Research › Search › Judgment

Calcutta High Court · body

2000 DIGILAW 518 (CAL)

BOARD OF TRUSTEES v. SWADESH KUMAR KHATUA

2000-09-29

ARUNABHA BARUA, VINOD KUMAR GUPTA

body2000
V. K. GUPTA, J. ( 1 ) THIS Appeal is directed against Judgment dated 13th February, 1998 passed by a learned single Judge of this Court in two Admiralty Suits, being Admiralty Suit No. 15 of 1994 (Anil Kumar Sen and Others v. Owners and Parties interested in the Vessel MV-Charisma-N), and Admiralty Suit No. 16 of 1994 (Swadesh Kumar Khatua and Others v. Owners and parties interested in the Vessel M. V. Alexandra-N ). ( 2 ) THE brief facts leading to the filing of this Appeal are as herein below stated :nilhaat Shipping Company Limited at the material time was the owner of the Vessels namely M. V. Charisma-N and M. V. Alexandra-N. Nilhaat Shipping Company was wound up by an order of the Company Court passed in this Court's Company petition No. 51 of 1995 and Official Liquidator had stood appointed who was directed to take possession of the assets of the said dissolved Company. M. V. Alexandra-N had in the meanwhile arrived at Haldia Dock Complex of Calcutta Port Trust on 18th October 1982 and was incurring Port charges, berth hire and deck dues etc. till the said Vessel was sold and the possession thereof was handed over to its Purchaser in terms of the Order passed by this Court. After the said Vessel M. V. Alexandra had arrived in Haldia Port in October 82, Shipping Development Fund Committee, the Predecessor-in-interest of ICICI and Union of India filed a Suit in this Court, being Admiralty Suit No. 1 of 1983 for enforcement of the mortgage created in favour of the said Shipping D. F. Committee in respect of the said Vessal. In or about December 1983 Calcutta Port Trust (CPT for short) applied in the said Suit for leave to intervene and to proceed against the said Vessel in terms of section 64 (2) of the Major Port Trusts Act, 1963 (1963 Act for short) and to deposit the surplus after adjustment of its calim against the sale proceeds of the Ship with the Registrar, Original Side of this Court. In October 1985 the said Vassel was sold to the highest bidder for Rs. 1,46,00,000/- in favour of one Amar Steel Industries and the said sale was confirmed by order of this Court. The sale proceeds of the said Vessel were-directed to be deposited with the CPT. In October 1985 the said Vassel was sold to the highest bidder for Rs. 1,46,00,000/- in favour of one Amar Steel Industries and the said sale was confirmed by order of this Court. The sale proceeds of the said Vessel were-directed to be deposited with the CPT. The Crew Members made an application for some ad-hoc payment and by an order of this Court, CPT was directed to pay on ad-hoc basis an amount of Rs. 5,00,000/- to the Crew Members from out of the said sale proceeds. This order was however passed without prejudice to the rights and contentions of the parties, The Vessel was ultimately handed over to the purchaser by CPT. In or about 24th January, 1986 CPT applied to this Court inter alia for a direction that it was entitled to be paid the hire charges and berth hire charges up to 11th December, 1985 as also reserve moorings charges at the prescribed rates from 12th December 85, claiming priority over anyone else, by way of its first charge over the said Ship purportedly in terms of section 64 (1) of the 1993 Act. ( 3 ) THE other Vessel namely "mv-Charisma-N" arrived at Haldia Dock Complex of CPT on 15th October, 1982. The members of the Crew filed a Suit in this Court claiming their unpaid wages. In the said Suit also CPT applied for the sale of the said Vessel in exercise of its similar power under section 64 (2) of 1963 Act. The Shipping Development Committee also had filed a Suit in Bombay High Court for enforcement of its mortgage right and for sale of the said Vessel M. V. Charisma-N. In the said Suit from time to time various orders were passed in Bombay High Court. Finally the said Vessel was sold on 12th December 1984 by order of Bombay High Court for an amount of Rs. 1. 17 Crores and the Vessel was taken delivery of by its purchaser on 25th December, 1986. Whereas in respect of the Vessel M. V. Alexandra-N, CPT claims Rs. 99,97,852. 31, in respect of the Vessel M. V. Charissma-N, CPT's claim is to the tune of Rs. 1,25,63,203. 23. 1. 17 Crores and the Vessel was taken delivery of by its purchaser on 25th December, 1986. Whereas in respect of the Vessel M. V. Alexandra-N, CPT claims Rs. 99,97,852. 31, in respect of the Vessel M. V. Charissma-N, CPT's claim is to the tune of Rs. 1,25,63,203. 