Arnold Samson vs Ramesh Baldev Gwalani
- Court
- Bombay High Court
2026:BHC-OS:12536
1-IA-516-2024.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION NO. 516 OF 2024
varsha
IN
COMMERCIAL ADMIRALTY SUIT NO. 44 OF 2021
Axis Trustee Services Limited, )
having their registered office at Axis )
House, Bombay Dyeing Mills Compound, )
Pandurang Budhkar Marg, Worli, )
Mumbai – 400 0025. ) … Applicant/
Original Plaintiff
Digitally
signed by
VARSHA
VIJAY
RAJGURU
Date:
2026.06.08
18:25:47
+0530
IN THE MATTER OF
VARSHA
VIJAY
RAJGURU
Axis Trustee Services Limited, )
having their registered office at Axis )
House, Bombay Dyeing Mills Compound, )
Pandurang Budhkar Marg, Worli, )
Mumbai – 400 0025. ) … Org. Plaintiff
V/s.
1. M.T PREM MALA IMO No. 9209972 )
(and her owners and all other persons con- )
cerned and/or interested in her) along with )
her hull, tackle, engines, machinery, boats )
bunkers, equipment, paraphernalia and all )
other appurtenances presently at Port and )
Harbour Mumbai, within the territorial waters )
of India and within the Admiralty and Vice )
Admiralty Jurisdiction of this Hon’ble Court. )
1/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
2. Mercator Limited, through Mr. H.K. Mital/ )
Mr. Shalabh Mittal, having its registered )
rd
office at 3 Floor, Mittal Tower, “B” Wing, )
Nariman Point, Mumbai 400 021. )
3. Mercator Oceantransport Limited, having )
rd
their office at 3 Floor, Mittal Tower, )
“B”Wing, Nariman Point, Mumbai 400 021. )
4. Mercator Petroleum Limited, having )
rd
their office at 3 Floor, Mittal Tower, )
“B” Wing, Nariman Point, Mumbai 400 021. )
5. State Bank of India, having their Corporate )
Office addressed at State Bank Bhavan, )
Madam Cama Road, Nariman Point, )
Mumbai- 400002 and branch office amongst )
others known as Stressed Assets Management)
nd
Branch-1, 2 floors, World Trade Centre, )
Cuffe Parade, Colaba, Mumbai – 400 005. ) Original
Defendants
And
1. Engineering Appliances Corporation, an )
Partnership firm established under the laws )
of India, having its office at Premises No.12B,)
Dr. Rajendra Prasad Sarani(formerly known as)
st
Clive Row), 1 Floor, Kolkata-700 001, )
2/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
West Bengal. )
2. Avdesh Kumar Verma )
Rank – Master )
Residing ATD-704, Royal Classic, )
Link Road, Mulund(West), )
Mumbai – 400 080. )
3. Awadh Kishore Diwakar )
Rank -Master )
Residing At diamond City West, )
18, Hochiiminh Sarani, T-8, )
FL-12H, Bakultala, Kolkata, West )
Bengal, Pin: 700 061. )
4. Abhijit Nair Radhakrishnan, )
Rank – Junior Officer )
Residing at 1-01-98/21, Mayuri Marg, )
Begumpet, Hyderabad, Pin: 500 016. )
5. Balveer Singh Rajawat )
Rank – Wiper )
Residing at 81, Hanuman Bagichi )
Nimera Phagi,Jaipur, Rajasthan, Pin: 303005.)
6. Kavindranath Singh )
Rank – Mechanic )
Residing at Village Samaur Bazar, )
Post – Bihar Bujurg, P.S – Patherwa, )
3/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
Dist – Kushinagar, Uttar Pradesh, )
Pin – 274401. )
7. Indian Oil Corporation )
a company incorporated under the Indian )
Companies Act, 1956 having its office at )
Indian Oil Bhavan, G9, Ali Yavar Marg, )
Bandra(East), Mumbai – 400 051. )… Respondents
Mr. Venkatesh Dhond, Senior Advocate a/w Mr. Bimal Rajasekhar,
Mr. Samarth Jaydev and Ms. Keyna Bhavsar i/b. Mr. Ashwin Shanker
for the Applicant/Plaintiff.
