IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:
18. 9.2013 CORAM THE HON'BLE MR.JUSTICE R.SUDHAKAR Application No.3541, 2999, 2436, 1874, 2438, and 2201 to 2204 of 2013 in C.S.No.222 of 2013 P-1 DEMYANENKO, VOLODYMYR . P-2 JUANILLO, PABLO S . P-3 NIM, ILDEFONSO P. JR . P-4 COMETA JAIME P . P-5 GALUPINO, ROQUE B . P-6 SUJIDE, MOREL C. . P-7 SUJIDE, MOREL C. . P-8 AMAGUIN, ALFONSITO E . P-9 MANSYUR L.A. WANDAN . P-10 BELOSO, NESTOR M . P-11 CENITA, ROBERTO O. JR . P-12 LAMOSOA, FAUSTINO G . P-13 LIMOSO, ALBERT L . P-14 ISLETA, EDWARD NELL I . P-15 RASIM, CHINT . P-16 PARBO, CHESTER LLYOD B . P-17 C
ORDERO , PEDRO T . P-18 QUITAYEN, LEOPOLDO C. JR . P-19 BENNY, FIRMANSYAH . P-20 ALIPIO, JEOFREP . P-21 DARYONO TAJO . P-22 MR. ABDEL RAHMAN ATTIA . P-23 MR MOHAMED KHEIR KHALED SHAAB . P-24 NEREDIMELLI, SAIBABA LAKSHMANA RAO P-25 AKULA, RAKESH . P-26 YADAV, BIPIN KUMAR . P-27 KUMAR, ASHISH ALL PRESENTLY ON BOARD THE VESSEL M.T. CHEMICAL ARROW REP BY THEIR POWER AGENT MR M KRISHNA SREEDHAR VS R-1 K. SHAJAHAN PROPRIETOR M/S. SABAH SHIP SUPPLIERS13KUTTY MAISTRY ST SEVEN WELLS CHENNAI R-2 OWNERS AND PARTIES INTERESTED IN THE VESSEL M.T. CHEMICAL ARROW
ORDERThe crew, 27 in all, filed A.No.3541 of 2013 under Order XIV Rule 8 and Order XLII Rule 38 of the Original Side Rules to direct the Advocate Commissioner to pay the wages of the crew as per Annexure 'A' and Annexure 'B' aggregating to USD479,346.48 equivalent to INR287,60,788.80 (excluding compensation) out of the sale proceeds on obtaining suitable permission from the Reserve Bank of India for payment in Foreign Exchange and also for obtaining Air Tickets for the repatriation of the crew. CLAIM OF PLAINTIFF K.SHAJAHAN FOR SHIP CHANDLER SERVICES REP. BY MR.T.S.BASKAR, LEARNED COUNSEL2 The plaintiff in this case is a Ship Chandler and it has filed the suit for recovery of money amounting to Rs.54,65,190.50, towards the cost of the goods supplied to the Vessel M.T.Chemical Arrow (for brevity, ".the Vessel".). The Vessel was carrying cargo of Caustic Soda Lye and was stranded in the Port of Kakinada. One of the main reasons for the Vessel being stranded in the Kakinada Port was that the engine of the Vessel developed serious problems. The plaintiff moved A.No.1597 of 2013 for arrest of the Vessel and this Court, by order dated 4.4.2013, ordered arrest of the Vessel. CLAIM OF CREW (27 IN ALL) FOR WAGES REP. BY MR.S.VASUDEVAN, LEARNED COUNSEL (Applicant in A.Nos.1874, 2436 and 3541 of 2013) 3.1. On 15.4.2013, the present applicants, namely Demyanenko Volodymyr, who is the Captain of the Vessel, and 20 others, filed A.Nos.1812 and 1813 of 2013 seeking intervention and arrest of the Vessel respectively. By order dated 15.4.2013, A.No.1812 of 2013 seeking intervention was allowed and the order of arrest was extended to A.No.1813 of 2013. In the meantime, since the Vessel had developed serious snag and its power generating capacity was affected, the crew filed A.No.1814 of 2013 seeking a direction not to disconnect the power supply to the Vessel. By order dated 16.4.2013, the Court ordered that the power supply to the Vessel should not be disconnected. 3.2. The crew also filed A.No.1874 of 2013 to declare and determine the amount due and payable to them at USD43564.64 (US Dollar Four Hundred and Thirty Five Thousand Six Hundred and Forty Three and Cents Sixty Four only) calculated up to 10.4.2013 and to direct the owners of the Vessel to pay the future wages till the date of their actual signing off from the defendant Vessel as per their respective contracts of employment together with their repatriation costs to their respective home towns. The said application is pending consideration. 3.3. The crew of the Vessel filed A.No.2170 of 2013 for sale of the Vessel and since the defendant/Owners of the Vessel did not object to the same, the Court, on 9.5.2013, invited sealed tenders for the sale of the Vessel. 3.4. In the meanwhile, some of the crew left the Vessel and A.No.2434 of 2013 was moved by the replaced crew, six in all, to intervene and that was ordered on 18.6.2013 and the order of arrest was extended to these applicants by order dated 18.6.2013 in A.No.2435 of 2013. These six crew filed A.No.2436 of 2013 to declare and determine the amount due and payable to them at USD9097665 (US Dollars Ninety Thousand Nine Hundred and Seventy Six and Cents Sixty Five only) calculated up to 31.5.2013 and to direct the owners of the Vessel to pay the future wages till the date of their actual signing off together with their repatriation costs to their respective home towns. CLAIM OF DCW LIMITED FOR BREACH OF CONTRACT BY OWNERS OF THE VESSEL REP. BY MR.S.VASUDEVAN, LEARNED COUNSEL (Applicant in A.No.2438 of 2013) 4.1. The Vessel was carrying cargo, which is perishable in nature, and at the behest of M/s.Dharangadhara Chemical Works Limited (DCW Limited), the owner of the goods, discharge of the cargo was ordered on 22.4.2013 in Application No.1873 of 2013, after their application in A.No.1872 of 2013 for intervention was allowed on 17.4.2013. The said DCW Limited have made a plea for arrest of the Vessel in A.No.2437 of 2013, which was ordered on 18.6.2013. They have also filed an application in A.No.2438 of 2013 to declare and determine the amount payable to them at US$ 3,62,300/- equivalent to INR201,20,747/-, which is pending consideration. 