Bombay High CourtIA/692/2024disposed off

Carnival Plc v. Sale Proceeds Of The Vessel Mv Karnika Imo No. 8521220

2025-03-28Hon'Ble Shri Justice Abhay Ahuja13 pages

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ADMIRALTY AND VICE-ADMIRALTY JURISDICTION by KANCHAN PRASHANT DHURI Date:

2025.04.02 14:32:07 +0530 IN ITS COMMERCIAL DIVISION INTERIM APPLICATION NO. 692 OF 2024 KANCHAN PRASHANT DHURI IN COMMERCIAL ADMIRALTY SUIT NO. 33 OF 2021 Carnival PLC ... Applicant/Plaintiff

Versus

The Sale Proceeds of Vessel M.V. Karnika and others ... Respondents/Defendants ............

Mr. Ajai Fernandes alongwith Ms. N.D. Motiwalla, Ms. Janhavi Kandekar and Ms. Anjali Kotecha instructed by Motiwalla & Co., Advocate for the Plaintiff/Applicant in IA-710-2025. Mr. Prathamesh Kamat alongwith Mr. Joji Jacob instructed by Adil Patel & Associates, Advocate for Defendant No.3 in COMAS-42-2021. Mr. Shubham Agrahari instructed by Mr. Kaushik Krishnaswamy, Advocate for the Defendant No.4 and the Applicant in IA-692-2024. Mr. Prathamesh Kamat alongwith Ms. Arpeeta Panvalkar, Advocate for the Respondent No.3 in IA-692-2024.

Mr. Abhijeet Desai instructed by Mr. Harsh Pratap, Advocate for the Plaintiffs in COMAS-24-2021, COMAS-26-2021 and COMAS-70-2021. ............

CORAM

ABHAY AHUJA, J.

DATE :

28 MARCH 2025 P.C. :

This Interim Application seeks determination of priorities of claims in the matter of M.V. Karnika. The learned Counsel appearing in the matter submit that even pending the other Interim Applications, this Application can be decided by this Court. 2.

Accordingly, this Court proceeds to hear the Interim Application for determination of priorities of claims in the matter of M.V. Karnika.

Kanchan Dhuri 1/13

This Interim Application has been taken out by the Applicants who have obtained a decree as registered mortgagee against the sale proceeds of the vessel M.V. Karnika.

Mr. Agrahari, learned Counsel, appearing for the Applicant submits that this Application has been filed under Rule 1087 of the Bombay High Court (Original Side) Rules, 1980 (High Court Rules) for determination of priorities of claims and payment out of sale proceeds. 5.

Mr. Agrahari however submits at the outset that he is only pressing for prayer clause (a) which pertains to the determination of priorities of claims as per Section 10 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (the Admiralty Act) and not pressing prayer clauses (b) and (c) which pertain to the payment out and remittance and seeks liberty to file an appropriate Application for the same.

The Applicant accordingly seeks the following prayer clause (a), which reads thus :

(a) This Hon'ble Court be pleased to pass appropriate orders determining the order of priority of claims against the proceeds of sale of the said vessel M.V. KARNIKA as per Section 10 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017.

Kanchan Dhuri 2/13

Mr. Agrahari submits that, the Applicant is incorporated under the laws of the United Kingdom in Southampton and is an operator of cruise ships worldwide. The Defendant No.1 are the sale proceeds of the vessel M.V. Karnika which represents the said vessel (which is registered at the Port of Nassau, Bahamas) and are deposited with the Admiralty Registrar/Prothonotary & Senior Master, High Court, Bombay. Defendant No.2 was the owner of the vessel at the relevant time and neither appeared nor contested the proceedings in the Admiralty Suit. Defendant No.3 are the crew members who had served during the relevant period and have filed Commercial Admiralty Suit No.11 of 2021 against the Defendant vessel/sale proceeds for their unpaid wages. Defendant No.

4 are also crew members that served on board of the said vessel during the relevant period and have filed Commercial Admiralty Suit (L) No. 6959 of 2021 against the Defendant-Vessel/sale proceeds for their unpaid wages. Defendant No.5 is the Board of Mumbai Port Authority that has instituted Commercial Admiralty Suit No. 42 of 2021 for unpaid port dues and other similar claims against the Defendant-vessel/sale proceeds. That the Interim Application No.710 of 2025 in the said Suit, pertaining to the amendment of Interim Application seeking Summary Judgment in the said Suit is to be listed on 13th June 2025.