Mr. Siddhanth Chabaria a/w. Mr. Yohaan Shah, Mr. Hasan
Mushabber i/b. Negandhi Shah and Himayatullah for Defendant No.7.
CORAM : GAURI GODSE, J.
th
RESERVED ON : 12 JANUARY 2026
th
PRONOUNCED ON : 8 JUNE 2026
JUDGMENT:
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.
4/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
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
5/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
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
th
alleged maritime lien of IOCL came into existence on 17 October
th
2019; the applicant’s suit is dated 30 January 2020; the order of
st
arrest was passed on 31 January 2020; and the sale of the said
th th
vessel was ordered on 26 May 2020. As IOCL’s suit was filed on 15
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).
6/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
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 Officer, Rajasthan v. Binani Cements Limited
1 .
& Anr
7) Learned senior counsel for the applicant relied upon the Apex
2
Court’s decision in Epoch Enterrepots Vs M. V. Won Fu to support
his submissions. He submitted that the Apex Court held that the
1 (2014) 8 SCC 319
2 (2003) 1 SCC 305
7/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
concept of maritime lien is of limited applicability and every kind of
maritime damage arising in connection with a ship would not give rise
to a maritime lien. Learned senior counsel for the applicant submitted
that a maritime claim would continue, not a maritime lien. A lien must
be enforced within the time limit.
8) Section 52 also finds a place in the new Merchant Shipping Act,
2025, which has received Presidential assent, was published in the
th
Official Gazette on 18 August 2025, and will come into force on a
date to be notified by the Central Government. Section 29 of the
Merchant Shipping Act, 2025 is pari passu with Section 52 of the
1958 Act. Therefore, an Act subsequent to the Admiralty Act has
retained this provision, indicating the legislature's intention to give the
highest priority to a registered mortgage in the event of an Indian ship
owner’s insolvency.
SUBMISSIONS ON BEHALF OF RESPONDENT NO. 7 (IOCL)
9) Section 9(4) provides that no maritime lien shall attach to a
vessel to secure a claim which arises out of or results from damage in
connection with the carriage of oil or other hazardous or noxious
substances by sea. Learned counsel for IOCL relied upon a passage
8/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
from Christopher Hill that “a maritime lien is like a leech stuck to
human skin”. It is thus submitted that, historically and across the
world, in admiralty jurisprudence, it has always been recognised and
held that a 'maritime lien' is a privileged claim, and now the exact
same position has been categorically codified in Section 10 of the
Admiralty Act. While the maritime lien may be extinguished qua the
vessel upon a judicial sale, it is transferred to the sale proceeds of the
said vessel and does not thereby extinguish vis-à-vis the sale
proceeds. Section 9(2) refers only to the vessel and not her sale
proceeds.
10) Once the vessel is sold by a court auction, i.e. a judicial sale,
the maritime lien on the vessel is extinguished qua the vessel only,
thereby barring any action against the vessel which has been
purchased in a court auction by a bonafide purchaser. Thus, the new
purchaser buys the vessel free from all maritime liens and
encumbrances and need not fear a maritime lienholder proceeding to
arrest his vessel after he has purchased it at a court auction. If the
applicant's arguments on interpretation of Section 9(2) are accepted,
it would mean that maritime lien-holders would be rendered
remediless even though statutorily their time limit has not expired to
exercise the maritime lien, merely because another statutorily lower-
9/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
ranking claimant has arrested and sold the vessel in a court
proceeding.
11) If the applicant's argument on interpretation of Section 9(2)
were to be accepted, then Section 10 of the Admiralty Act would
actually be rendered otiose, and the determination of priorities would
actually be decided only on the basis of who causes the sale of the
first arrest in complete and utter derogation of Section 10 of the
Admiralty Act.
12) Without prejudice to the above referred arguments, learned
counsel for IOCL submitted that, a maritime lien does not get
extinguished on the sale of the vessel, as long as the suit for
enforcement of the maritime lien is filed within the statutory time limit
of 1 year for all maritime liens under Section 9(1) (b) to 9(1)(e) and 2
years for crew members under Section 9(1) (a). The maritime lien
always attaches to the vessel's sale proceeds, as held in O.