4.2. The sum and substance of the claim made in A.No.2438 of 2013 is that DCW Limited has entered into a charter party agreement with the Owners of the Vessel for transfer of cargo from Tuticorin to Visakhapatnam, but since the Vessel got stranded near Kakinada, the cargo could not be discharged at Visakhapatnam. Therefore, based on the orders passed by this Court, arrangements were made by them to transfer the cargo to another vessel for unloading it at the Port of Visakhapatnam, thereby incurring additional costs and that is now claimed. CLAIM OF SEATRAFFIC SUPPLIER FOR SUPPLY OF NECESSARIES51. On 30.4.2013, the crew filed a memo seeking a direction to maintain the Vessel and the crew, which was permitted, by order dated 30.4.2013 in C.S.No.222 of 2013. It is on record that M/s.Seatraffic supplied the necessaries to maintain the Vessel and the crew on and from 1.5.2013. Since the essentials got supplied, the Port authorities disconnected the power supply from 7.5.2013. 5.2. The supplies made by M/s.Seatraffic has been necessitated due to order of the Court consequent to arrest of the Vessel and, by order dated 23.8.2013, this Court directed the Advocate Commissioner to pay the amount of Rs.36,07,925/- (Rupees Thirty Six Lakhs Seven Thousand Nine Hundred and Twenty Five only) to M/s.Seatraffic in terms of Article 12(2) of the International Convention of Maritime Liens and Mortgages, 1993, which will be dealt with in the later part of the judgment. CLAIM OF SEMBMARINE KAKINADA LIMITED SHIP REPAIRER, REP. BY Mr.A.K.MYLSAMY, LEARNED COUNSEL (Applicant in A.Nos.2201 to 2204 of 2013) 6.1. In the meantime, M/s.Sembmarine Kakinada Limited, Kakinada, who claims to be the repairer of the engines and other spares removed from the Vessel, sought intervention and the same was ordered on 5.6.2013 in A.No.2199 of 2013. The order of arrest of the Vessel was extended to the said party in A.No.2200 of 2013 vide order dated 28.6.2013. 6.2. They also filed A.No.2201 of 2013 to declare and determine the amount due and payable to them towards the services/provisions rendered by them to the Vessel at USD474,286.75 (US Dollars Four Lakh Seventy Four Thousand Two Hundred and Eighty Six and Cents Seventy Five only), which in INR amounts to Rs.2,61,00,000/-. They claim under four heads as under: Sl.No.Description Value in US@ $ /INR Amounts in INR (at INR55Dollar) 1 Core Repairs US$ 216220.74 Rs.1,19,00,000/- 2 Berthing Charges Rs.1,70,000/- x 60 days Rs.1,02,00,000/- 3 Electricity Charges Rs.50,000/- x 60 days Rs. 30,00,000/- 4 Bunkering & towing charges Rs.10,00,000/- Rs. 10,00,000/- Rs.2,61,00,000/- 6.3. They filed A.No.2202 of 2013 seeking payment out of the declared and determined amount from and out of the sale proceeds of the Vessel. They also filed A.No.2203 of 2013 not to proceed with the sale of the Vessel without securing the amounts due and payable to them. Further, they filed A.No.2204 of 2013 to declare that they have a priority over the other debts in relation to the Vessel, to firstly secure their dues, and to direct the dues to be paid to them in full on the same priority as that of the crew members. 6.4. Mr.A.K.Mylsamy, learned counsel for this applicant sought permission of this Court to file further claims based on records for services rendered to the Vessel during the period of arrest till signing off of the crew and the same is permitted. 6.5. As the sale of the Vessel has been effected, A.No.2203 of 2013 has become infructuous and accordingly, A.No.2203 of 2013 is dismissed as infructuous. A.Nos.2201, 2202 and 2204 of 2013 are pending consideration. CLAIM OF DEEP SEA SHIPPING LOGISTICS FOR AGENCY SERVICES REP. BY MR.P.GIRIDHARAN: (Applicant in A.No.2999 of 2013) 7.1. A.No.2883 of 2013 filed by the Agents of the Vessel seeking intervention was ordered on 10.7.2013. 7.2. They have filed A.No.2999 of 2013 to declare and determine the amount due and payable to them at Rs.10,81,856/- (Rupees Ten Lakhs Eighty One Thousand Eight Hundred and Fifty Six only) as on 7.1.2013 towards agency fee for services rendered as steamer agent and to direct the owners of the defendant Vessel to pay the same. This application is pending consideration. SALE OF THE VESSEL8 By order dated 19.7.2013 made in A.No.2170 of 2013, the Court declared M/s.Maritime Ventures Fund Ltd., Cayman Islands as the highest bidder and the sale was confirmed in their favour and consequent to the same the entire sale consideration of Rs.3,87,00,000/- (Three Crores and Eighty Seven Lakhs only) was paid by the said party and the said amount is in the custody of the Court.
