abs IN THE HIGH COURT OF JUDICATURE AT BOMBAY ADMIRALTY AND VICE ADMIRALTY JURISDICTION NOTICE OF MOTION NO. 1728 OF 2007 IN ADMIRALTY SUIT NO. 13 OF 2007 Bank of Beirut (UK) Ltd. .. Plaintiff V/s m.v. SAN GIORGIO 1 & Ors. .. Defendants Mr. Rahul Narichania i/b Mulla & Mulla, Craigie Blunt & Caroe for the plaintiff. Mr.V. Subramaniam for the proposed intervener. Mr.V.K. Ramabhadran for the Chennai Port Trust. for the defendant. CORAM : D.G. KARNIK, J. DATE : 6TH JUNE 2008 P.C. P.C. P.C. : 1. This motion is taken out by the plaintiff for sale of the defendant no.1 vessel. 2. The plaintiff has filed the suit against the defendant no.1 vessel, its owner, guarantors and manager for recovery of US$ 16,37,080.34 and for a declaration that the plaintiff has a cheque by way of first mortgage on the defendant no.1 vessel. In the suit, the - 2 - plaintiff applied for arrest of the defendant no.1 vessel. By an order dated 22nd March 2007, this Court (Dr.D.Y. Chandrachud, J.) directed arrest of the defendant no.1 vessel. I am informed that the ship has been arrested and presently lying in the Port of Chennai since April 2007. 3. The defendants initially appeared through their advocates. However, the defendants’ advocates have since moved the Prothonotary & Senior Master for discharge and are absent when called. Nobody else has filed appearance for the defendants. The defendants are also absent when called. 4. Counsel for the plaintiff submitted that the defendant no.1 vessel is a dead vessel, it has no power and is incapable of sailing. The owner of the cargo on the vessel has filed a suit bearing Admiralty Suit No.18 of 2007 for recovery of US$ 2 million. Counsel for the owner of the cargo who is present in court stated that he has already taken out separate application for intervention in this matter and supported the prayer of the plaintiff for sale of the defendant no.1 vessel. 5. Counsel for the plaintiff further submitted that the dues of the Chennai Port Trust are in excess of Rs.11 crores. The owner of the vessel is practically - 3 - insolvent and is unable to take care of the vessel. He has not come forward to bail out the vessel. The charges of the Port Trust are mounting and if the vessel is not sold forthwith, the charges would go up further. In the circumstances, the counsel submitted that strong case is made out for sale of the defendant no.1 vessel. 6. When this motion came up before the Court earlier, this Court, prima facie accepting the necessity of sale, by an order dated 29th October 2007 appointed M/s Ericson & Richards as surveyors to give a report regarding true value of the vessel. Accordingly, the report of the surveyor has been received in a sealed envelope. By a further order dated 20th December 2007, this Court (Dr.D.Y. Chandrachud, J.) directed the Sheriff of Bombay to take steps as set out in prayer clauses (c), (d), (e) and (f) of the motion. The said prayers read as follows:- "(c) That the Sheriff of Bombay be directed to do the following: (i) Conduct such sale by public auction in U.S. Dollars currency. (ii) Fix an expeditious date for such public auction. (iii) Establish with Canara Bank, Bombay a separate bank account designated in U.S. Dollar currency in the name of the Sheriff of Bombay, High Court and for such purpose, forthwith apply for approval if required by the Exchange Control Authorities. - 4 - (d) That the Sheriff of Bombay be directed to give Public Notice of the intended sale of the first Defendant vessel by advertisement in the public notice columns of the Indian Express (Bombay Edition) and the Bombay Samachar, Llyods List International prior to the date fixed for the sale. (e) That the Sheriff of Bombay be directed to require the successful bidder/buyer of the first Defendant vessel, at the auction to pay the purchase price by means of a Telegraphic Transfer, a Banker’s draft in favour of the Sheriff of Bombay payable at/into Canara Bank, Bombay, fifteen percent of the amount of his bid in US Dollars, within ninety six hours of the sale and the balance of purchase price within fourteen days of the auction sale and to also fix the reserve bid in U.S. Dollars. (f) That the Plaintiffs abovenamed be authorized to pay and defray the fees of M/s Ericson & Richards for appraisal of the first Defendant vessel m.v "SAN GIORGIO 1", the costs of the said advertisements of sale and all other incidental expenses, fees, charges, costs in the first instance and that the same be treated as Sheriffs costs charges and expenses and the Sheriff of Bombay be directed to reimburse the same to the Plaintiff in full out of the sale proceeds of the first Defendant Vessel as first charge and priority over all other claims of whatsoever kind or nature against the 1st Defendant Vessel or the sale proceeds." This Court, however, directed that sale shall not be confirmed without further directions of the Court. Perusal of the orders dated 29th October 2007 and 20th December 2007 show that prima facie this court has accepted the plaintiff’s contention that the vessel needs to be sold. - 5 - 7. After hearing the counsel for the plaintiff and perusal of the material on record, I am of the view that the vessel needs to be sold even before the decision of the suit. In M.V. Elizabeth v. Harwan Investment & M.V. Elizabeth v. Harwan Investment & M.V. Elizabeth v. Harwan Investment & Trading Pvt. Ltd. - reported in AIR 1993 SC 1014 Trading Pvt. Ltd. - reported in AIR 1993 SC 1014 Trading Pvt. Ltd. - reported in AIR 1993 SC 1014. In para 53 of the said decision, the Supreme Court has observed:- "53. If the ship or cargo under arrest before judgment has not been released by the defendant by putting in sufficient bail, and if the property is found deteriorating, the court has the power to order the sale of the property after notice has been duly issued to the parties interested." The Hon’ble Supreme Court has held that the sale can be ordered if the property is deteriorating. 8. Taking into consideration the fact that the vessel is under arrest since April 2007, and that the defendants have remained absent at the hearing of the motion and have not taken any steps for release of the vessel, the owner of the cargo has also filed a suit for recovery of huge amount and that the dues of the Chennai Port Trust of more than Rs.11 crores and which would go - 6 - on increasing if the vessel is not removed from the premises, I am of the view that the defendant no.1 vessel needs to be sold forthwith. 9. In the circumstances, the motion is allowed in terms of prayers (c), (d), (e) and (f) with a direction to the Sheriff of Bombay to sell the defendant no.1 vessel subject however to confirmation of sale by the Court. The plaintiff shall deposit in the office of Sheriff of Bombay all expenses necessary for the purpose of advertisement and sale of the vessel within two weeks hereof. The net sale proceeds shall be deposited in this Court and shall not be disbursed to the plaintiff until further orders. The plaintiff and the proposed intervener would be at liberty to take out appropriate motions regarding appropriation of sale proceeds at the appropriate stage. (D.G. KARNIK, J.)