3
Konavaloy Vs. Commander, Coast Guard Region . Learned counsel
4
for IOCL also relied upon the extracts from The Optima , Buxton v.
5 6 7
Snee , The Sanko Mineral and The Acrx .
3 2006 (4) SCC 620
4 (1905) 10 Asp. ML.C.147
5 1748 1 Ves. Sen. 154
6 [2015] Vol. 1 LLR 247
7 [1962] Vol. 1 LLR 405
10/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
13) This distinction between a vessel and its sale proceeds is also
brought out in Rule 1087(e)(iv) of the Bombay High Court (OS) Rules,
which provides that any person having a claim against the ship or the
proceeds of sale thereof should file a suit to prove his claim before
the expiration of that period. Thus, while a maritime lien may get
extinguished against the vessel on its sale through a court auction, it
gets transferred to the sale proceeds, and the maritime lien-holder
can well proceed against its sale proceeds provided he files his suit
within 1 year in the case of maritime liens under Section 9(1)(b) to (e)
or within 2 years in the case of crew members under Section 9(1)(a).
Section 9(2) of the Admiralty Act ought to be read with and in the
context of Section 8 thereof, which provides for the vesting of rights
on sale of vessels in exercise of its admiralty jurisdiction, on the
vessel in the purchaser free from all encumbrances, liens,
attachments, registered mortgages and charges of the same nature
on the vessel.
14) The applicant's interpretation of Section 52 of the 1958 Act, is
entirely out of context and incorrect, as the Admiralty Act, was
enacted by the Parliament in the year 2017 to consolidate the laws
relating to admiralty jurisdiction, legal proceedings in connection with
vessels, their arrest, detention, sale and other matters connected
11/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
therewith or incidental thereto. The Admiralty Act was enacted by the
Parliament after almost two-and-a-half decades of the judgment of
the Hon'ble Apex Court in M. V Elisabeth and Ors. Vs Harwan
8
Investment And Trading Pvt Ltd . in which judgment the Hon'ble Apex
Court expressed an urgent need for codification, clarification and
consolidation of admiralty laws in India. Section 10 of the Admiralty
Act specifically provides for and deals with 'priority of claims', inter se
priority of claims, and inter se priority of maritime liens. One of the
objects of the Admiralty Act is categorically stated in its 'Statement of
Objects and Reasons', to provide for inter se priorities of maritime
claims, and it states that "The Bill also deals with admiralty jurisdiction
in personam and the order of priority of maritime claims. "
15) Therefore, it is wholly incorrect to suggest that Section 10 of the
Admiralty Act is a general provision and Section 52 of the Merchant
Shipping Act is a specific provision, as it would completely render
Section 10 of the Admiralty Act otiose. The Admiralty Act is a
subsequent statute, whereas the Merchant Shipping Act is a prior
Act. The Admiralty Act specifically provides for inter se priorities of
maritime claims. Section 52 of the Merchant Shipping Act is not a
provision that deals with the priority of maritime claims. The only
8 AIR 1993 SC 1014
12/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
provision in Indian law intended to determine the priorities of maritime
claims is under the Admiralty Act, and Section 52 of the Merchant
Shipping Act provides no mechanism to determine priorities amongst
maritime claims. Therefore, Section 10 of the Admiralty Act would
prevail over Section 52 of the Merchant Shipping Act. Learned
counsel for IOCL relied upon paragraph 83 of the judgment in M V
Elisabeth . He also relied upon Rule 1087(c) of the OS Rules, which
provides for the order of priorities in accordance with the provisions of
Sections 9 and 10 of the Admiralty Act.
16) Therefore, the determination of priorities is governed by the
Admiralty Act. Learned counsel for IOCL relied upon the decision of
9
this Court in Raj Shipping Agencies v. Barge Madhwa & Anr to justify
that the maritime lien attaches to the sale proceeds of the subject
vessel if the vessel has been judicially sold.
17) IOCL's Admiralty Suit against the sale proceeds of the said
Vessel is not to secure a claim which either arises out of, or results
from, damage in connection with the carriage of oil by sea. IOCL's
claim arises out of an incident in which, during the course of
9 2020 SCC Online Bom 651
13/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
discharge of the petroleum cargo, the said Vessel, for the purpose of
discharging cargo, was dragged and sheared at the flange.
