Raj Shipping Agencies vs Barge Madhwa

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2020 Supreme(Bom) 288

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
K.R. SHRIRAM, J.
Raj Shipping Agencies - Plaintiff
Versus
Barge Madhwa and Anr. - Defendants
Chamber Summons No.66 of 2018 In Admiralty Suit No.6 of 2015, Admiralty Suit No.1 of 2015, Commercial Admiralty Suit No.285 of 2015, Admiralty Suit No.6 of 2015, Admiralty Suit No.11 of 2015, Commercial Admiralty Suit No.284 of 2015, Admiralty Suit No.17 of 2015, Commercial Suit No.73 of 2016, Admiralty Suit No.20 of 2015, Commercial Notice of Motion No.74 of 2015 In Commercial Admiralty Suit No.284 of 2015, Notice of Motion No.1162 of 2015 In Admiralty Suit No.1 of 2015, Commercial Notice of Motion No.75 of 2015 In Commercial Admiralty Suit No.285 of 2015, Notice of Motion No.1721 of 2015 In Admiralty Suit No.17 of 2015, Notice of Motion No.1161 of 2015 In Admiralty Suit No.6 of 2015, Notice of Motion No.1166 of 2015 In Admiralty Suit No.17 of 2015, Commercial Notice of Motion No.73 of 2015 In Commercial Admiralty Suit No.284 of 2015, Notice of Motion No.1715 of 2015 In Admiralty Suit No.1 of 2015, Commercial Notice of Motion No.76 of 2015 In Commercial Admiralty Suit No.285 of 2015, Notice of Motion No.1717 of 2015 In Admiralty Suit No.6 of 2015, Commercial Suit No.319 of 2016, Notice of Motion (L) No.180 of 2016 In Admiralty Suit No.20 of 2015, Notice of Motion (L) No.181 of 2016 In Commercial Suit No.73 of 2016, Notice of Motion No.757 of 2017 In Admiralty Suit No.41 of 2015, Commercial Notice of Motion No.743 of 2019 In Commercial Admiralty Suit No.36 of 2018, Notice of Motion No.1095 of 2019 In Admiralty Suit No.41 of 2015, Notice of Motion No.1718 of 2015 In Admiralty Suit No.11 of 2015, Admiralty Suit No.1 of 2017, Admiralty Suit No.28 of 2017, Admiralty Suit No.33 of 2017, Commercial Admiralty Suit No.482 of 2017, Commercial Admiralty Suit No.121 of 2017, Notice of Motion No.800 of 2018 In Admiralty Suit No.41 of 2015, Notice of Motion No.1158 of 2015 In Admiralty Suit No.11 of 2015, Notice of Motion No.726 of 2019 In Admiralty Suit No.41 of 2015, Notice of Motion No.1805 of 2019 In Admiralty Suit No.6 of 2015, Commercial Admiralty Suit No.142 of 2016, Notice of Motion No.1215 of 2019 In Admiralty Suit No.65 of 2015, Notice of Motion No.2447 of 2019 In Admiralty Suit No.41 of 2015, Notice of Motion No.1974 of 2018 In Admiralty Suit No.18 of 2017, Admiralty Suit No.18 of 2017, Admiralty Suit No.38 of 2018, Commercial Admiralty Suit No.36 of 2018, Commercial Admiralty Suit No.8 of 2019, Commercial Admiralty Suit No.39 of 2018
Decided On : 19-05-2020

