TMI Blog2019 (8) TMI 1487X X X X Extracts X X X X X X X X Extracts X X X X ..... view of Section 3(15) a foreign ship falls within the jurisdiction of the High Court where the vessel happens to be at the relevant time - i.e., at the time when the jurisdiction of the High Court is invoked, or, where the cause of action wholly or in part arises - The above judgment of M.V.Elisabeth was followed by the Hon'ble Supreme Court later on in various cases and one amongst them being in the case of M.V.Al Quamar v. Tsavliris Salvage (International) Ltd. [ 2000 (8) TMI 1124 - SUPREME COURT ], in which, the Supreme Court, while holding that the High Courts of Calcutta, Bombay and Madras have such Admiralty Jurisdiction like the English Courts had under the provisions of Colonial Courts of Admiralty Act, 1890, the Andhra Pradesh High Court, being the successor of High Court of Madras as some territories of erstwhile State of Madras were included in the State of Andhra Pradesh, also will have such Admiralty jurisdiction. The provisions of the Admiralty Act, 2017 enacted by Parliament in India also defines the terms like Admiralty jurisdictions, Admiralty proceedings, arrest of ships, maritime claim and maritime lien, vessel, territorial waters, etc. The said enactmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order of the learned Single Judge of this Court dated 03.01.2018, namely Whether in Admiralty suits filed in the original jurisdiction of this Court, the leave of the High Court / Tribunal under Section 446 of the Companies Act, 1956 (now Section 279 of new Companies Act, 2013) to file or proceed with such a suit is required to be obtained by the plaintiffs or not, after the Winding Up Order is passed by the Court and an Official Liquidator or Provisional Liquidator is appointed by that Court / Tribunal? . 2. The facts leading to the filing of the present Appeals arose in the following context. A ship or vessel, MT Pratibha Cauvery, when anchored at the shore near Chennai was caught in the eye of cyclonic storm named 'Neelam' around 27.12.2012. The said vessel drifted towards the shore and in the said natural calamity, some of the crew members jumped into the sea and six of them lost their lives and one of the crew members was rescued by the Indian Coast Guard on 01.11.2012, who filed a civil suit, i.e. C.S.No.89 of 2013 invoking the original Admiralty Jurisdiction of this Court and seeking a Decree and judgment against the Ship, viz. owners and parties interested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1956, whereas the claimants pursuing their claims under the Admiralty jurisdiction of this Court have opposed the said stand of the Official Liquidator on the ground that the proceedings under the Admiralty jurisdiction are proceedings-in-rem against the vessel in question and to satisfy their maritime lien, they not only had the right to seek the arrest of the ship MT Pratibha Cauvery, but they can also go ahead for determination of their claims without seeking any such leave of the Bombay High Court, as the Admiralty jurisdiction exercised by this Court under the recently enacted Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, which came into effect on 01.4.2018, being a Special Law, did not provide for any such requirement for obtaining leave from the Company Court and the said Special Law will prevail over the General law, namely the provisions of the Companies Act, 1956 or even later Companies Act of 2013 and therefore, they cannot be compelled to obtain any such leave or permission from the Bombay High Court and they can proceed to satisfy their claims against the Vessel in the Admiralty jurisdiction cases, which are proceedings in rem and not action in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case, the winding up order has been against the owner company by the Bombay High Court and the Official Liquidator has been appointed as its Provisional Liquidator, Section 446 of the Act would stand attracted and that provision does not permit any suit against the company under winding up to lie or to be proceeded with, without obtaining the leave of the Court, as the assets of the company are in the custody of that Company Court and the Court being the custodia legis in respect of the companies under winding up, the Official Liquidator is entitled to take charge of all the assets of the company and realise the value thereof and then distribute the proceeds to the creditors in accordance with the priorities and rankings of claim prescribed under the provisions of the Companies Act. 11. The learned senior counsel, Mr.V.Prakash, further submitted that the very purpose of providing for need to obtain a leave from Court and providing further under Section 446(2) that the Company Court can transfer any such legal proceedings or suits to itself and try the same, is to protect the assets of the company under supervision and control of one Court and not to allow the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons on the respondent company and even after the admission of the winding up petition, to transfer such winding up petitions to the National Company Law Tribunal, which has to proceed there, first for rehabilitation and revival of the company and if it is not found to be feasible by the Insolvency Professional, as envisaged as per the provisions of the said new Insolvency and Bankruptcy Code, 2016, then to liquidate the company in accordance with the further provisions therein. 