- Case
- RAJ TRANSPORT and TRADING COMPANY v. BARGE MADHWA AND ANR (Bombay High Court, 04-04-2025)
- Law
- Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, Code of Civil Procedure, Insolvency and Bankruptcy Code.
Facts: Raj Transport and Trading Company filed an admiralty suit against Barge Madhwa and another, seeking a decree for Rs. 15,04,797/- for necessaries (water and self-propelled barges) supplied to the defendant's vessels. The defendant No. 2, Punj Lloyd Limited, went into liquidation after the suit was filed, and a liquidator was appointed. The plaintiff also lodged a claim with the liquidator. The plaintiff filed an interim application under Order XII Rule 6 of the Code of Civil Procedure, 1908, seeking a judgment on admission based on the defendant's acknowledgment of liability in communications dated 28th August 2014 and 18th November 2014.
Procedural Posture: The case came before the High Court of Judicature at Bombay in its Admiralty and Vice Admiralty Jurisdiction as an Interim Application (L) No. 4027 of 2025 in Admiralty Suit No. 17 of 2015. The liquidator of Defendant No. 2 opposed the application, arguing that the plaintiff had relinquished its security interest by submitting to the liquidation process under the Insolvency and Bankruptcy Code (IBC), 2016, and could not pursue two remedies for the same claim.
Issue: Can the Plaintiff obtain a judgment on admission in an admiralty suit based on the Defendant's admission of liability, despite the Defendant undergoing liquidation under the IBC and the Plaintiff having lodged a claim with the Liquidator? Does Section 53 of the IBC, regarding distribution of assets, override the Admiralty Court's jurisdiction in rem and the priorities established under the Admiralty Act? Does the principle of approbation and reprobation prevent the Plaintiff from pursuing the admiralty suit after participating in the liquidation process?
Holding: Yes, the Plaintiff is entitled to a judgment on admission. The Admiralty Court's jurisdiction in rem and the priorities under the Admiralty Act are not overridden by Section 53 of the IBC. The principle of approbation and reprobation does not apply in this case.
Reasoning: The Court reasoned that an action in rem against a vessel is distinct from an action against the owner/corporate debtor. The ship is liable in its own name, independent of its owner's status. The Court relied on its earlier decision in Raj Shipping Agencies vs. Barge Madhwa and Ors. and Uttam Singh Duggal & Co. Ltd Vs. United Bank of India and Others, holding that once a ship is arrested for a maritime claim, the claimant becomes a secured creditor vis-Ã -vis the vessel. The Court emphasized that Section 53 of the IBC, which governs the distribution of assets in liquidation, does not apply when the ship is sold by the Admiralty Court in its jurisdiction in rem. The Court also rejected the argument of approbation and reprobation, stating that the Plaintiff is making a claim in rem against the vessel, which is distinct from the claim in personam against the owner. The Court found a clear admission of liability by the Defendant No. 2, warranting a decree on admission under Order XII Rule 6 of the CPC. The Court allowed the interim application and decreed the suit in terms of prayer clause (b), awarding costs of litigation to the Plaintiff.