23. ( 4 ) THE only point to be determined in those two Appeals exactly is the ranking of priorities interest between the three parties, namely, ICICI, being the successor-in-interest of Union of India, the Appellant CPT and the Crew Members, the Decree Holders in the two Appeals. ( 5 ) THE aforesaid two Suit being Admiralty suits No. 15 and 16 of 1994 with respect to the aforesaid two ships were filed by the Respondents in both those Appeals who were the Crew Members of the aforesaid two ships. The Respondent Crew Members were claiming their wages because it was alleged by them that the wages due to them had not been paid to them in their favour. It was in these two Suits that CPT applied for and was allowed intervention and got impleaded itself as a party Respondent because according to CPT it had its claims in respect of both the Ships with respect to the charges noted in the earlier part of this Judgment. ( 6 ) IN so far as the ICICI is concerned, it may be mentioned that both the Ships belonged to an Indian Company namely Nilhat Shipping Co. Ltd. which had gone into liquidation and had became insolvent. It may also be mentioned that in respect of both the Ships the Union of India had entered into two sets of mortgage deeds whereby Union of India became mortgage and the aforesaid Company had become mortgager. The mortgage was affected on the basis of a Shipping fund created in terms of sections 14, 15 and 16 of the Marchant Shipping Act, 1958. This fund was to be administered by the Shipping Fund Committee. However by the Abolition Act of 1986, being Act No. 66 of 1986, the Shipping Fund Committee and the Shipping Fund were both abolished and sections 14, 15 and 16 of 1958 Act were deleted. This fund was to be administered by the Shipping Fund Committee. However by the Abolition Act of 1986, being Act No. 66 of 1986, the Shipping Fund Committee and the Shipping Fund were both abolished and sections 14, 15 and 16 of 1958 Act were deleted. The Central Government took over the Shipping Fund and the Rule of the Shipping Committee and it is under those circumstances that the Union Government came to be substituted as mortgage in respect of both the Ships By a notification dated 15-4-1997 later on issued in terms of section 16 (1) of the aforesaid Abolition Act. ICICI came to be notified as a designated person in terms of section 16 (1) of the aforesaid Abolition Act to take over the responsibility from Union Government. The ICICI was thus delegated all the powers and functions as exercisable by the Central Government in terms of sections 4, 5 and 8 of the Act. It is under these circumstances that the Division Bench of this Court had vide an earlier order passed in this Appeal permitted the ICICI to be impleaded as a party-respondent. ( 7 ) THE claim of ICICI therefore can be summarised in the following manner :-IT is claiming on the basis of a mortgage and on the basis of decree obtianed by it from the Courts in England, Bombay and Calcutta. It says that in terms of section 52 of the Marchant Shipping Act, 1958 its claim has preference over the claims of all others and that in so far as the CPT is concerned, the lien of CPT as per section 64 (1) (2) of Major Port Trusts Act is only for the arrest of the Ship under section 64 (1) and subsequently for the sale under sub-section (2 ). Undoubtedly the lien of a Port Trust may be paramount, but such a lien is restricted only to the arrest and the subsequent right to its sale. But in this case the Ship had already been arrested by order of Bombay High Court and Calcutta High Court and therefore there was no question of the Ship being arrested for the second time by any order passed by CPT under section 64 (1) of the Act. But in this case the Ship had already been arrested by order of Bombay High Court and Calcutta High Court and therefore there was no question of the Ship being arrested for the second time by any order passed by CPT under section 64 (1) of the Act. Similarly CPT had concented to the sale of the Ship by order of Bombay High Court and Calcutta High Court and therefore by its consent in the said sale and the fact of the sale, its lien had stood extinguished in all respects. According to the learned Advocate for ICICI, section 64 only creates a lien for the Port Trust for arrest of the Ship and for its sale and it does not create any lien or priority or preference over the funds lying in the Court being the sale proceeds of the ship once the Ship has been sold by order of the Court. ( 8 ) AFTER hearing the learned Advocate of the parties we are of the opinion that on an overall consideration, in the facts and circumstances of this case we find that the Crew Members have a priority and preference over all others because the claim of the Crew Members with respect to unpaid wages has a preference over the claims of all others because it is based on a maritime lien. Under section 139 of the Merchant Shipping Act 1958 (1958 Act for short) read with section 138 of the same Act a Seaman's