14. Therefore, they submitted that it is too late in the day to now contend that in the old pending winding up petitions where Official Liquidator attached with the High Court were appointed as Provisional Liquidators, to insist upon the need of the leave of the Company Court to proceed with any suit or legal proceedings against the company under winding up, which may be in other parts of the country other than the State where winding up order has been passed by the High Court or such compensation claims including maritime claims and liens like under the Admiralty Act, 2017 are being tried under such Special Law. 15. It is also contended that the provisions of the Companies Act in Section 446 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its owner found within the jurisdiction of the High Court concerned. This power of the court to render justice must necessarily include the power to make interlocutory orders for arrest and attachment before judgment. Power to enforce claims against foreign ships is an essential attribute of admiralty jurisdiction and it is assumed over such ships while they are within the jurisdiction of the High Court by arresting and detaining them. This jurisdiction can be assumed by the High Court concerned, whether or not the defendant resides or carries on business, or the cause of action arose wholly or in part, within the local limits of its jurisdiction. Once a foreign ship is arrested within the local limits of the jurisdiction of the High Court, and the owner of the ship has entered appearance and furnished security to the satisfaction of the High Court for the release of the ship, the proceedings continue as a personal action. Actions in rem were resorted to by courts in England and U.S. and a device to overcome the difficulty of personal service on the defendant by compelling him to enter appearance and accept service of summons with a view to furnishing security for the releas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to clothe the competent tribunal with jurisdiction over the owner in respect of the claim. The arrest of the vessel while in Indian waters by an order of the High Court concerned, as defined under the Merchant Shipping Act, 1958 [Section 3(15)] attracts the jurisdiction of the competent court to proceed with the trial, as in the case of any other suit, as an action against the owner, and any decree obtained by the plaintiff is executable against any property of the owner available within jurisdiction, including the security furnished by him for release of the vessel. The Act being essentially regulatory in character, the various authorities, tribunals and Courts entrusted with the administration and enforcement of its provisions are specifically stated. In view of Section 3(15) a foreign ship falls within the jurisdiction of the High Court where the vessel happens to be at the relevant time - i.e., at the time when the jurisdiction of the High Court is invoked, or, where the cause of action wholly or in part arises. 18. The above judgment of M.V.Elisabeth was followed by the Hon'ble Supreme Court later on in various cases and one amongst them being in the case of M.V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Admiralty jurisdiction in the case of Chrisomar Corporation v. MJR Steels (P) Ltd. [(2018) 16 SCC 117], decided on 14th September 2017, in which, explaining the history of the Admiralty jurisdiction, maritime claims and maritime lien, while relying upon the decision in the case of M.V.Elisabeth supra, the Court also explained the difference between Action-in-rem in Admiralty jurisdiction and Action-in-personam. The following extract from the Head Note of Chrisomar case would be useful, which is quoted below. Admiralty Law in England, and India, which is based thereon, is derived from the laws of Oleron and other ancient maritime codes like the Rhodian Sea Law, the Basilika, the Assizes of Jerusalem, the Baltic Laws of Wisbuy and the Hanseatic Code. In England, the Admiralty Court Act, 1840 was the first of a series of statutes extending and defining the jurisdiction of the High Court of Admiralty in England. This was followed by the 1861 Admiralty Court Act and various subsequent enactments which were consolidated by the Supreme Court of Judicature (Consolidation) Act, 1925. By the Administration of Justice Act, 1956, the admiralty jurisdiction of the High Court was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s defined in Section 2(1)(f) as being a claim referred to in Section 4 and a maritime lien is defined in clause (g) of Section 2(1). Under Section 5 of the 2017 Act, the High Court may order for the arrest of a vessel which is within its jurisdiction for the purpose of providing security against a maritime claim. Under Section 6 of the said Act, the High Court may also exercise admiralty jurisdiction by an order in personam in respect of the maritime claims referred to in Section 4. An admiralty action in the courts of India commences against a vessel to enforce what is called a maritime claim . How maritime claims are enforced, is that Admiralty Law confers upon the claimant a right in rem to proceed against the ship or cargo in addition to a right in personam to proceed against the owner. A personal action may be brought against the