9. After the highest bidder was declared, M/s.Kasturi Commodities Private Limited filed A.Nos.3050 to 3052 of 2013 seeking to intervene; to recall the order dated 19.7.2013 in A.No.2170 of 2013; and to stay the operation of the order dated 19.7.2013 in A.No.2170 of 2013 respectively. This Court, by order dated 23.7.2013, dismissed A.Nos.3050 to 3052 of 2013. It is stated that the Original Side Appeals preferred against the said order have also been dismissed by a Division Bench of this Court.
10. By order dated 7.8.2013 made in A.No.1597 of 2013, this Court permitted the crew of the Vessel to sign off after following the procedure that is prescribed and reside at Seafarers Club at Chennai until further orders, so as to enable them to pursue their claim for salary. It is stated that on 12.8.2013, all crew signed off from the Ship and they are presently residing at Seafarers Club, Chennai.
11. After the sale of the Vessel, certain amounts were disbursed as already observed. Thereafter, the crew, in all 27 members, has filed A.No.3541 of 2013 for payment of wages, claiming it as maritime lien, consolidating their earlier claim for wages made in A.Nos.1874 of 2013 and 2436 of 2013. The other parties, namely: (i)the plaintiff, who is a ship chandler, seeks payment of amount as maritime claim; (ii)M/s.DCW Limited, Applicant in A.No.2438 of 2013 claims amount on the basis of breach of contract by the Owners of the Vessel; (iii)M/s.Seatraffic, who is supplier, made a maritime claim for supply of necessaries to maintain the Vessel and since, the same was based on the order of this Court dated 30.4.2013 made in C.S.No.222 of 2013, by order dated 23.8.2013, this Court directed the Advocate Commissioner to pay the amount of Rs.36,07,925/- and their claim is now discharged; (iv)M/s.Sembmarine Kakinada Limited have made a claim for services/provisions rendered to the Vessel. They have filed one application to declare that they have a priority over the other debts; (v)Similarly, M/s.Deep Sea Shipping Logistics, as an agent of the Vessel made a maritime claim for the agency services rendered by it. Therefore, all other parties, barring the crew, plead that they are entitled to a maritime claim and insofar as crew are concerned, they made a plea before this Court stating that their claim falls under the category maritime lien and they seek a direction to pay their wages on priority basis.
12. The issue that is now required to be considered by this Court is whether the payment should be made after adjudication of all the claims or whether priority should be given to the claim of the crew for the wages, which they are seeking for the period during which the Vessel was under arrest till signing off and for few months prior to the order of arrest.
13. This Court, while considering the above issue, should also take into consideration the objection of M/s.Sembmarine Kakinada Limited and their claim in A.No.2204 of 2013 seeking to declare that they have a priority over the other debts in respect of the Vessel and that their dues should be first secured and paid on the same priority as that of the crew.