18) Learned counsel also relied upon the International Convention
on Maritime Liens and Mortgages, 1993 to support his submissions
that the rationale in Section 9(4) for exclusion of maritime liens arising
out of damage in connection with the carriage of oil is that such
claims are instead channelled through dedicated treaties such as the
1969/1992 International Convention on Civil Liability for Oil Pollution
Damage (CLC), which mandate owners of oil-tankers to maintain
insurance up to certain specified limits, and for handling of claims via
a dedicated fund, which has no relation in the present case of IOCL.
The suit filed by IOCL is still pending, and thus, in view of Rule 1087
of the OS Rules, the prayers in the present application are premature
and cannot be decided until the decision in IOCL’s suit is decided.
CONSIDERATION OF THE SUBMISSIONS AND ANALYSIS :
19) In Raj Shipping Agencies , this court considered whether leave
under Section 446 of the Companies Act was required before
proceeding further in the suits seeking claims against the vessel and
its owner. Admiralty Suits were filed, and Orders of Arrest were
passed in most of the suits. Company Petitions against the owner of
14/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
Vessels were admitted, and winding up was initiated. However,
according to the learned senior counsel for the applicant, IOCL's
reliance upon the decision in Raj Shipping Agencies, the said
judgment is misplaced as the above judgment does not specifically
deal with Section 9 (2) of the Admiralty Act or discuss this issue as
part of its ratio.
20) The question of whether there is a conflict between actions in
rem filed under the Admiralty Act and the provisions of the IBC was
also decided in the said judgment. This court referred to the legal
principles settled in M.V. Elisabeth and held that, for the purpose of
an action in rem under the Admiralty Act, the ship is treated as a
separate juridical personality, with an almost corporate capacity,
having not only rights but also liabilities, sometimes distinct from
those of the owner. It is further held that the action in rem is an
action against the ship itself and the action is a remedy against the
corpus of the offending ship. This court discussed the maritime claim,
also known as a statutory right in rem. A closed list of maritime claims
is set out in Section 4 of the Admiralty Act. It is thus held as under:
“42. In order of priority, maritime claims (excluding maritime lien
and mortgages) fall in the category of “All Other
15/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
Claims” appearing in Section 10 (1)(c) and rank below maritime
liens and also below mortgages. Thus a financial creditor who
has a registered mortgage on the ship would recover in priority
over all parties who have maritime claims but not maritime
liens. A vast majority of the claims are maritime claims (18 out
of 23) which are listed in Section 4 of the Admiralty Act and
which will rank below a mortgagee. Only those who have a
maritime lien get priority over a registered mortgage. The
reason why a maritime lien holder is given priority over a
registered mortgage is to accord highest priority to crew wages
and thereafter to claims involving loss of life or personal injury
in connection with the operation of a ship and to Salvors but for
whose efforts the ship would have been irretrievably lost or
damaged thus destroying the security of a mortgagee. After
these, rank statutory dues of a port, canal and other statutory
dues related to the vessel and claims based on tort if the ship
causes physical damage to another ship or property because
the ship is considered to be the wrong doer. We need to
highlight that even port dues are given priority only after crew
wages and salvage claims are paid. ”
emphasis applied by me
16/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
21) In O. Konavalov, the issue concerned the claim for wages
arising from the sale of the ship. It was held that the Merchant
Shipping Act has laid down exhaustive provisions for seamen's
wages and the Act itself recognises that recovery of wages shall not
be subject to attachment and thus held that all the seamen who were
on board the vessel were entitled to their full wages and perks. It was
held that the most unique concept of all in admiralty law is the
maritime lien and 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. It is held in paragraph
23 as under:
“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.”
17/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
22) In Epoch Enterrepots , the Apex Court dealt with the attributes
of maritime lien to exist in the event of damage done by a ship,
salvage, seamen's and master's wages, master's disbursements and
bottomry. It is held that in the event a maritime lien exists in the
aforesaid five circumstances, a right in rem is said to exist; otherwise,
a right in personam exists for any claim that may arise out of a
contract.
