Maritime liens securing port dues and related services transfer to judicial-sale proceeds.

The Plaintiff, the Board of Mormugao Port Authority, claimed unpaid port-related charges arising from the Vessel M.V. Qing’s stay at Mormugao Port between 9 January 2014 and 6 February 2018. The claim comprised port dues, pilotage and anchorage charges, oil-spill pollution-response services, encroachment charges, equipment-hire charges and manpower-deployment charges. The Vessel grounded and listed at the port on 29–30 June 2016, following which the Plaintiff deployed oil booms, launches and personnel to prevent pollution and protect the port.

The Vessel was arrested in Commercial Admiralty Suit No. 63 of 2016 and subsequently sold by order of the Court for Rs.18.50 crores. The net sale proceeds were deposited with the Prothonotary and Senior Master.

The Plaintiff filed the present suit in rem against the sale proceeds and in personam against Defendant Nos. 2 and 3, respectively the registered owner and bareboat charterer, seeking Rs.11,89,73,403, together with further interest and a personal decree in the event that the sale proceeds were insufficient. Defendant No. 2 filed a written statement but did not lead evidence or appear subsequently; Defendant No. 3 did not defend the suit and was shown as “struck off” in the Ministry of Corporate Affairs records. The Plaintiff’s evidence remained unrebutted because its witness was not cross-examined.

1. Whether the Bombay High Court had jurisdiction to entertain and determine the suit against the sale proceeds of the Vessel and against the owner and bareboat charterer.

2. Whether the plaint disclosed a cause of action against Defendant No. 2 and whether Defendant No. 2 established that it had no liability after allegedly delivering the Vessel to Defendant No. 3.

3. Whether the Plaintiff’s claims constituted maritime claims secured by maritime liens, and whether those liens transferred to the sale proceeds following the judicial sale of the Vessel.

4. Whether the Plaintiff’s claims ranked in priority against other creditors or claimants.

5. Whether the Plaintiff proved its claims for port dues and vessel-related services of Rs.32,32,622; oil-spill response services of Rs.9,58,55,007; encroachment charges of Rs.11,13,569; equipment-hire charges of Rs.4,02,956; manpower charges of Rs.14,269; and damage to port infrastructure of Rs.94,40,000.

6. Whether the Plaintiff was entitled to a decree for the claimed amount with interest.

The Court applied Sections 3, 4(1)(d), (k), (n) and (w), 4(3), 5, 6, 9(1)(d)–(e) and 10(1)(a) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017. These provisions confer admiralty jurisdiction over maritime claims, permit proceedings against the vessel or its sale proceeds, recognise specified maritime liens and determine their priority.

The Court applied the principle that a maritime lien attaches to the vessel when the cause of action arises and follows the vessel through changes of ownership; upon judicial sale free of liens, the lien is represented by and enforceable against the sale proceeds.

The Court also relied on the principle in Manager, Reserve Bank of India, Bangalore v. S. Mani, (2005) 5 SCC 100, that failure of a defendant to prove its defence does not amount to an admission of the plaintiff’s case and does not relieve the plaintiff of its initial burden of proof.

The Court further applied the applicable Mormugao Port scales of rates, tariff notifications and port circulars governing the charges and interest.

The Court held that it had admiralty jurisdiction because the Vessel had been arrested and sold under orders of the Bombay High Court and the sale proceeds, deposited with the Court, represented the res for purposes of claims against the Vessel.

The plaint disclosed a clear cause of action based on the Vessel’s presence at the port, the services rendered, the unpaid charges and the subsequent deposit of the sale proceeds.

Defendant No. 2 failed to prove the alleged bareboat charter arrangements and delivery of the Vessel to Defendant No. 3; in any event, the Plaintiff’s claim covered a period both before and after the alleged delivery.

On the merits, the Court accepted the Plaintiff’s bills, statements, tariff notifications and circulars as proof of five heads of claim.

The oil-spill response claim was supported by evidence of the Vessel’s grounding, the presence of fuel oil, governmental directions and the continuous deployment of oil booms, launches and personnel.

The Court found that the port dues, pilotage, anchorage, pollution-response, encroachment, equipment-hire and manpower claims were maritime claims secured by maritime liens and transferable to the sale proceeds.

However, the claim for Rs.94,40,000 towards damage to the port structure was rejected because it was based only on an estimate and was unsupported by adequate evidence; the Plaintiff also did not press that claim.

The Court consequently reduced the principal claim by Rs.94,40,000 and awarded Rs.10,95,33,403, comprising the proved claims and pre-suit interest, with further interest on the principal amount of Rs.9,28,86,049 at 15% per annum.

The Plaintiff was awarded Rs.10,95,33,403 against the sale proceeds of M.V. Qing, with interest on Rs.9,28,86,049 at 15% per annum from the date of filing of the suit until decree and thereafter until payment or realisation.

If the sale proceeds were unavailable or insufficient, Defendant No. 2 was held liable for the shortfall, together with the applicable interest.

The Plaintiff’s claim was declared secured by a maritime lien, and the Admiralty Registrar was directed to pay the decretal amount and costs from the sale proceeds in accordance with the determined priority.