14. In the absence of specific State Laws on priority of maritime claim and maritime lien, the filed is occupied by International Conventions. The important conventions, which require to be considered, are the International Convention of Maritime Liens and Mortgages, 1993 and the International Convention on Arrest of Ships, 1999. At the first instance, the International Convention for the Unification of Certain Rules relating to the Arrest of Seagoing ships, Brussels, 1952 was in vogue and that has now been replaced by the International Convention on Arrest of Ships, 1999, in the United Nations/International Maritime Organization Diplomatic Conference on Arrest of Ships held at Geneva from 1st to 12th March, 1999, to which India is also a signatory. Therefore, these Conventions apply insofar as they are not inconsistent with the laws of the State Party. It is to be noticed that all the claims made by the plaintiff and the intervenors are maritime claims in terms of the International Convention on Arrest of Ships, 1999, which reads as follows: ".INTERNATIONAL CONVENTION ON ARREST OF SHIPS, 1999 The States Parties to this Convention, Recognizing the desirability of facilitating the harmonious and orderly development of world seaborne trade, Convinced of the necessity for a legal instrument establishing international uniformity in the field of arrest of ships which takes account of recent developments in related fields, Have agreed as follows: Article 1 Definitions For the purposes of this Convention:
1. ".Maritime Claim". means a claim arising out of one or more of the following: (a) loss or damage caused by the operation of the ship; (b) loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the ship; (c) salvage operations or any salvage agreement, including, if applicable, special compensation relating to salvage operations in respect of a ship which by itself or its cargo threatened damage to the environment; (d) damage or threat of damage caused by the ship to the environment, coastline or related interests; measures taken to prevent, minimize, or remove such damage; compensation for such damage; costs of reasonable measures of reinstatement of the environment actually undertaken or to be undertaken; loss incurred or likely to be incurred by third parties in connection with such damage; and damage, costs, or loss of a similar nature to those identified in this subparagraph (d); (e) costs or expenses relating to the raising, removal, recovery, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship, and costs or expenses relating to the preservation of an abandoned ship and maintenance of its crew; (f) any agreement relating to the use or hire of the ship, whether contained in a charter party or otherwise; (g) any agreement relating to the carriage of goods or passengers on board the ship, whether contained in a charter party or otherwise; (h) loss of or damage to or in connection with goods (including luggage) carried on board the ship; (i) general average; (j) towage; (k) pilotage; (l) goods, materials, provisions, bunkers, equipment (including containers) supplied or services rendered to the ship for its operation, management, preservation or maintenance; (m) construction, reconstruction, repair, converting or equipping of the ship; (n) port, canal, dock, harbour and other waterway dues and charges; (o) wages and other sums due to the master, officers and other members of the ship's complement in respect of their employment on the ship, including costs of repatriation and social insurance contributions payable on their behalf; (p) disbursements incurred on behalf of the ship or its owners; (q) insurance premiums (including mutual insurance calls) in respect of the ship, payable by or on behalf of the shipowner or demise charterer; (r) any commissions, brokerages or agency fees payable in respect of the ship by or on behalf of the shipowner or demise charterer; (s) any dispute as to ownership or possession of the ship; (t) any dispute between co-owners of the ship as to the employment or earnings of the ship; (u) a mortgage or a ".hypothhque". or a charge of the same nature on the ship; (v) any dispute arising out of a contract for the sale of the ship.
2. ".Arrest". means any detention or restriction on removal of a ship by order of a Court to secure a maritime claim, but does not include the seizure of a ship in execution or satisfaction of a judgment or other enforceable instrument.
3. ".Person". means any individual or partnership or any public or private body, whether corporate or not, including a State or any of its constituent subdivisions.
4. ".Claimant". means any person asserting a maritime claim.
5. ".Court". means any competent judicial authority of a State. Article 2 Powers of arrest 1. A ship may be arrested or released from arrest only under the authority of a Court of the State Party in which the arrest is effected.
2. A ship may only be arrested in respect of a maritime claim but in respect of no other claim.
3. A ship may be arrested for the purpose of obtaining security notwithstanding that, by virtue of a jurisdiction clause or arbitration clause in any relevant contract, or otherwise, the maritime claim in respect of which the arrest is effected is to be adjudicated in a State other than the State where the arrest is effected, or is to be arbitrated, or is to be adjudicated subject to the law of another State.
4. Subject to the provisions of this Convention, the procedure relating to the arrest of a ship or its release shall be governed by the law of the State in which the arrest was effected or applied for. Article 3 Exercise of right of arrest 1. Arrest is permissible of any ship in respect of which a maritime claim is asserted if: (a) the person who owned the ship at the time when the maritime claim arose is liable for the claim and is owner of the ship when the arrest is effected; or (b) the demise charterer of the ship at the time when the maritime claim arose is liable for the claim and is demise charterer or owner of the ship when the arrest is effected; or (c) the claim is based upon a mortgage or a ".hypothhque". or a charge of the same nature on the ship; or (d) the claim relates to the ownership or possession of the ship; or (e) the claim is against the owner, demise charterer, manager or operator of the ship and is secured by a maritime lien which is granted or arises under the law of the State where the arrest is applied for.
2. Arrest is also permissible of any other ship or ships which, when the arrest is effected, is or are owned by the person who is liable for the maritime claim and who was, when the claim arose: (a) owner of the ship in respect of which the maritime claim arose; or (b) demise charterer, time charterer or voyage charterer of that ship. This provision does not apply to claims in respect of ownership or possession of a ship.
