Bombay High Court: In the present case, four applications were filed seeking to set aside the adjudication of claims made by the respondent, Official Liquidator of GOL Offshore Ltd. (‘the Company’), with respect to the applicant-Mumbai Port’s dues/claims made as overriding maritime lien by the applicant in respect of four vessels. A Single Judge Bench of Abhay Ahuja, J., opined that the claims towards anchorage, port charges, etc. lodged with the Official Liquidator were actions in personam and not actions in rem even if the Official Liquidator had sold the vessels. The Court also opined that the claims would be against the Company in liquidation and not against the vessels and the applicant’s claim was a secured claim which should be paid in priority to all other classes.
Background
The applicant stated that not only pursuant to Section 64 of the Major Port Trusts Act, 1963 (‘the 1963 Act’) but also pursuant to Sections 4(1)(n) and 4(1)(w) of the Admiralty Jurisdiction and Settlement of Maritime Claims Act, 2017, the claims of the applicant had priority ahead of the secured creditors and thus, the Official Liquidator incorrectly adjudicated the applicant’s claim. Therefore, the present interim application was filed by the applicant against the decision of the Official Liquidator dated 3-2-2023, categorizing the admitted claim of the applicant for Rs 45,67,042, as unsecured claim. The applicant had filed its claim in respect of the vessel, Malviya-18 of the Company, before the Official Liquidator around 15-12-2020.
The Company, before going into liquidation, offered charter hire of drilling services, offshore logistics support services and port and terminal support services through a fleet of vessels and harbour tugs, and these vessels operated in Indian and International Waters. By order dated 5-5-2017, a provisional liquidator was appointed to take control of the assets of the Company and thus, the Company was restrained from disposing of its assets; its operations were ceased; and the vessel Malviya-18 was anchored at the Mumbai Port. The Company had unpaid outstandings and therefore, the applicant notified the Master of the vessel Malviya-18 to make payment of the outstanding dues, failing which the applicant would distrain the vessel under Section 64 of the 1963 Act.
The applicant submitted that by exercising the right under Section 64 to distrain the vessels, it became the Company’s secured creditor and thus, had rights over the vessels and its sale proceeds. Further, the applicant allowed the sale of the vessel on the undertaking of the secured creditor of the Company under order dated 29-8-2018. The Liquidator could not defeat the applicant’s claim by categorizing the claim as an unsecured claim. Thus, it was submitted that the expenses incurred by the applicant were related to expenses for preservation of the vessels which were assets of the Company, incurred during the winding up proceedings and therefore, such expenses were required to be paid in priority to the rights of secured creditors and before distribution to any other person/entity as provided in Rule 338 of Company (Court) Rules, 1959.
Analysis, Law, and Decision
The Court noted that the applicant filed claims towards anchorage, port charges, etc. with the Official Liquidator based on the invoices and the Official Liquidator accepted the claims and only categorized part of the claims as unsecured. The Court opined that the claims lodged with the Official Liquidator were actions in personam and not actions in rem even if the Official Liquidator had sold the vessels, as the claims would be against the Company in liquidation and not against the vessels. The Court rejected the contention of the Official Liquidator that just because the claim was a maritime claim, any action to claim the same would be an action in rem.
The Court relied on Raj Shipping Agencies v. Barge Madhwa, 2020 SCC OnLine Bom 651, which restricted a winding up Court’s jurisdiction to dispose off an action in rem against a ship but not an action in personam filed against the Official Liquidator of a company who happens to be the ship owner and for a claim which would also be a maritime claim. It was held that an action in rem against a ship was not an action against the owner (company) or an asset of the owner (company). Thus, this Court opined that the dispute sought to be raised by the Official Liquidator as to the jurisdiction of the Company Court was misconceived.
The Court relied on Mumbai Port v. Indian Oil Corpn., (1998) 4 SCC 302, wherein the Supreme Court interpreted Section 64 of the 1963 Act and observed that the statutory right under Section 64 embodied the overriding right of the harbour authority over the vessel for the recovery of its dues and that the said right stood above the rights of the secured and unsecured creditors of a company in winding up and the lien could not be extinguished without its express or implied consent. Therefore, the Court opined that the applicant’s claim was a secured claim which should be paid in priority to all other classes.
The Court took note of the respondent’s contention of objecting to the maintainability of the interim applications stating that only an appeal under Rule 164 of the Company (Court) Rules, 1959, could be filed against the order of the Official Liquidator whereas only applications were filed in the present case. The Court opined that Rule 164 was a rule of procedure for implementing that the substantive provision of Section 460(6) under the Companies Act, 1956, and the form of an appeal as per the rule was by way of a judge’s summons with affidavit in support and under the Bombay High Court Rules on the Original as well as Appellate Side, all the interim procedures were by way of interim applications.
The Court opined that the procedure was the handmaiden of justice, therefore, the objection by the Official Liquidator that the present interim applications were not maintainable was to be rejected and should not come in the way of doing substantial justice. Thus, the Court allowed the interim applications.
[Mumbai Port v. GOL Offshore Ltd. (Liquidator), Interim Application No. 3292 of 2023, decided on 6-5-2025]
Advocates who appeared in this case :
For the Applicant: Kanishk Kejriwal (through video conferencing) with Amit Meharia, Paramita Banerjee, and Shubham Sawant, Harshit Trivedi, Tushar Awasthi, Mansi Deore i/by Meharia & Co., Advocates for the Applicant.
For the Respondent: Mutahhar Khan, Advocate for the Official Liquidator; Chandan Kumar, Official Liquidator, is present.