right to wages and provisions shall be taken to begin either at the time at which he commences work or at the time specified in the agreement for such commencement of work and a seaman shall not by any agreement forfeit his lien on the Ship or be deprived of any remedy for the recovery of his wages nor shall he by any agreement abandon his right to wages in case of loss of the Ship etc. section 146 of 1958 Act provides that a proceeding for the recovery of wages due to a Seaman shall not be instituted by or on his behalf in any Civil Court except when one of the following three conditions exists or is fulfilled :- (A)the owner of the Ship has been declared insolvent; (B)the ship is under arrest or sold by the Authority of any Court; (C)a Judicial Magistrate of the first class or a Metropolitan Magistrate refers such a claim to a Court. ( 9 ) SECTION 139 thus in our opinion recognizes the old Maritime Law that a seaman or any other Mamber of Crew has a lien which cannot be forfeited. This right of seaman is not only a statutory right but a right apparently under the universal Maritime Law and seems to be covered by various international Conventions. The learned single Judge in the Judgment under Appeal has relied upon an unreported Judgment of this Court delivered on 21st May 1981 in Admiralty Suit No. 1 of 1980 and in some other related cases where the lien of the Crew Members was clearly recognized. In Halsbury's Law of England, 4th Edn. Vol. 43 it is noted as under;"1142. Priority of liens generally. It would seem that the determination of the priority of liens over one another rests on no rigid application of any rules but on the principles that equity must be done to the parties in the circumstances of such particular case. However, there is a general order of priority, and there are certain general rules which in the absence of special circumstances, the Court tends to apply. As to the general order of priority, the right of a dock and harbour authority exercising its powers under the provisions of the Harbours, Docks, and piers Clauses Act 1847, or under the similar provisions of its special Act, to detain a ship in respect of damage is dock works, or to detain and sell a ship in respect of damage to dock works, or to detain and sell a ship in respect of dock and harbour dues, or to take possession of and sell a wreck in respect of conservancy charges overrides all maritime liens. Next in order of priority are maritime liens; these usually rank above mortgages and statutory liens. A mortgage generally has precedence over a statutory lion. Next in order of priority are maritime liens; these usually rank above mortgages and statutory liens. A mortgage generally has precedence over a statutory lion. A possessory lien ranks after all liens which have attached before and before all liens which attach after the possessary lien holder has taken possession of the ship. " ( 10 ) IN British Shipping Laws-Vol. 14 by D. R. Thomas it is noted as under :-"seamen's Wages-Maritime Lien the contemporary maritimes lien 309. It has long been recognised that under the general maritime law as administered in the English Court of Admiralty a seaman possesses a maritime lien in respect of a claim for wages. To the present day the source of the lien remain unchanged for the lien has never been expressly incorporated into the marchant shipping legislation. Statutes enlarging the jurisdiction of the Court to entertain claims for wages have been construed by the Courts as impliedly extending the ambit of the lien. It is probably accurate to comment therefore that to the extent that the Admiralty Court has jurisdiction, there exists to an equal extent a lien. The jurisdiction of the Court and the existence of a maritime lien are conterminous. ( 11 ) A seman's lien for wages is treated as sacresanct and afforded comprehensive protection by the legislature which has made it incapable of being renounced by agreement. Section 16 (1) of the Merchant Shipping Act 1958 provides;"a seaman's lien, his remedies for the recovery of his wages shall not be capable of being renounced by any agreement. The power of a seaman to transfer his maritime lien for the recovery of wages, subject to the consent and supervision of the Court, is unaffected by section 16 (1 ). A seaman's maritime lien for wages arises from the fact of service rendered to a ship and is independent of agreement and of personal liability on the part of a ship owner. " ( 12 ) IN Strouds' Judicial Dictionary of Words and Phrases by John S. James, Fifth Edition-Volums 3 a maritims lien has been defined as a right specifically binding a ship, furniture, tackle, cargo and freight for payment of a claim founded upon the maritime law and entitling the claimant to take judicial proceedings against the property