3. Notwithstanding the provisions of paragraphs 1 and 2 of this article, the arrest of a ship which is not owned by the person liable for the claim shall be permissible only if, under the law of the State where the arrest is applied for, a judgment in respect of that claim can be enforced against that ship by judicial or forced sale of that ship. Article 4 Release from arrest 1. A ship which has been arrested shall be released when sufficient security has been provided in a satisfactory form, save in cases in which a ship has been arrested in respect of any of the maritime claims enumerated in article 1, paragraphs 1 (s) and (t). In such cases, the Court may permit the person in possession of the ship to continue trading the ship, upon such person providing sufficient security, or may otherwise deal with the operation of the ship during the period of the arrest.
2. In the absence of agreement between the parties as to the sufficiency and form of the security, the Court shall determine its nature and the amount thereof, not exceeding the value of the arrested ship.
3. Any request for the ship to be released upon security being provided shall not be construed as an acknowledgement of liability nor as a waiver of any defence or any right to limit liability.
4. If a ship has been arrested in a non-party State and is not released although security in respect of that ship has been provided in a State Party in respect of the same claim, that security shall be ordered to be released on application to the Court in the State Party.
5. If in a non-party State the ship is released upon satisfactory security in respect of that ship being provided, any security provided in a State Party in respect of the same claim shall be ordered to be released to the extent that the total amount of security provided in the two States exceeds: (a) the claim for which the ship has been arrested, or (b) the value of the ship, whichever is the lower. Such release shall, however, not be ordered unless the security provided in the non-party State will actually be available to the claimant and will be freely transferable.
6. Where, pursuant to paragraph 1 of this article, security has been provided, the person providing such security may at any time apply to the Court to have that security reduced, modified, or cancelled. Article 5 Right of rearrest and multiple arrest 1. Where in any State a ship has already been arrested and released or security in respect of that ship has already been provided to secure a maritime claim, that ship shall not thereafter be rearrested or arrested in respect of the same maritime claim unless: (a) the nature or amount of the security in respect of that ship already provided in respect of the same claim is inadequate, on condition that the aggregate amount of security may not exceed the value of the ship; or (b) the person who has already provided the security is not, or is unlikely to be, able to fulfil some or all of that persons obligations; or (c) the ship arrested or the security previously provided was released either: (i) upon the application or with the consent of the claimant acting on reasonable grounds, or (ii) because the claimant could not by taking reasonable steps prevent the release.
2. Any other ship which would otherwise be subject to arrest in respect of the same maritime claim shall not be arrested unless: (a) the nature or amount of the security already provided in respect of the same claim is inadequate; or (b) the provisions of paragraph 1 (b) or (c) of this article are applicable.
3. ".Release". for the purpose of this article shall not include any unlawful release or escape from arrest. Article 6 Protection of owners and demise charterers of arrested ships 1. The Court may as a condition of the arrest of a ship, or of permitting an arrest already effected to be maintained, impose upon the claimant who seeks to arrest or who has procured the arrest of the ship the obligation to provide security of a kind and for an amount, and upon such terms, as may be determined by that Court for any loss which may be incurred by the defendant as a result of the arrest, and for which the claimant may be found liable, including but not restricted to such loss or damage as may be incurred by that defendant in consequence of: (a) the arrest having been wrongful or unjustified; or (b) excessive security having been demanded and provided.
2. The Courts of the State in which an arrest has been effected shall have jurisdiction to determine the extent of the liability, if any, of the claimant for loss or damage caused by the arrest of a ship, including but not restricted to such loss or damage as may be caused in consequence of: (a) the arrest having been wrongful or unjustified, or (b) excessive security having been demanded and provided.
3. The liability, if any, of the claimant in accordance with paragraph 2 of this article shall be determined by application of the law of the State where the arrest was effected.
4. If a Court in another State or an arbitral tribunal is to determine the merits of the case in accordance with the provisions of article 7, then proceedings relating to the liability of the claimant in accordance with paragraph 2 of this article may be stayed pending that decision.
5. Where pursuant to paragraph 1 of this article security has been provided, the person providing such security may at any time apply to the Court to have that security reduced, modified or cancelled. Article 7 Jurisdiction on the merits of the case 1. The Courts of the State in which an arrest has been effected or security provided to obtain the release of the ship shall have jurisdiction to determine the case upon its merits, unless the parties validly agree or have validly agreed to submit the dispute to a Court of another State which accepts jurisdiction, or to arbitration.
2. Notwithstanding the provisions of paragraph 1 of this article, the Courts of the State in which an arrest has been effected, or security provided to obtain the release of the ship, may refuse to exercise that jurisdiction where that refusal is permitted by the law of that State and a Court of another State accepts jurisdiction.
3. In cases where a Court of the State where an arrest has been effected or security provided to obtain the release of the ship: (a) does not have jurisdiction to determine the case upon its merits; or (b) has refused to exercise jurisdiction in accordance with the provisions of paragraph 2 of this article, such Court may, and upon request shall, order a period of time within which the claimant shall bring proceedings before a competent Court or arbitral tribunal.
4. If proceedings are not brought within the period of time ordered in accordance with paragraph 3 of this article then the ship arrested or the security provided shall, upon request, be ordered to be released.
