JUDGMENT :

GAURI GODSE, J.

1) This application is filed by the plaintiff for the determination of priorities among the creditors to the sale proceeds of the vessel, MT Prem Mala (“said Vessel”), deposited in this Court, and for payment to the applicant in priority to the other claimants. The applicant has prayed for a direction to release the balance of the sale proceeds to the applicant after payment to the crew members in Admiralty Suit (L) No. 4545 of 2020.

2) The applicant claims first in priority on the ground that the applicant is the holder of a decree based on a registered mortgage on the said Vessel. The said Vessel belongs to defendant no. 2, who is undergoing the Corporate Insolvency Resolution Process (“CIRP”). The applicant claims preference over all other creditors of the insolvent company and is first in priority, in accordance with Section 52 of the Merchant Shipping Act, 1958 and/or under Section 10 read with Section 9 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (“the Admiralty Act”).

SUBMISSIONS ON BEHALF OF THE APPLICANT:

3) According to the learned senior counsel for the applicant, in the present case, i.e., involving an Indian insolvent ship owner, in view of Section 52 of the Merchant Shipping Act, the provisions of the Merchant Shipping Act, being a special law, will prevail over the provisions of the Admiralty Act. Hence, the applicant will have the highest priority and will even rank above the crew members. However, only on humanitarian grounds, it has no objection to releasing the crew members' claims.

4) Learned senior counsel for the applicant submitted that IOCL’s claim cannot be a maritime lien as it is in the nature of damages in connection with the alleged damage caused by the said Vessel, which is an oil tanker, to its jetty. The claim therefore arises out of damage in connection with the carriage of oil. The claim is made by IOCL under the law of tort for compensation. Hence, in view of Section 9(4) of the Admiralty Act, IOCL cannot attach its claim to the said Vessel as a maritime lien-holder.

5) Learned senior counsel for the applicant submitted that the alleged maritime lien of IOCL came into existence on 17th October 2019; the applicant’s suit is dated 30th January 2020; the order of arrest was passed on 31st January 2020; and the sale of the said vessel was ordered on 26th May 2020. As IOCL’s suit was filed on 15th September 2020, after a period of one year, the lien ended on the date of the Order of sale of the said Vessel. Even assuming IOCL's claim had the status of a maritime lien, such lien stood extinguished in view of Section 9 (2) of the Admiralty Act when the vessel was sold. A party that claims a higher priority on the vessel cannot stand by, refuse to participate in maintaining the vessel, and then assert a lien once the vessel is sold. The only exception is a crew member who has an unconditional two-year lien, as per the proviso to Section 9(2).

6) Learned senior counsel for the applicant submitted that even assuming that IOCL's claim will result in a decree, IOCL's claims will still not have priority over the applicant’s first-priority mortgage decree. Even assuming IOCL's claim has the status of a maritime lien as of today, Section 52 of the 1958 Act would be applicable in determining priorities, not Section 10 of the Admiralty Act. Whereas Section 10 of the Admiralty Act deals with the general order of priorities of maritime claims, and Section 52 is a more specific provision squarely applicable to the present case. If Section 10 is applied even in a case such as the present one, Section 52 is rendered redundant. There is no situation in which Section 52 will ever be applied. The only way to read both harmoniously is to apply Section 10 generally and Section 52 in a specific situation like this. Learned senior counsel for the applicant relied upon the legal principle that a special provision shall prevail over a general, as set out in Commercial Tax