bound to enforce, to ascertain for satisfaction of his demand. Maritime liens are distinguished from other liens in two chief particulars, firstly, that they are in no way founded on possession or property in the claimant, and secondly, they are exercised by taking proceedings against the property itself in a form of action styled and action in run. Such a lien is a privileged claim upon a vessel in respect of service done to it and a maritime lien is universal, that is it attaches to every part of the res to the fullest extent. A maritime lien is the foundation of the proceeding in rem-a process to make, prefer a right inchoate from the moment the lien attaches; and whilist it must be admitted that where such a lien exists, a proceeding in rem may be had it cannot be found to be equally true that in all cases where a proceeding in rem is the proper course there a maritime lien exists which gives a privilege or calim upon the thing to be carried into affect by legal process. It is inchoate from the moment the claim or privilage attaches and when carried into effect by legal process by a proceeding in rem, relates back to the period when it first attached. ( 13 ) WE also agree with the finding of the learned single Judge that the right of the Crew to recover wages does not depend upon the ditrain or detention of the vehicle and the Crew would have the right to unpaid wages in preference to the rights of all others and that this right is preserved and thus is not subject to any restriction or exception. We therefore find that the learned single Judge very correctly held that the claim of the plaintiffs Crew Mambers would have priority over all other claims. ( 14 ) COMING to the question of determining the priority between the claim of CPT and ICICI, was reiterate that whereas the claim of CPT is based on the invocation and applicability of section 64 (2) of 1963 Act, the claim of ICICI is basically based on section 52 of 1958 Act. In support of its claim the CPT has relied upon a Judgment of the Supreme Court reported in AIR 1998 Supreme Court 1878 and a Judgment of the High Court of Bombay reported in AIR 1988 Bombay 329. In support of its claim the CPT has relied upon a Judgment of the Supreme Court reported in AIR 1998 Supreme Court 1878 and a Judgment of the High Court of Bombay reported in AIR 1988 Bombay 329. ( 15 ) IN so far as the claim of CPT is concerned, we have given our dareful and thoughtful consideration to the submissions made by the learned Advocate appearing for CPT. We have also gone through to section 64 (2) of 1963 Act. In our opinion the lien as created under sub-section (2) of section 64 of 1963 Act being totally paramount, the same cannot be either dispensed with, or compromised or be superseded by the claim by any other party. The two judgments reported in AIR 1988 Bombay 329 and AIR 1998 SC 1828 clearly support the view that the lien of CPT is paramount in the light of the mandatory legal requirement as contemplated under section 64 (2) of 1963 Act. We therefore have no hesitation in disagreeing with the contentions of Mr. Mukherjee that his client namely ICICI has a superior claim over the claim of CPT. Insofar as the ICICI is concerned, in our considering view section 52 of 1958 Act by itself cannot supersede or override the superior claim of CPT even though under section 52 of the 1958 Act, the ICICI. has a claim over the sale proceeds of the two ships in question, but the claim of CPT will rank prior to that of ICICI and we hold accordingly. ( 16 ) FOR the foregoing reasons therefore the appeals are dismissed. The judgment of the learned single Judge is upheld. It is directed that the claim of the three parties involved in this appeal shall rank priority wise as hereunder: (I)crew members; (ii) cpt. (iii)ICICI. The appeals thus stand disposed of. There will be no order as to costs. A. Barua, J.-I agree. Later : after this judgment was pronounced, the learned counsel appearing for the ICICI made an oral prayer for staying the operation of this order. This prayer has been opposed by the learned Advocates appearing for the other parties. On consideration we grant a limited stay of the operation of this order till 31st October, 2000 and direct that this order shall not be implemented and acted upon till that date. This prayer has been opposed by the learned Advocates appearing for the other parties. On consideration we grant a limited stay of the operation of this order till 31st October, 2000 and direct that this order shall not be implemented and acted upon till that date. Let a Xerox copy of this judgment, duly countersigned by the Assistant Registrar of this Court, be given to the parties upon their undertaking to apply for and obtain certified copy of the same on usual undertaking. Appeal disposed of.