It is observed from the Application that the said vessel was a cruise ship owned by Jalesh Cruises Maritime Ltd. viz. Defendant No. 2 and mortgaged to the Applicant. The vessel was first arrested by an order of this Court dated 17th March, 2020 in Commercial Admiralty Suit (L) No.11 of 2020. By further orders dated 7th October, 2020 and 28th October, 2020, passed by this Court in Commercial Admiralty Suit (L) No.3579 of 2020 the vessel was sold through a judicial sale at the instance of other Claimants in Commercial Admiralty Suit (L) No.3579 of 2020 and the sale proceeds aggregating to USD 11,650,000.00/-, were deposited with the Admiralty Registrar/Prothonotary & Senior Master, High Court, Bombay.

Subsequently, by an order dated 22nd December, 2020 passed in Commercial Admiralty Suit (L) No.4374 of 2020, the Sheriff of Bombay was directed to issue a public notice as contemplated in Rule 1087 and Rule 1088 of the High Court Rules for inviting claims against M.V. Karnika and/or the sale proceeds. The said notice was published on 7th January, 2021 and required persons having a claim against the sale proceeds of the Defendant vessel to file a Suit within 90 days from the date of publication of the said notice and further stated that the order of priorities of claims against the sale proceeds would be determined after the expiry of that period. The said period of 90 days Kanchan Dhuri 4/13

expired on 7th April, 2021.

10.

Pursuant to the aforesaid publication the Suits which are listed at Exhibit F have been filed.

11.

It is submitted that the Applicant being the registered mortgagee of the said vessel had filed Commercial Admiralty Suit No.33 of 2021 for recovery of the outstanding loan amount and interest, which was secured by a registered mortgage of the said vessel and that the Applicant has a maritime claim under Section 4(1)(c) of the Admiralty Act. The Applicant has obtained a judgment and decree dated 13th September, 2022 against the sale proceeds of the vessel in Commercial Admiralty Suit No.33 of 2021 for a sum of USD 12,972,981/- along with interest at the rate of 8% p.a. on the principal amount of USD 12,000,000/- from the date of filing of Suit (1st April 2021) till date of payment and/or realization plus legal costs of Rs.4,00,000/-. The sale proceeds represent the said vessel and the Applicant is therefore entitled to recover its decretal amount from the sale proceeds of the said vessel.

12.

As noted above, the Applicant has obtained a decree against the sale proceeds. The 90 day period for filing claims as per the public notice also expired on 7th April, 2021. Consequently, the Applicant is entitled to file the present application under Rule 1087 of the High Kanchan Dhuri 5/13

Court Rules for the determination of order of priorities of claims against the sale proceeds of the said vessel and for payment of the amounts due to the Applicant as per the judgment/decree dated 13th September, 2022 in Commercial Admiralty Suit No.33 of 2022, from the sale proceeds of the said vessel.

13.

Rule 1087(c) of the High Court Rules states that the order of priorities of claims shall be in accordance with the provisions of Sections 9 and 10 of the Admiralty Act. Section 10 of the Admiralty Act, which is relevant for the present application, is reproduced below : "Section 10 : "Order of priority of maritime claims" - (1) The order of maritime claims determining the inter se priority in an admiralty proceeding shall be as follows :- (a) a claim on the vessel where there is a maritime lien;

(b) registered mortgages and charges of same nature on the vessel;

(2) The following principles shall apply in determining the priority of claims inter se- (a) if there are more claims than one in any single category of priority, they shall rank equally; (b) claims for various salvages shall rank in inverse order of time when the claims thereto accrue."

14.

The Applicant's claim is in respect of a registered mortgage on the vessel. The claim falls under Section 10(b) of the Admiralty Act in Kanchan Dhuri 6/13

terms of priority and ranks below claims which are in the nature of the Maritime lien but above all other Maritime claims. 15.

The learned Counsel appearing in the matter have referred to Exhibit F which contains the list of Suits filed against the sale proceeds of the vessel M.V. Karnika alongwith the nature of claim as set out below :

Sr.

No.

Commercial Plaintiff Principal Claim Amount Nature of Claim u/s Section 10 Maritime Claim Admiralty u/s Section 4 Suit No.

(USD/INR) 1.

Irwin Edmund Sequera and 43 USD 341552.82 Sec 10 (a) Sec. 4(1)(o) Maritime Crew wages Others Lien

2. (L) 6959 of Vijay Prajwal D'souza and 45 INR 29,81,081 Sec 10 (a) Sec. 4(1)(o) Maritime Crew wages Others Lien 3.

The Board of Mumbai Port INR 53,18,24,380.

Sec 10 (a) Sec. 4(1)(n) Maritime Port Dues Authority Lien 4.

