Case: ICICI Ltd Vs. Board of Trustees, Port of Calcutta

unless it was with the express or implied consent of the Dock Authorities. The Bombay High Court held that the Port Trust was bound not to get into a conflict with the Sheriff but to surrender the said vessel to the Sheriff as representative of the Court and to allow him to sell the vessel under the Courts directions. It was held that it was then the duty of the Court to protect the interests of the Port Trust and to put the Port Trust in the same position as if they had sold the vessel under the powers given to them under the Act. It was held that by permitting the sale of the said vessel the Port Trust did not forgo its lien on the vessel or its right to have the sale proceeds applied towards the satisfaction of its dues in priority to all other claims. It was held that the Port Trust, in allowing the sale, had followed a well established admiralty practice which was of immense advantage to all who had claims upon a vessel for it ensured a sale thereof at a fair price, by and under the directions of the Court. 13. The decision of the Bombay High Court was approved by this Court in the case of Board of Trustees, Port of Mumbai v. Indian Oil Corpn. (1998 (4) SCC 302 ) In this case the question was whether by virtue of the statutory rights, under S.64 of the Major Port Trusts Act, the Port Trust had a priority over secured creditors. This Court considered a large number of authorities including the authority of the Bombay High Court (AIR 1988 Bom 329 ) and held as follows: "8. The port authorities have a paramount right to arrest a vessel and detain the same until the amounts due to it in respect of extending the port facilities and services to the vessel are paid. Under sub-s.(2), in case any part of the said rates, charges, penalties or the cost of the distress or arrest or of the keeping of the same remain unpaid for a space of five days next after any such distress or arrest has been made, the Board may cause the vessel so distrained or arrested to be sold. The proceeds of such sale shall satisfy such rates or penalties and costs including the costs of sale remaining unpaid. The surplus, if any, is to be rendered to the master of such vessel on demand.9. The statutory right under S.64 embodies this overriding right of the harbour authority over the vessel for the recovery of its dues. This right stands above the rights of secured and unsecured creditors of a company in winding up -- in the present case, the shipping company which owns the vessel. The harbour authorities allow ships -- national or foreign to anchor and avail of the services provided by them. For payment they look to the vessel. The owner may be foreign or even unknown to the harbour authority. The latters right to recover its dues is not affected by any pending proceedings against the owner in any court -- whether in winding up or otherwise. The harbour authority can arrest the vessel while it is anchored in the harbour and recover its dues in respect of that vessel by sale of the vessel if the dues are not paid. This lien of the harbour authority over the vessel is paramount. The lien cannot be extinguished or the vessel sold by any other authority under the directions of the court or otherwise, unless the harbour authority consents to such sale. Thus, in the case of Ashoke Arya v. M.V. "Kapitan Mitsos" (AIR 1988 Bom 329 ) the Bombay High Court relied upon the decision in Emilie Millon, The (1905 (2) KB 817 : 75 LJKB 31 : 93 LT 692) and held that the lien given by statute to a dock or harbour authority cannot be extinguished by the court unless it be done with the authoritys express or implied consent." 14. The Calcutta High Court has based the impugned judgment on this authority. We are in agreement with the view that by virtue of this authority the Port Trust would have priority over the appellants. 15. It was, however, submitted that both, in the case before the Bombay High Court as well as in the abovementioned authority, the right of the Port Trust was upheld because they had already arrested the ship. It was submitted that if the ship had not been arrested and/or if the Port Trust allows the ship to be sold then on the principle laid down in Charger case (1966 (3) All ER 117) the Port Trust would have lost its remedy and rights under S.64. 16. We are unable to accept this submission. On facts of this case it cannot be said that the Port Trust had given up their right under S.64. As has been pointed out hereinabove, the Port Trust had intervened in the admiralty suit in Calcutta and had sought leave to exercise their rights under S.64(2) of the Major Port Trusts Act. This showed that the Port Trust had not given up their rights and were insisting on their rights. They had merely permitted sale and delivery of vessel in pursuance of the established admiralty practice. Merely because they did not enter into a conflict with the Court and surrendered the vessel to the representative of the Court did not mean that they lost their right. It then becomes duty of the Court to protect the interest of the Port Trust and to put it in the same position as if they had sold the vehicle themselves under their powers. 17. We are unable to accept submission that the provisions of the Shipping Development Fund Committee (Abolition) Act, 1986 and/or that S.51 and 52 of the Merchant Shipping Act, 1958 give the claims of the appellant a priority over the claims of the Port Trust.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]14. The Calcutta High Court has based the impugned judgment on this authority. We are in agreement with the view that by virtue of this authority the Port Trust would have priority over thethe present case, the shipping company which owns the vessel. The harbour authorities allow ships -- national or foreign to anchor and avail of the services provided by them. For payment they look to the vessel. The owner may be foreign or even unknown to the harbour authority. The latters right to recover its dues is not affected by any pending proceedings against the owner in any court -- whether in winding up or otherwise. The harbour authority can arrest the vessel while it is anchored in the harbour and recover its dues in respect of that vessel by sale of the vessel if the dues are not paid. This lien of the harbour authority over the vessel is paramount. The lien cannot be extinguished or the vessel sold by any other authority under the directions of the court or otherwise, unless the harbour authority consents to such sale.We are unable to accept this submission. On facts of this case it cannot be said that the Port Trust had given up their right under S.64.We are unable to accept submission that the provisions of the Shipping Development Fund Committee (Abolition) Act, 1986 and/or that S.51 and 52 of the Merchant Shipping Act, 1958 give the claims of the appellant a priority over the claims of the Port Trust.