying Light Dues Charges for the period from 23rd March 2020, i.e. the time when the Vessel arrived at Mumbai Port till the date of its removal.

12. NKD contends that physical delivery of the Vessel was made over to the Appellant on 11th November 2020. General Light Dues charges were payable on and from 11th November 2020. NKD also disputed its liability to pay Anchorage Charges as claimed by the Respondent No. 1, hereinafter referred to as the “Port Tru