5. If proceedings are brought within the period of time ordered in accordance with paragraph 3 of this article, or if proceedings before a competent Court or arbitral tribunal in another State are brought in the absence of such order, any final decision resulting therefrom shall be recognized and given effect with respect to the arrested ship or to the security provided in order to obtain its release, on condition that: (a) the defendant has been given reasonable notice of such proceedings and a reasonable opportunity to present the case for the defence;and (b) such recognition is not against public policy (ordre public).
6. Nothing contained in the provisions of paragraph 5 of this article shall restrict any further effect given to a foreign judgment or arbitral award under the law of the State where the arrest of the ship was effected or security provided to obtain its release. Article 8 Application 1. This Convention shall apply to any ship within the jurisdiction of any State Party, whether or not that ship is flying the flag of a State Party.
2. This Convention shall not apply to any warship, naval auxiliary or other ships owned or operated by a State and used, for the time being, only on government non-commercial service.
3. This Convention does not affect any rights or powers vested in any Government or its departments, or in any public authority, or in any dock or harbour authority, under any international convention or under any domestic law or regulation, to detain or otherwise prevent from sailing any ship within their jurisdiction.
4. This Convention shall not affect the power of any State or Court to make orders affecting the totality of a debtor's assets.
5. Nothing in this Convention shall affect the application of international conventions providing for limitation of liability, or domestic law giving effect thereto, in the State where an arrest is effected.
6. Nothing in this Convention shall modify or affect the rules of law in force in the States Parties relating to the arrest of any ship physically within the jurisdiction of the State of its flag procured by a person whose habitual residence or principal place of business is in that State, or by any other person who has acquired a claim from such person by subrogation, assignment or otherwise. Article 9 Non-creation of maritime liens Nothing in this Convention shall be construed as creating a maritime lien. Article 10 Reservations 1. Any State may, at the time of signature, ratification, acceptance, approval, or accession, or at any time thereafter, reserve the right to exclude the application of this Convention to any or all of the following : (a) ships which are not seagoing; (b) ships not flying the flag of a State Party; (c) claims under article 1, paragraph 1 (s).
2. A State may, when it is also a State Party to a specified treaty on navigation on inland waterways, declare when signing, ratifying, accepting, approving or acceding to this Convention, that rules on jurisdiction, recognition and execution of court decisions provided for in such treaties shall prevail over the rules contained in article 7 of this Convention. Article 11 Depositary This Convention shall be deposited with the Secretary-General of the United Nations. Article 12 Signature, ratification, acceptance, approval and accession 1. This Convention shall be open for signature by any State at the Headquarters of the United Nations, New York, from 1 September 1999 to 31 August 2000 and shall thereafter remain open for accession.
2. States may express their consent to be bound by this Convention by: (a) signature without reservation as to ratification, acceptance or approval; or (b) signature subject to ratification, acceptance or approval, followed by ratification, acceptance or approval; or (c) accession.
3. Ratification, acceptance, approval or accession shall be effected by the deposit of an instrument to that effect with the depositary. Article 13 States with more than one system of law 1. If a State has two or more territorial units in which different systems of law are applicable in relation to matters dealt with in this Convention, it may at the time of signature, ratification, acceptance, approval or accession declare that this Convention shall extend to all its territorial units or only to one or more of them and may modify this declaration by submitting another declaration at any time.
2. Any such declaration shall be notified to the depositary and shall state expressly the territorial units to which the Convention applies.
3. In relation to a State Party which has two or more systems of law with regard to arrest of ships applicable in different territorial units, references in this Convention to the Court of a State and the law of a State shall be respectively construed as referring to the Court of the relevant territorial unit within that State and the law of the relevant territorial unit of that State. Article 14 Entry into force 1. This Convention shall enter into force six months following the date on which 10 States have expressed their consent to be bound by it.
2. For a State which expresses its consent to be bound by this Convention after the conditions for entry into force thereof have been met, such consent shall take effect three months after the date of expression of such consent. Article 15 Revision and amendment 1. A conference of States Parties for the purpose of revising or amending this Convention shall be convened by the Secretary-General of the United Nations at the request of one-third of the States Parties.
2. Any consent to be bound by this Convention, expressed after the date of entry into force of an amendment to this Convention, shall be deemed to apply to the Convention, as amended. Article 16 Denunciation 1. This Convention may be denounced by any State Party at any time after the date on which this Convention enters into force for that State.
2. Denunciation shall be effected by deposit of an instrument of denunciation with the depositary.
3. A denunciation shall take effect one year, or such longer period as may be specified in the instrument of denunciation, after the receipt of the instrument of denunciation by the depositary. Article 17 Languages This Convention is established in a single original in the Arabic, Chinese, English, French, Russian and Spanish languages, each text being equally authentic.".
