The main legal point established in the judgment is that the restrictions laid down in section 42(2A) of the Merchant Shipping Act do not apply to a sale of a vessel conducted by the court, and the said provision is only applicable to voluntary transfers/acquisitions made inter vivos.

(B.P. Colabawalla J.)

1. Admit. By consent of parties, the Appeal is heard finally.

2. In the present appeal, exception is taken to the order of the learned single Judge dated 5th December 2013 confirming the sale of a vessel M.V. Crown 1 belonging to the Company in liquidation (respondent No.1) in favour of Respondent No.2 whose bid of Rs.1.5 crores was the highest. The appellant was a Master on the said vessel. According to him, the said vessel cannot be sold before his wages are paid in view of section 42(2A) read with section 148 of the Merchant Shipping Act, 1958 (said Act).

3. The question that falls for consideration is whether the provisions of section 42(2A) apply to the sale of a vessel, conducted by a Court.

4. The facts stated briefly are as follows:-

The Company, M/s Crown Maritime Co.(India) Pvt. Ltd. is the owner of the said vessel. The appellant contends that he was the Master of the said vessel since 11th June 2009. The company was ordered to be wound up by the Company Court in or around March 2010. On 21st April 2011, the Official Liquidator arrested the said vessel.

5. After the arrest, several attempts were made to sell the vessel but without success. Finally, the Official Liquidator filed a report before the Company Court inter alia informing the Court that the Official Liquidator had called for bids from interested parties and two bids were received. Out of the same, the bid of Respondent No.2 of Rs.1.5 crores was found to be the highest bid. The learned Judge, after setting out the facts in detail about how (i) a substantial amount of time had been invested to ensure disposal of the said vessel; (ii) the ex-Directors of the Company were trying to thwart the sale at every stage and reneged on their undertakings; and (iii) the said vessel was in a dangerous condition, confirmed the sale in favour of the highest bidder (Respondent No.2).

6. The appellant contends that in view of sections 42(2A) and 148 of the said Act, the vessel cannot be sold till his wages are paid.

7. The submission is not well founded. Our attention has not been invited to any judgment that interprets the provisions of section 42(2A). The interpretation of section 42(2A) requires a consideration of several provisions of the Act including as they stood prior to them being amended. We have done so with the able assistance of Mr. Dhond, learned senior counsel who appeared as amicus curiae. We must express our gratitude to him for his efforts and able assistance.

8. Section 42 as it stood before its amendment in 1993, read as under:-

“42. Transfer of ships or shares –

(1) No person shall transfer or acquire any Indian ship or any share or interest therein without the previous approval of the Central Government and any transaction effected in contravention of this provision shall be void and unenforceable.

(2) The Central Government may, if it considers it necessary or expedient so to do for the purpose of conserving the tonnage of Indian shipping, refuse to give its approval to any such transfer or acquisition.

(3) Subject to the other provisions contained in this section, an Indian ship or a share therein shall be transferred only by an instrument in writing.

(4) The instrument shall contain such description of the ship as is contained in the surveyor's certificate or some other description sufficient to identify the ship to the satisfaction of the registrar and shall be in the prescribed form or as near thereto as circumstances permit and shall be executed by the transferor in the presence of and be attested by at least two witnesses.”

Section 42 prior to its amendment imposed a complete embargo on any person transferring or acquiring an Indian ship without the previous approval of the Central Government. The unamended provision was an embodiment of the legislative expectation that the Central Government would protect the interest of the crew whilst granting any permission for transfer / acquisition, as the case may