Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(Bom) 351842

Abhay Ahuja, J
Board of Mumbai Port Authority – Appellant
Versus
Official Liquidator of GOL Offshore Limited – Respondent
INTERIM APPLICATION NO.3292 OF 2023 | INTERIM APPLICATION NO.3296 OF 2023 | INTERIM APPLICATION NO.3293 OF 2023 | INTERIM APPLICATION NO.3294 OF 2023 | COMPANY PETITION NO.756 OF 2014

Advocates:
For the Appellants/Petitioners: Kanishk Kejriwal, Amit Meharia, Paramita Banerjee, Shubham Sawant, Harshit Trivedi, Tushar Awasthi, Mansi Deore
For the Respondents: Mutahhar Khan

A port authority's statutory lien under Section 64 of the Major Port Trusts Act, 1963, is a paramount right that overrides the claims of secured and unsecured creditors in a company's winding-up proceedings.

Headnote:(A) Major Port Trusts Act, 1963 - Section 64 - Maritime Lien - Port Authority claims towards anchorage, pilotage - Statutory right under S. 64 embodies overriding right of harbour authority to arrest/distraint vessel for recovery of dues - This lien is paramount and stands above rights of secured and unsecured creditors in winding-up proceedings. (Para 51)

(B) Companies Act, 1956 - Section 460(6) - Companies (Court) Rules, 1959 - Rule 164 - Maintainability of applications against Official Liquidator's decision - Although Rule 164 speaks of 'appeal', Section 460(6) allows aggrieved persons to 'apply' to the Court - Procedure is the handmaiden of justice and technical hurdles should not prevent substantial justice - Interim applications against Liquidator's decision are maintainable. (Paras 56-61)

Facts of the case:
The Applicant/Port Authority lodged claims for anchorage and pilotage services provided to vessels of the Company in liquidation. The Official Liquidator categorized these claims as unsecured. The Applicant challenged this, asserting the Port Authority has a paramount right/lien under Section 64 of the 1963 Act to recover dues from the vessel, which should take priority over other creditors.

Findings of Court:
The Court held the claim is a 'secured claim' arising from a statutory lien, which is paramount. Reversing the Liquidator's decision, it directed the Liquidator to recognize the status of the claims accordingly.

Issues: Whether the Port Authority's claim for anchorage charges is a secured claim with priority over other creditors; and whether the interim applications filed instead of an 'appeal' under Rule 164 are maintainable.

Ratio Decidendi: A Port Authority's statutory lien under Section 64 of the Major Port Trusts Act, 1963, to recover dues by arresting/distraining a vessel is a paramount right that overrides the claims of secured and unsecured creditors in a winding-up process; procedural technicalities in the Companies (Court) Rules should not frustrate the substantive right to have a Liquidator’s decision scrutinized under Section 460(6) of the Companies Act, 1956.

Result: Interim Applications allowed.

Table of Content
1. nature of claims filed by port authority for maritime dues post-liquidation. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21)
2. competing contentions on lien, jurisdiction, and maintainability of applications. (Para 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38)
3. port authority statutory lien is a paramount secured right. (Para 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54)
4. procedure is handmaiden of justice regarding liquidator adjudication appeals. (Para 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62)
5. final allowance of the interim applications. (Para 63)

ORDER. :

1. These four Applications have been filed seeking to set aside the adjudication of claims made by the Official Liquidator with respect to the Port Authority’s dues/claims made as overriding maritime lien by the Applicant – Port Authority in respect of four vessels.

2. Mr. Kanishk Kejriwal, learned counsel appearing (through video conferencing) for the Applicant in Interim Application No.3292 of 2023 submits that not only pursuant to section 64 of the Major Port Trusts Act, 1963 but also pursuant to section 4(1)(n) and (w) of the Admiralty Jurisdiction and Settlement of Maritime Claims Act, 2017 (the “Admiralty Act”), the claims of the Port Authority have a priority ahead of the secured creditors and the Official Liquidator has incorrectly adjudicated the claim of the Applicant.

3. Mr.Amit Meharia, learned counsel appearing for the Applicants in the other three Applications makes similar submissions.

4. Mr. Kejriwal has relied upon the decision of the Hon’ble Supreme Court in the case of Board of Trustees, Port of Mumbai Vs. Indian Oil Corporation and another , ((1998) 4 Supreme Court Cases 302), in support of his contention.

5. On 22nd March, 2024, after Mr.Kejriwal, learned Counsel for the Applicant made submissions, Mr.Khan, learned Counsel for the Official Liquidator had sought some time to file Reply. Thereafter, Reply was filed on behalf of the Official Liquidator on 5th July, 2024. It was submitted on behalf of the Applicant, on instructions, that no Rejoinders would be filed on behalf of the Applicant.

6. Thereafter, written submissions were filed on behalf of the Applicant on 6th September, 2024. Mr.Kejriwal, learned Counsel for the Applicant and Mr.Khan, learned Counsel for the Official Liquidator had concluded their arguments. However, since Mr. Khan, learned Counsel had relied upon the decision of this Court dated 10th May, 2024 in Interim Application No.3907 of 2023 in Commercial Admiralty Suit No.8 of 2024, to submit that this Court would not have jurisdiction to entertain the Applications, Mr.Kejriwal, learned Counsel for the Applicant had sought some time to make submissions on the said decision.

7. Finally on 18th October, 2024, Mr.Kejriwal, learned Counsel has concluded his arguments. Accordingly, it was recorded that arguments were concluded and order reserved. Liberty was granted to the parties to file written submissions within a period of two weeks upon reopening after the Diwali break with a copy to the other side. Pursuant to the said liberty, the Applicant has filed written submissions on 22nd November, 2024 and written submissions have been filed on behalf of the Respondent Official Liquidator only on 16th January, 2025. Accordingly, this Court proceeds to decide these Applications.

8. Considering that the issues involved in all these four Applications are with respect to similar facts this Court deems it appropriate to consider the facts with respect to Interim Application No.3292 of 2023.

9. The Interim Application No.3292 of 2023, has been filed by The Board of Mumbai Port Authority ("Mumbai Port") against the decision of the learned Official Liquidator of GoL Offshore Limited dated 3rd February, 2023 inter alia categorising the admitted claim of Mumbai Port for Rs. 45,67,042/-, as unsecured claim. The

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2025 Supreme(Online)(Bom) 351842

A port authority's statutory lien under Section 64 of the Major Port Trusts Act, 1963, is a paramount right that overrides the claims of secured and unsecured creditors in a company's winding-up proceedings.

Cases Referred (1)