defendant if he is either present in the country or submits to jurisdiction. If the foreign owner of an arrested ship appears before the court and deposits security as bail for the release of his ship against which proceedings in rem have been instituted, he submits himself to jurisdiction. An action in rem is directed against the ship itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ralty law is the maritime lien. It is a concept which is sui generis, but for practical purposes it may be considered as a charge upon maritime property, arising by operation of law and binding the property even in the hands of a bona fide purchaser for value and without notice, but which can only be enforced by an admiralty claim in rem. 23. A maritime lien: adheres to the ship from the time that the facts happened which gave the maritime lien, and then continues binding on the ship until it is discharged, either by being satisfied or from the laches of the owner, or in any other way which, by law, it may be discharged. It commences and there it continues binding on the ship until it comes to an end. 24. Admiralty jurisdiction mall over the world recognise the existence of maritime liens which have evolved over years of State and judicial practice. The existence and enforceability of such liens outside statute law is well established. The statutory law in regard to admiralty or maritime claims is not exhaustive of the subject. The courts recognise and applied such members of maritime liens as capable of enforcement through admiralty. MV Elisabeth case [MV Elisabeth v. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal and this procedure is contained in Chapter V of the Act and is covered by Sections 25 to 30. It is not the intendment of the Act while the basic liability of the defendant is to be decided by the Tribunal under Section 17, the banks/financial institutions should go to the civil court or the Company Court or some other authority outside the Act for the actual realisation of the amount. The certificate granted under Section 19(22) has, to be executed only by the Recovery Officer. No dual jurisdictions at different stages are contemplated. Further, Section 34 of the Act clearly state that the RDB Act overrides other laws to the extent of inconsistency . Obviously, the prescription of an exclusive Tribunal both for adjudication and execution is a procedure clearly inconsistent with realisation of these debts in any other manner. Moreover, the Tiwari Committee which recommended the constitution of a Special Tribunal in 1981 for recovery of debts due to banks and financial institutions stated in its report that the exclusive jurisdiction of the Tribunal must relate not only in regard to the adjudication of the liability but also in regard to the execution proceedings. Thus, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any other High Court which may be notified by the Central Government. 24. Section 4 deals with maritime claims while Section 5 deals with arrest of vessel in rem. Section 6 defines Admiralty jurisdiction in personam and Section 7 deals with restrictions on actions in personam in certain cases. Section 8 deals with vesting of rights on sale of vessels while Section 9 talks of inter-se priority of maritime liens. Section 10 provides for orders of priority of maritime claims and Section 11 gives protection of owner, demise charterer, Manager or Operator or crew of vessel arrested. Sections 12 and 13 deal Procedures and Section 14 deals with Appeals. While Section 15 talks of transfer of proceedings by Supreme Court from one High Court to another High Court, Section 16 talks of power of the Central Government to make Rules. Section 17 is for Repeal and Savings, whereunder the Admiralty Court Act, 1840, the Admiralty Court Act, 1861, the Colonial Courts of Admiralty Act, 1890, the Colonial Courts of Admiralty (India) Act, 1891, and the provisions of the Letters Patent, 1865 in so far as they apply to the admiralty jurisdiction of the Bombay, Calcutta and Madras High Courts, were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the development of laws and therefore, any contra opinion on that would lead to unnecessary obstacles and hindrance in the exercise of special jurisdictions by the special Tribunals or Courts under these special recovery laws as well as the special law like the Admiralty jurisdiction of this Court. 29. We are further fortified in our view by the enactment of recent Insolvency and Bankruptcy Code, 2016, which also is another Special Law in sequence for recovery of dues in Banks and Financial Institutions, after the RDB Act and SARFAESI Act, 2002. The Insolvency and Bankruptcy Code, 2016, further empowers the National Company Law Tribunal to undertake the rehabilitation process of such defaulter companies in accordance with the provisions of Insolvency and Bankruptcy Code, 2016 and the said Act read with Section 434 of the Companies Act, 2013, now amended, envisages transfer of even pending winding up proceedings from the Company Court, viz. High Court to the National Company Law Tribunal. 30. We, therefore, answer the aforesaid question of law in negative and hold that the leave of the Company Court / Tribunal under the provisions of Section 446 of the Companies Act, 1956 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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