23) In light of the legal principles, as discussed in the above
paragraphs, I have considered the rival submissions of the parties. In
view of the rival submissions made on behalf of both parties, the
questions to be decided in this application are twofold. Firstly,
whether the priorities of the claims against the said Vessel or its sale
proceeds has extinguished and can be determined in this application
at this stage before the decision in IOCL’s suit and secondly, whether
the applicant can claim priority higher than the claim of IOCL for
seeking release of the balance amount of sale proceeds, for
enforcing the decree in favour of the applicant.
24) In the present case, the applicant claims priority in view of the
decree in favour of the applicant on the ground of registered
mortgage. Therefore, relies upon the Merchant Shipping Act. The
18/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
scope of the Merchant Shipping Act is regulatory and covers the
regulation of ships, seamen, shipping administration, and connected
maritime functions, matters concerning seafarers, shipping
governance, that is, powers and functions of shipping, authorities,
safety, navigation, and related concerns. The said Act is not restricted
to maritime claims and liens and does not govern the priorities. The
rights under a mortgage are governed by Section 51 of the Merchant
Shipping Act. Therefore, the right under a registered mortgage can be
realised or enforced to recover the amount due under the mortgage
by selling the ship even without coming to the High Court under the
admiralty jurisdiction. Section 52 provides that a registered mortgage
of the ship would not be affected by the mortgagor's insolvency. In
such a situation, the claim would be governed under the Transfer of
Property Act. Therefore, a claim of a registered mortgage is not
restricted to the admiralty jurisdiction and would not extinguish, even
in the absence of arrest and sale of the vessel.
25) The Admiralty Act is a statute governing maritime claims and
defines maritime claims and liens, and it also governs the procedure
to enforce them by arrest of a vessel and its sale. The priorities of the
claims and liens are also defined under the said Act. Thus, the
Merchant Shipping Act provides for shipping rights and remedies and
19/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
is not equivalent to the Admiralty Act. Therefore, it cannot be said that
the Merchant Shipping Act is a special statute and therefore would
prevail over the Admiralty Act. I do not find any substance in the
arguments raised on behalf of the applicant that the provisions of the
Merchant Shipping Act would prevail over the Admiralty Act, and
therefore only the applicant would have priority on the sale proceeds
on the ground that it is a decree holder on the ground of registered
mortgage. Hence, the legal principles settled in the case of the
Commercial Tax Officer would not assist the arguments raised on
behalf of the applicant.
26) “Maritime Claim” is defined under Section 2(f) of the
Admiralty Act to mean a claim referred to in Section 4. A “Maritime
Lien” means a maritime claim against the owner, demise charterer,
manager or operator of the vessel referred to in clauses (a) to (e) of
sub-section (1) of Section 9, which shall continue to exist under sub-
section (2) of that section. The admiralty jurisdiction and maritime
claims under the Admiralty Act are prescribed in Chapter II. Section 4,
which deals with maritime claims. The claim for loss or damage
caused by the operation of a vessel is covered under section 4(d).
Section 9 of the Admiralty Act governs the inter se priority on
Maritime Liens. Amongst the maritime liens, the claims based on tort
20/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
arising out of loss or damage caused by the operation of the vessel,
other than loss or damage to cargo and containers carried on the
vessel, are provided under clause (e) of sub-section (1) of Section 9.
27) The order of priority of maritime claims is provided under
Section 10 of the Admiralty Act. A registered mortgage and charges
of the same nature on the vessel are second in the rank of maritime
claims. A claim on the vessel where there is a maritime lien is first in
rank in the order of priorities, provided under Section 10 of the
Admiralty Act. IOCL has a claim for physical damage allegedly
th
caused by the said Vessel to its jetty in Kandla on 17 October 2019
during oil discharge. According to IOCL, such a claim constitutes a
maritime lien and, therefore, by virtue of being a maritime lien and by
reason of the provisions of Section 10 of the Admiralty Act, the claim
of IOCL has priority over the applicant’s claim.
28) Therefore, if IOCL’s claim is accepted as a maritime lien, it will
be higher than the applicant’s maritime claim. IOCL’s claim is on the
grounds of the loss that occurred due to the damage caused by the
vessel to the jetty. A jetty damage is not categorised, but it would be
a loss by operation of the vessel if it is proved in the IOCL’s suit that
the damage caused to the jetty is by operation of the said Vessel.