Advocate Appeared:
Mr. Prashant Pratap, Senior Advocate - Amicus Curiae/Assisted by Mr. Nishaan Shetty.
Mr. V. K. Ramabhadran, Senior Advocate, Amicus Curiae.
Dr. Abhinav Chandrachud, Amicus Curiae assisted by Mr. Saurish Shetye and
Mr. Shailendra A. Singh.
Mr. Rahul Narichania, Senior Advocate a/w. Ms. Pratiksha Avhad i/b. Mulla and Mulla
and Craigie Blunt and Caroe for Plaintiff in ADMS/41/2015.
Mr. Sharan Jagtiani, Senior Advocate a/w. Ms. Surabhi Agrawal, Advocates for Official
Liquidator.
Mr. Prasad Shenoy a/w. Mr. Prashant Ashar, Mr. Naishadh Bhatia, Ms. Bulbul Singh-
Rajpurohit and Mr. Niraf Shroff i/b. Crawford Bayley and Co. for Plaintiff in
ADMS/6/2015, ADMS/1/2015, ADMS/17/2015, COMAS/284/2015, ADMS/1/2017 and
COMAS/121/2017.
Mr. Prathamesh Kamat, Advocate for Official Liquidator.
Mr. Ajai Fernandes a/w. Ms. Sneha B. Pandey for Applicant in CHS/66/2018 and for
Defendant No.3 in ADMS/18/2017.
Mr. Ashwini Sinha i/b. Mr. Harsh G. Pratap for Plaintiff in ADMS/11/2015.
Ms. S. Priya a/w. Ms. Aparna Sinha, Advocates for Official Liquidator.
Mr. Kunal Naik i/b. Mr. Ashwin Shanker for Plaintiff in ADMS/20/2015,
COMAS/73/2016 and ADMS/28/2017.
Mr. Kunal Naik i/b. Mr. Bimal Rajasekhar for Plaintiff in COMAS/142/2016.
Mr. Shrey Sancheti i/b. Theba and Associates for Plaintiff in COMAS/36/2018.
Mr. Kundanlal Patil i/b. Vyas and Bhalwal for Plaintiff in ADMS/18/2017.
Mr. Osama Butt i/b. Ganesh and Co. for Plaintiff in COMS/319/2016 and
COMAS/8/2019.
Mr. R. P. Shirole a/w. Ms. Kunjita Shah i/b. Khare Legal Chambers for Plaintiff in
ADMS/38/2018.
Dr. Shrikant Hathi a/w. Mr. Pritish Das i/b. Brus Chambers for Plaintiff in
ADMS/33/2017.
Ms. Aneesa Cheema i/b. Charles De Souza for Respondent (EXIM Bank) in
NMS/800/2018.
Ms. Lakshmi Bussa i/b. M. V. Kini and Co. for Defendant No. 9 in COMAS/36/2018.
Mr. Mahendhar Aithe, Company Prosecutor present.

Headnote:(A) Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 - Sections 2, 3, 4, 9, and 10 - Companies Act, 1956 - Section 446 - Conflict between insolvency proceedings and admiralty actions - The court ruled that actions in rem under the Admiralty Act are permissible even when the corporate debtor is in liquidation. A maritime claimant does not require leave to proceed with an action in rem against a ship, as such proceedings are not against the corporate debtor but against the ship as an independent entity. The provisions of the Admiralty Act will prevail over the Companies Act regarding maritime claims and priorities. (Paras 100-106)

Facts of the case:
The case involved several admiralty suits filed against vessels owned by companies in liquidation. The main issue centered on whether leave under Section 446 of the Companies Act was needed for proceeding with these admiralty actions during insolvency proceedings.

Findings of Court:
The court held that admiralty actions did not constitute suits against the corporate debtor, thus allowing proceedings to continue unhindered while protecting the interests of both the creditors and the admiralty claimants.

Issues: Whether admiralty actions in rem require leave under Section 446 of the Companies Act during insolvency proceedings.

Ratio Decidendi: The court concluded that the Admiralty Act is a special law concerning maritime claims and actions, taking precedence over the general provisions of the Companies Act, and held that no leave was required for such actions.

Result: No leave of the Company Court is required for commencing or continuing an admiralty suit in rem despite company liquidation.

