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IN THE HIGH COURT OF ANDHRA PRADESH
A.V.Sesha Sai, J.Umadevi, JJ.
Novatic Trading F.Z.E. – Petitioner
Versus
Hero Fincorp. Ltd & others - Respondents
COM CA No.12 OF 2021
Decided On : 30-04-2021
Commercial Courts Act, 2015 - Section 13 - Admiralty Act, 2017 - Section 14 - Jurisdiction and Settlement of Maritime – Claim of compensation – Dishonor of cheque - Whether impugned order passed by learned single Judge in facts and circumstances of case is sustainable and tenable - Whether impugned order warrants any interference of this Court under Section 13 of Commercial Courts Act, 2015 read with Section 14 of Admiralty Act, 2017 - Whether impugned order accepting highest bidder third respondent for US is valid or not in facts and circumstances of case - Whether said noncompliance deprived Diesel Locomotive Works of authority to accept bid - Whether it could have validly condoned shortcoming in tender in question - Said suit came to be instituted on basis of a loan agreement supply agreement deed of mortgage and deed of hypothecation where under 1st respondent herein advanced loan to 2nd respondent – Initially by way of an order learned single Judge directed respondent No.3 herein-Port to detain 2nd respondent’s ship which is berthed at Kakinada port - Subsequently 1st respondent herein filed wherein learned single Judge passed an order fixing time schedule for purpose of sale of subject vessel by way of auction in manner –
Finding of the Court:
Court are satisfied that there is no fraud in auction sale - It may be mentioned that auctions are of two types where auction is not subject to subsequent confirmation and where auction is subject to subsequent confirmation by some authority after the auction is held - In first case mentioned where auction is not subject to confirmation by any authority auction is complete on fall of hammer and certain rights accrue in favor of auction purchaser - However where auction is subject to subsequent confirmation by some authority auction is not complete and no rights accrue until sale is confirmed by said authority - Once however sale is confirmed by that authority certain rights accrue in favor of auction purchaser and these rights cannot be extinguished except in exceptional cases such as fraud - In present case auction having been confirmed by Court it cannot be set aside unless some fraud or collusion has been proved - Court are satisfied that no fraud or collusion has been established by anyone in this case - It is very much evident from a reading of above ruling of Hon’ble Apex Court that when an auction sale is advertised in well known newspapers having wide circulation those who could not come forward within time stipulated are required to blame themselves - If request of appellant is considered entire herculean exercise undertaken before learned single Judge for second time obviously for sale of vessel is required to be redone - Contention of learned counsel for appellant that as 4th respondent offered amount less than amount of reserved price initially its bid ought not to have been accepted is also not sustainable in absence of any clause in tender notification to said effect - In considered opinion of this Court judgments sought to be relied upon by learned counsel for appellant would not render any assistance to appellant herein having regard to factual and circumstantial variation –
Result: Appeal is dismissed
JUDGMENT:
The present appeal, preferred under Section 13 of the Commercial Courts Act, 2015 read with Section 14 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (for short, the Act, 2017’), calls in question the order dated 16.04.2021 in Com.S. No.2 of 2019 passed by a learned single Judge of this Court.
2. Respondent No.1 herein instituted the said COM.S.No.2 of 2019, under Section 4 (1) (c) of the Act, 2017, laying a claim for a sum of Rs.19,72,06,028/-together with interest, against respondent No.2 herein. The said suit came to be instituted on the basis of a loan agreement date 24.10.2016, supply agreement dated 24.10.2016, deed of mortgage dated 15.11.2016 and deed of hypothecation dated 15.11.2016, whereunder 1st respondent herein advanced loan to 2nd respondent. Initially, by way of an order dated 28.03.2019 in I.A.No.3 of 2019, learned single Judge directed respondent No.3 herein-Port, to detain 2nd respondent’s ship which is berthed at Kakinada port. Subsequently, 1st respondent herein filed I.A.No.8 of 2019, wherein learned single Judge passed an order dated 22.10.2019, fixing the time schedule for the purpose of sale of the subject vessel by way of auction in the following manner.
“a) 2nd November 2019 -Registrar (Judicial), of High Court of Andhra Pradesh at Amaravathi to hold meeting with Advocates of all parties to finalize the advertisements and terms and conditions of sale at 11.00 a.m. and appoint Mr. Vijendra Vatsa, Kakinada, as Valuer to appraise and value the vessel.
(b) 25th November, 2019: Submission of valuation report in a sealed cover by the Appraiser to the office of Registrar (Judicial) of High Court of Andhra Pradesh at Amaravathi.
(c) 29th November, 2019: Registrar (Judicial) to hold meeting with the of all parties to finalize the reserve price of defendant No.1-vessel at 11.00 a.m.
(d) 6th December, 2019: Registrar (Judicial) to cause to publish the advertisement for sale of defendant No.1-vessel in 'the Hindu', English Daily and Times of India English Daily Newspapers both All India Editions, mentioning therein the reserve price along with technical details of defendant No.1-vessel (Ex. tonnage, year of build, etc.,) furnished by the parties. Defendant No.1-vessel will be sold on "as is where is, what is there is" basis. All risks, costs, charges, fees and expenses of any kind or nature involved in the removal of defendant No.1-vessel from her present position will be solely to the account of the successful purchaser. This must be stated explicitly in the public advertisement notice. Defendant No.2-port shall also post this publication in its website.
(e) 13th December, 2019: Intending bidders to submit their bid by 2.00 p.m to the office of the Registrar (Judicial) for purchase of the defendant No.1 vessel.
(f) 23rd December, 2019: Office of the Registrar (Judicial) to place the sealed bids and report before this Hon'ble Court at 2.15 p.m., for sale of the 1st respondent-vessel.
(g) 31st December, 2019: payment of balance purchase money by successful bidder.
(h) Purchase money shall be paid either in Indian Rupee currency or US Dollars or Euros and be deposited in appropriate Bank account opened by the Registrar (Judicial) for the purpose of the cases of this nature under Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017.
(The Registrar (Judicial) is directed to obtain permission Hon'ble the Chief Justice, for opening such account.)”
But, the said process could not materialize in view of the lesser amounts quoted by the bidders, which prompted the learned single Judge to cancel further process.
3. Subsequently, the learned single Judge, vide order dated 15.12.2020 in I.A.No.2 of 2019, directed the valuer to appraise the value once again. Later, as per order dated 28.01.2021 in COM.S.No.2 of 2019, the learned single Judge directed publication of the schedule of the auction once again. In terms of the said order, the Registrar (Judicial), High Court of Andhra Pra
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