21/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
Therefore, once a jetty damage is considered to be covered within
Section 4(d), it would be covered under Section 9(1)(e) as a maritime
lien. Therefore, if IOCL succeeds in its suit to prove that the loss is
caused to its jetty by the operation of the said Vessel, its claim would
be treated as a maritime lien, resulting in it being above the
applicant’s claim on the ground of registered mortgage. The issue of
whether the loss is caused to the jetty by the operation of the said
vessel is yet to be decided in the IOCL’s pending suit.
29) Learned counsel for IOCL has rightly relied upon the
th
observations of this Court in the order dated 10 January 2023
passed in a separate Interim Application (L) No. 16401 of 2022 filed
by the applicant for determination of priorities. I have perused the
said order. The relevant paragraphs 8 and 10 of the said order read
as under:
“8. Evidently, there are claimants who have lodged claims
against the sale proceeds of Defendant No. 1 Vessel. Thus, at
this stage, without delving into the question sought to be raised
in the Application, it would be in the fitness of things to
determine the priorities amongst all the claimants as the claims
have already been invited in accordance with Rules 1087 and
22/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
1088 of the Bombay High Court (Original Sides) Rules, 1980.
All the questions, including the question as to whether the
Applicant is entitled to priority over all the creditors of Defendant
No.2 in view of the provisions contained in Section 52 of the
Merchant Shipping Act, 1958 can be legitimately considered at
the time of determination of priorities amongst all the claimants.
9. Keeping open all the contentions, including the aforesaid
question, the Application stands disposed.”
30) Thereafter, the applicant’s intervention in IOCL’s suit was
th
allowed by order dated 24 January 2023, passed in Interim
Application No. 969 of 2022, in COMAS No. 35 of 2021. I have
perused the said order. The applicant is permitted to file a written
statement to raise defences restricted to the extent of demonstrating
that IOCL is not entitled to a decree in excess of the genuine and
sustainable claim and raise only those defences which are
appropriate to its character as the competing maritime lien
holder/claimant.
31) Therefore, there is substance in the arguments made on behalf
of IOCL that it would be premature to decide the controversy of
23/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
priority between the applicant and IOCL, and it must be settled after
the result in IOCL’s suit. However, learned senior counsel for the
th
applicant has relied upon the Order dated 26 July 2020, directing
MMD to register the applicant’s charge over the said Vessel and the
th
Order dated 5 May 2021, disposing of the applicant’s suit in terms of
the consent terms and granting the decree on admission in favour of
the applicant. Thus, according to the applicant, in view of the said
orders, the applicant is entitled to the determination of priorities at this
stage and for directions to release the balance sale proceeds to the
applicant.
32) Although the applicant is recognised as having a registered
mortgage on the said Vessel, in view of SBI’s claim also on the
ground of registered mortgage, the inter se priority among them is
decided by consent, and their respective suits are decreed in terms of
the consent terms. However, so far as the decision on the priority
between the applicant and IOCL is concerned, it must await the
decision in IOCL’s suit. It is only in the IOCL’s suit that it will be
decided whether the IOCL’s claim is due to the loss caused by the
operation of the said Vessel or not. It is only if IOCL succeeds in
proving that the loss is caused to the jetty by the operation of the said
Vessel that its maritime claim can be considered as a maritime lien.
24/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
33) Not all maritime claims create a lien, but all liens arise from
maritime claims. Therefore, maritime claims are broader. An order to
arrest a vessel is intended to secure a maritime claim, but it does not
automatically create priority. Therefore, in the present case, the
decision on whether the IOCL’s maritime claim can be considered as
a maritime lien would depend upon the result of IOCL’s suit. Hence,
the decision on priority between the applicant and IOCL must await
the decision in IOCL’s suit.
34) Another argument on behalf of the applicant that, in view of the
time contemplated under Section 9(2), the IOCL’s claim filed after the
end of one year from the date of the claim came into existence will be
extinguished on the order of sale of the said Vessel and shall not
survive against the sale proceeds has no meaning.