Table of Content
1. court's admission of company petitions. (Para 1 , 2 , 3)
2. appreciation of legal assistance by counsel. (Para 4)
3. questions of law involving conflicting acts. (Para 5)
4. consideration of statutes' objectives in conflict. (Para 6 , 7 , 8)
5. nature and purpose of the admiralty act. (Para 9 , 11)
6. rights attached to actions in rem. (Para 12 , 13 , 14)
7. maritime lien and its precedence. (Para 15 , 16 , 17)
8. secured creditors and enforcement of rights. (Para 18 , 19)
9. judicial discretion in maritime cases. (Para 20)
10. balance between admiralty and insolvency. (Para 21 , 22 , 23)
11. company court's jurisdiction limitations. (Para 24 , 25)
12. non-obstante clauses and statutory conflicts. (Para 26 , 27 , 28 , 29 , 30)
13. principle of special acts prevailing. (Para 31 , 32 , 33 , 34)
14. meaning of in rem actions versus in personam. (Para 35 , 36)
15. jurisdictional constraints surrounding action in rem. (Para 37 , 38 , 39)
16. outcome of actions in rem. (Para 40 , 41 , 42)
17. interplay between various creditor types. (Para 43 , 44)
18. outcomes for creditors under liquidation. (Para 45 , 46)
19. legal interpretations in line with creditor claims. (Para 47 , 48 , 49)
20. actions and implications under moratorium. (Para 50 , 51)
21. statutory barriers for new actions. (Para 52 , 53 , 54)
22. overall reflections on creditor rights. (Para 55 , 56)
23. admiralty court's role post-insolvency actions. (Para 57 , 58 , 59)

JUDGMENT:

1. These Admiralty Suits were filed and Orders of Arrest obtained from this Court in all or most of the suits. By Orders dated 05 May 2017 this Court, however, was pleased to admit Company Petition No. 119 of 2015 as well as Company Petition No. 756 of 2014 against GOL Offshore Ltd., the owner of Defendant Vessels in Admiralty Suit No. 1 of 2017 and Commercial Admiralty Suit No. 121 of 2017. Further, by its Order dated 04 December 2017, this Court was pleased to order GOL Offshore Ltd. (Company in liquidation), be wound up.

2. On 09 March 2018, when Admiralty Suit No. 1 of 2017 was listed and taken up for directions/orders, the Official Liquidator of GOL Offshore Ltd. (Company in liquidation), through his assistant, objected to the Suit proceeding further without obtaining leave under S. 446 of the COMPANIES ACT , 1956 (hereinafter referred to as COMPANIES ACT ). In response to the objection, it was submitted on behalf of Plaintiff in Adm. Suit no. 1 of 2017 that in light of the decision in Shanmugam Rajashekhar V/s. Owners and parties interested in the vessel M.T. Pratibha Cauvery , 2018 SCC Online Madras 13, no leave under S. 446 was required to be obtained. As this would be repetitive issue, this Court, therefore, by its Order dated 09 March 2018, was pleased to direct listing of all such suits together, to hear and decide upon the question as to whether leave under S. 446 of the COMPANIES ACT was required. This will be relevant in Adm. Suit no. 1 of 2017, Commercial Adm. Suit no. 121 of 2017, Adm. Suit no. 11 of 2015, Adm. Suit no. 20 of 2015, Commercial Adm. Suit no. 73 of 2016, Commercial Adm. Suit no. 142 of 2016, Adm. Suit 28 of 2017, Adm. Suit 33 of 2017, Commercial Adm. Suit no. 319 of 2016, Adm. Suit no. 41 of 2015, Commercial Adm. Suit no. 36 of 2018, Commercial Adm. Suit no. 482 of 2017, Ad. Suit 65 of 2015, Adm. Suit no. 18 of 2017, Adm. Suit no. 38 of 2018, Commercial Adm. Suit no. 8 of 2019, and Commercial Adm. Suit no. 39 of 2018 listed.

3. By an order dated 08 March 2019, in C.P. No. IB-731(PB)/2018, the National Company Law Tribunal, New Delhi, in the meanwhile, was pleased to admit a Petition under S. 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as IBC) against Punj Lloyd Ltd., the owner of Defendant Vessels in Admiralty Suit No. 1 of 2015, Admiralty Suit No. 6 of 2015, Admiralty Suit No. 17 of 2015, Commercial Admiralty Suit No. 284 of 2015, and Commercial Admiralty Suit No. 285 of 2015. Consequently, a Moratorium under S. 14 of the IBC was also declared b

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2020 Supreme(Bom) 288

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