Carnival PLC USD 12972981 Sec 10 (b) Registered Sec. 4(1)(c) Mortgage on mortgage the vessel the vessel 5.

Monjassa DMC USD 912414 Sec 10 (c) Sec. 4(1)(l) Bunker supplies Other Maritime Claims 6.

Glander Bunkering USD 2213230 Sec 10 (c) Sec. 4(1)(l) Bunker supplies Other Maritime Claims 7.

ISS Shipping India Private USD 7439690 Sec 10 (c) Sec. 4(1)(t) Agency Services Other Maritime Limited and expenses Claims Kanchan Dhuri 7/13

ISS Shipping Service Dubai USD 1106555 Sec 10 (c) Sec. 4(1) Other Maritime LLC Claims 9.

SA Cruise USD 10,929,470.59 Sec 10 (c) Sec. 4(1) & (p) Services Other Maritime Necessaries & disbursements Claims

10. (L) 5213 of M/s. Campbell Cruise & Yatch Management Ltd.

USD 75800 Sec 10 (c) Sec. 4(1) Technical management Other Maritime Claims services

11. 25 of 2022 Inchcape Shipping Services USD 205901 Sec 10 (c) Sec. 4(1)(t) Agency Services Other Maritime Claims

12. 33 of 2022 Inchcape Shipping Services USD 214,374 Sec 10 (c) Sec. 4(1)(t) Agency Services Other Maritime Dubai LLC Claims

13. 26 of 2021 Integr8 Fuels Inc.

USD 532,965.07 Sec 10 (c) Sec. 4(1)(t) Bunker Supply Other Maritime Claims

14. 24 of 2021 Integr8 Fuels India Pvt. Ltd.

Rs.

3,86,56,597.69 Sec 10 (c) Sec. 4(1)(t) Bunker Supply Other Maritime Claims

15. 20 of 2022 NXS Oil Trading USD 985888.21 Sec 10 (c) Sec. 4(1)(t) FZE Other Maritime Supply of Bunkers Claims

16. 23 of 2022 Apollo Exports USD 3797250 Sec 10 (c) Sec. 4(1) (l) Warehouse INC Other Maritime Necessaries Claims Kanchan Dhuri 8/13

17. 58 of 2021 Aeromarine Private Limited INR 623, 869 Sec 10 (c) Sec. 4(1)(l) Other Maritime Necessaries Claims

18. 45 of 2021 Kenmark Tech INR 13,75,581 Sec 10 (c) Sec. 4(1)(l) & Solutions Other Maritime (m) Necessaries and Claims ship repair

19. 27 of 2021 Sembcorp Marine USD 1425921.93 Sec 10 (c) Sec. 4(1)(m) Repairs and Upgrades Pte.

Other Maritime Ship repair services Ltd.

Claims

20. 26 of 2022 American Steamship Owners Mutual USD 71909.98 Sec 10 (c) Sec. 4(1)(s) Outstanding Other Maritime Insurance Protection & Claims Premium Indemnity

21. 70 of 2021 Spark Experience USD 2,278,648.58 Sec 10 (c) Sec. 4(1)(l) LLC Other Maritime Services to vessel Claims 16.

Mr. Agrahari submits that there are no other claims/suits filed nor any other claims have been received pursuant to the notice that has been published by the Office of the Sheriff on 7th January 2021 under Rules 1087 and 1088 of the High Court Rules.

17.

From the provisions reproduced above, the order of priority in respect of all existing claims against the vessel and/or its sale proceeds would be as follows :

a) Crew claims forming the subject matter of Kanchan Dhuri 9/13

Commercial Admiralty Suit No.11 of 2021 and Commercial Admiralty Suit (L) No. 6959 of 2021 - 1st priority.

b) Claims of Mumbai Port in relation to its Port dues in respect of the said vessel forming subject matter of Commercial Admiralty Suit No. 42 of 2021 - 2nd priority. c) Plaintiff's claim as per judgment and decree dated 13 September 2022 in Commercial Admiralty Suit No.33 of 2021 - 3rd priority.

d) All other maritime claims - last priority and pari passu inter se.

18.

Having heard the learned Counsel and having considered the aforesaid elucidation on determination of priorities in respect of the claims and nature of claims set as set out above, the priorities in respect of the said claims are determined as under :

Sr No.

Commercial Plaintiff Principal Claim Nature of Claim u/s Section 10 Maritime Claim u/s Order of priorities Admiralty Amount (USD/INR) of the Claim 1.

11 of 2021 Irwin Edmund Suit No.