35) This Court in Raj Shipping Agencies, held that as the sale
proceeds represent the ship, the action continues in rem against the
sale proceeds and a notice is published inviting claims against the
sale proceeds as per established admiralty rules or procedure. The
relevant extract from the said decision in paragraphs 84 and 85 reads
as under:
25/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
“ 84. Once this fundamental distinction between an action in
rem against a vessel which is a distinct and separate entity
dehors its owner is recognized, it is easy to reconcile the
ostensible conflict between Admiralty and Insolvency. Thus, an
action in rem against the ship is not an action against the owner
of the ship who may be the corporate debtor as defined under
the IBC. Neither is the action in rem considered as a proceeding
against the asset of the owner/corporate debtor. It is a
proceeding against the ship to recover the claim from the ship,
not an action against the owner/corporate debtor to recover the
claim by attachment of the asset of the owner/corporate debtor.
85. Also, to be borne in mind is the principle that an action in
rem continues as an action in rem notwithstanding that the
owner may have entered appearance, if security is not
furnished for release of the vessel. The action will continue in
rem against the ship which will be sold and the sale proceeds
paid out to the successful claimants after determination of
priorities amongst the various maritime claimants. As the sale
proceeds represent the ship, the action continues in rem against
the sale proceeds and a notice is published inviting claims
against the sale proceeds as per established Admiralty rules or
procedure. Thus, whilst the judicial sale by the Admiralty Court
extinguishes all maritime liens and the claims, thus giving a free
and clear title to the purchasers, all those who have maritime
liens and claims can still enforce them by filing an action against
the sale proceeds. “
26/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
36) The wording in Section 9(2) of the Admiralty Act provides that a
maritime lien under sub-section (1) shall continue to exist on the
vessel and would get extinguished after expiry of a period of one year
unless, prior to the expiry of such period, the vessel has been
arrested or seized and such an arrest or seizure has led to a forced
sale by the High Court. In the present case, the cause of action for
th
IOCL is 17 October 2019. Therefore, the period of one year would
th
expire on 16 October 2020. Before the expiry of one year, the sale
th
of the vessel was ordered on 26 May 2020, and the suit was filed on
th
15 September 2020 against the sale proceeds. Therefore, the
IOCL’s maritime lien would not extinguish in view of sub-section (2) of
Section 9 of the Admiralty Act.
37) The arguments raised on behalf of the applicant by referring to
sub-section (4) of Section 9 of the Admiralty Act would also depend
upon the decision in IOCL’s suit. Sub-section (4) provides that no
maritime lien shall attach to a vessel to secure a claim which arises
out of or results from the damage in connection with the carriage, or
other hazardous or noxious substance by the sea, for which
compensation is payable to the claimants pursuant to any law for the
time being in force. In the present case, IOCL’s claim is based on tort
arising out of loss or damage caused to the jetty by the operation of
27/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
the vessel. Nothing is shown to point out that IOCL’s claim would
amount to a claim resulting from damage in connection with the
carriage of oil for which compensation is payable pursuant to any law.
IOCL’s claim, specifically pleaded in IOCL’s suit to show how the said
Vessel caused damage to the jetty, is still awaiting decision.
38) There are three suits pending raising claims against the said
Vessel and its sale proceeds. The respective plaintiffs in the three
pending suits are made party respondents in this application. IOCL,
which is respondent no. 7, is the only claimant who has filed an
affidavit-in-reply opposing this application. One of the three suits is by
the crew members; however, the applicant consents to pay them the
amounts claimed in their suit from the sale proceeds.
39) In view of the reasons recorded in the above paragraphs, the
applicant’s prayer for holding that the applicant is entitled to the
highest priority and should be paid the balance amount of sale
proceeds cannot be considered at this stage. However, the applicant
would be at liberty to apply for deciding priority and release of the
balance sale proceeds after the decision in the IOCL’s suit or make
such a prayer in IOCL’s suit, inasmuch as the applicant is already
permitted to intervene and file a written statement in the IOCL’s suit.
28/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::
1-IA-516-2024.doc
40) The application is therefore dismissed subject to the aforesaid
liberty.
(GAURI GODSE, J.)
29/29
::: Uploaded on - 08/06/2026 ::: Downloaded on - 08/06/2026 18:59:59 :::