15. In order to appreciate the two off-quoted legal jargons ".maritime lien". and ".maritime claim". and the manner in which maritime lien and maritime claim should be discharged, it is relevant to refer to certain provisions of the International Convention of Maritime Liens and Mortgages, 1993, which read as under: ".Preamble: The States Parties to this Convention, Conscious of the need to improve conditions for ship financing and the development of national merchant fleets, Recognizing the desirability of international uniformity in the field of maritime liens and mortgages, and therefore Convinced of the necessity for an international legal instrument governing maritime liens and mortgages, have decided to conclude a Convention for this purpose .....". Article 2 - Ranking and effects of mortgages, hypothhques and charges. The ranking of registered mortgages, hypothhques or charges as between themselves and, without prejudice to the provisions of this Convention, their effect in regard to third parties shall be determined by the law of the State of registration; however, without prejudice to the provisions of this Convention, all matters relating to the procedure of enforcement shall be regulated by the law of the State where enforcement takes place. Article 4 - Maritime liens 1. Each of the following claims against the owner, demise charterer, manager or operator of the vessel shall be secured by a maritime lien on the vessel: (a) claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf; (b) claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel; (c) claims for reward for the salvage of the vessel; (d) claims for port. canal. and other waterway dues and pilotage dues; (e) claims based on tort arising out of physical loss or damage caused by the operation of the vessel other than loss of or damage to cargo, containers and passengers' effects carried on the vessel.
2. No maritime lien shall attach to a vessel to secure claims as set out in subparaghraphs (b) and (e) of paragraph 1 which arise out of or result from: (a) damage in connection with the carriage of oil or other hazardous or noxious substances by sea for which compensation is payable to the claimants pursuant to international conventions or national law providing for strict liability and compulsory insurance or other means of securing the claims; or (b) the radioactive properties or a combination of radioactive properties with toxic, explosive or other hazardous properties of nuclear fuel or of radioactive products or waste. Article 5 - Priority of maritime liens 1. The maritime liens set out in article 4 shall take priority over registered mortgages, hypothhques and charges, and no other claim shall take priority over such maritime liens or over such mortgages, hypotheques or charges which comply with the require-ments of article 1, except as provided in paragraphs 3 and 4 of article 12.
2. The maritime liens set out in article 4 shall rank in the order listed, provided however that maritime liens securing claims for reward for the salvage of the vessel shall take priority over all other maritime liens which have attached to the vessel prior to the time when the operations giving rise to the said liens were performed.
3. The maritime liens set out in each of subparagraphs (a), (b), (d) and (e) of paragraph 1 of article 4 shall rank pari passu as between themselves.
4. The maritime liens securing claims for reward for the salvage of the vessel shall rank in the inverse order of the time when the claims secured thereby accrued. Such claims shall be deemed to have accrued on the date on which each salvage operation was terminated. Article 11 - Notice of forced sale.
1. Prior to the forced sale of a vessel in a State Party, the competent authority in such State Party shall ensure that notice in accordance with this article is provided to: (a) the authority in charge of the register in the State of registration; (b) all holders of registered mortgages, hypothhques or charges which have not been issued to bearer; (c) all holders of registered mortgages. hypotheques or charges issued to bearer and all holders of the maritime liens set out in article 4, provided that the competent authority conducting the forced sale receives notice of their respective claims; and (d) the registered owner of the vessel 2. Such notice shall be provided at least 30 days prior to the forced sale and shall contain either: (a) the time and place of the forced sale and such particulars concerning the forced sale or the proceedings leading to the forced sale as the authority in a State Party conducting the proceedings shall determine is sufficient to protect the interests of persons entitled to notice; or, (b) if the time and place of the forced sale cannot be determined with certainty, the approximate time and anticipated place of the forced sale and such particulars concerning the forced sale as the authority in a State Party conducting the proceedings shall determine is sufficient to protect the interests of persons entitled to notice. If notice is provided in accordance with subparagraph (b), additional notice of the actual time and place of the forced sale shall be provided when known but, in any event, not less than seven days prior to the forced sale.
3. The notice specified in paragraph 2 of this article shall be in writing and either given by registered mail, or given by any electronic or other appropriate means which provide confirmation of receipt, to the persons interested as specified in paragraph 1, if known. In addition, the notice shall be given by press announcement in the State where the forced sale is conducted and, if deemed appropriate by the authority conducting the forced sale, in other publications. Article 12 - Effects of forced sale 1. In the event of the forced sale of the vessel in a State Party, all registered mortgages, hypothhques or charges, except those assumed by the purchaser with the consent of the holders, and all liens and other encumbrances of whatsoever nature, shall cease to attach to the vessel, provided that: (a) at the time of the sale, the vessel is in the area of the jurisdiction of such State; and (b) the sale has been effected in accordance with the law of the said State and the provisions of article 11 and this article.
2. The costs and expenses arising out of the arrest or seizure and subsequent sale of the vessel shall be paid first out of the proceeds of sale. Such costs and expenses include, inter alia, the costs for the upkeep of the vessel and the crew as well as wages, other sums and costs referred to in article 4, paragraph 1 (a), incurred from the time of arrest or seizure. The balance of the proceeds shall be distributed in accordance with the provisions of this Convention, to the extent necessary to satisfy the respective claims. Upon satisfaction of all claimants the residue of the proceeds, if any, shall be paid to the owner and it shall be freely transferable.