Section 4 USD 341552.82 Sec.10(a) Sec.4(1)(o) Crew wages Sequera and Maritime 43 Others Lien 1st 2.

(L) 6959 of Vijay Prajwal INR 29,81,081 Sec.10(a) Sec.4(1)(o) Crew wages D'souza and Maritime 45 Others Lien 3.

The Board of Mumbai Port INR 53,18,24,380.82 Sec.10(a) Sec.4(1)(n) 2nd Maritime Port Dues Authority Lien Kanchan Dhuri 10/13

Carnival PLC USD 12972981 Sec.10(b) Sec.4(1)(c) Mortgage on 3rd Registered mortgage on the vessel the vessel 5.

24 of 2021 Monjassa DMC USD 912414 Sec.10(c) Sec.4(1)(l) Other Maritime Bunker supplies Claims 6.

Glander Bunkering USD 2213230 Sec.10(c) Sec.4(1)(l) Other Maritime Bunker supplies Claims 7.

ISS Shipping India Private USD 7439690 Sec.10(c) Sec.4(1)(t) Other Maritime Agency Services and Limited Claims expenses 8.

ISS Shipping Service Dubai USD 1106555 Sec.10(c) Sec.4(1) Other Maritime LLC Last Claims or 4th 9.

SA Cruise USD 10,929,470.59 Sec.10(c) Sec.4(1) & Services Other Maritime (p) Necessaries & disburseClaims ments

10. (L) 5213 of M/s. Campbell Cruise & Yatch USD 75800 Sec.10(c) Sec.4(1) Technical Other Maritime Management manageLtd.

Claims ment services

11. 25 of 2022 Inchcape Shipping USD 205901 Sec.10(c) Sec.4(1)(t) Other Maritime Agency Services Services Claims

12. 33 of 2022 Inchcape Shipping Services Dubai USD 214,374 Sec.10(c) Sec.4(1)(t) Other Maritime Agency Services LLC Claims Kanchan Dhuri 11/13

13. 26 of 2021 Integr8 Fuels USD 532,965.07 Sec.10(c) Sec.4(1)(t) Inc.

Other Maritime Bunker Supply Claims

14. 24 of 2021 Integr8 Fuels India Pvt. Ltd.

Rs.

3,86,56,597.69 Sec.10(c) Sec.4(1)(t) Other Maritime Bunker Supply Claims

15. 20 of 2022 NXS Oil Trading FZE USD 985888.21 Sec.10(c) Sec.4(1)(t) Other Maritime Supply of Bunkers Claims

16. 23 of 2022 Apollo Exports USD 3797250 Sec.10(c) Sec.4(1)(l) Necessaries Warehouse Other Maritime INC Claims

17. 58 of 2021 Aeromarine INR 623, 869 Sec.10(c) Sec.4(1)(l) Necessaries Last Private Limited Other Maritime or 4th Lien

18. 45 of 2021 Kenmark Tech INR 13,75,581 Sec.10(c) Sec.4(1)(l) Solutions Other Maritime & (m) Necessaries Claims and ship repair

19. 27 of 2021 Sembcorp USD 1425921.93 Sec.10(c) Sec.4(1)(m) Marine Repairs and Upgrades Pte.

Other Maritime Ship repair services Claims Ltd.

20. 26 of 2022 American Steamship USD 71909.98 Sec.10(c) Sec.4(1)(s) Outstanding Other Maritime Owners Insurance Mutual Protection & Claims Premium Indemnity

21. 70 of 2021 Spark Experience USD 2,278,648.58 Sec.10(c) Sec.4(1)(l) Other Maritime Services to LLC vessel Claims Kanchan Dhuri 12/13

19.

Mr. Desai, learned Counsel, appearing for the Plaintiff in Commercial Admiralty Suit No. 24 of 2021, Commercial Admiralty Suit No. 26 of 2021 and Commercial Admiralty Suit No. 70 of 2021, has no objection if the priorities are determined in the aforesaid manner. 20.

Accordingly, the two claims above which have been ranked as 1st will take first equally from the sale proceeds lying in this Court and thereafter, the claims from the remaining amounts ranked 2nd will take, after which the claim ranked 3rd will take and thereafter, the claim ranked last or 4th will take from the balance remaining, subject of course to the pending Suits being decreed, it is being clarified that payment out on the basis of the aforesaid priorities will be subject to the amounts decreed in the Suit(s).

21.

The Interim Application accordingly stands allowed and disposed in terms of prayer clause (a).

22.

The priorities having been decided, the Applicant is at liberty to take out an appropriate Application for payment out. (ABHAY AHUJA, J.) Kanchan Dhuri 13/13