3. A State Party may provide in its law that in the event of the forced, sale of a stranded or sunken vessel following its removal by a public authority in the interest of sate navigation or the protection of the marine environment, the costs of such removal shall be paid out of the proceeds of the sales, before all other claims secured by a maritime lien on the vessel.
4. It at the time of the forced sale the vessel is in the possession of a shipbuilder or of a shiprepairer who under the law of the State Party in which the sale takes place enjoys a right of retention, such shipbuilder or shiprepairer must surrender possession of the vessel to the purchaser but is entitled to obtain satisfaction of his claim out of the proceeds of sale after the satisfaction of the claims of holders of maritime liens mentioned in article 4.
5. When a vessel registered in a State Party has been the object of a forced sale in any State Party, the competent authority shall, at the request of the purchaser, issue a certificate to the effect that the vessel is sold free of all registered mortgages, hypothhques or charges, except those assumed by the purchaser, and of all liens and other encumbrances, provided that the requirements set out in paragraph 1 (a) and (b) have been complied with. Upon production of such certificate, the registrar shall be bound to delete all registered mortgages, hypothhques or charges except those assumed by the purchaser, and to register the vessel in the name of the purchaser or to issue a certificate of deregistration for the purpose of new registration, as the case may be.
6. States Parties shall ensure that any proceeds of a forced sale are actually available and freely transferable.
16. The relevant Rules prescribed in the Madras High Court Original Side Rules for arrest of the Vessel and further proceedings thereof are Order XLII Rules 18, 32 and 38 and the same read as under: ".Order XLII Rules for regulating the procedure and practice in cases brought before the High Court of Judicature at Madras in the exercise of its admiralty jurisdiction. Rule 18 An attorney at whose instance any property has been arrested may, before an appearance has been entered, obtain the release thereof by filing a praecipe to withdraw the warrant. Rule 32 If when the suit comes before the Court it is satisfied that the claim is well founded, it may pronounce for the amount which appears to be due and may enforce the payment thereof by order and attachment against the party on whose behalf the Caveat has been entered and by the arrest of the property if it then be or thereafter come within the jurisdiction of the Court. Rule 38 Money paid into Court shall not be paid out of Court except in pursuance of an order of the Court or a Judge.".
17. The Form for release of the arrested vessel, as contemplated in the Madras High Court Original Side Rules, is Form No.7 and the same is as under: ".Form No.7 RELEASE (Rule 18) Suit No......................... 20...... IN THE HIGH COURT OF JUDICATURE AT MADRAS Admiralty Jurisdiction To The Sheriff, Whereas in a suit of ................................. commenced in our said High Court on behalf of .................................... against .......................... you were commanded to arrest the said ............................ and to keep the same under safe arrest until you should receive further orders from us. Now you are hereby commanded to release the said ............................... from the arrest effected by virtue of the warrant in the said suit, upon payment being made to you of all costs, charges and expenses attending the care and custody of the property whilst under arrest in that suit. Witness, etc. Release Taken out by .................................... on the ........................... day of 20....... the .................................. or vessel ........................ (or cargo and freight, etc. as the case may be) released from arrest pursuant to his instrument of release.".
18. At this juncture, it will be relevant to refer to the law relating to Maritime Lien, as is understood world over. In Halsbury's Laws of England Volume 94 Shipping and Maritime Law in respect of Liens on Ships, Freight and Cargo, more particularly about Maritime Liens, it is held as under: ".1016. Maritime liens recognised by English law. The maritime liens recognised by English law are those in respect of bottomry and respondentia bonds, salvage of property, seamen's wages, damage and a salvor's rights under any international convention or national law. A maritime lien has been held not to exist in respect of towage, the supply of goods, materials etc. or insurance contributions. It is doubtful whether a maritime lien exists in respect of pilotage dues. Statutory rights and remedies similar to those enjoyed by the holder of a maritime lien, and enforced in similar manner, include claims in respect of the wages, disbursements and liabilities of the master of a ship; claims in respect of damage to land caused by persons rendering services to a vessel wrecked, stranded or in distress; claims in respect of the fees and expenses of a receiver of wreck; and claims in respect of the expenses of a local authority incurred on account of the burial or destruction of the carcase of any animal or carcase thrown or washed from any vessel.
1025. Priority of liens generally. It would seem that the determination of the priority of liens over one another rests on no rigid application of any rules but on the principle that equity must be done to the parties in the circumstances of each particular case. There is, however, a general order of priority, and there are certain general rules which, in the absence of special circumstances, the Court tends to apply. As to the general order of priority, the right of a dock and harbour authority exercising its powers under the Harbous, Docks and Piers Clauses Act 1857, or under the similar provisions of its special Act, to detain a ship in respect of damage to dock works, or to detain and sell a ship in respect of dock and harbour dues, or to take possession of and sell a wreck in respect of conservancy charges, overrides all maritime liens. Next in order of priority are maritime liens; these usually rank above mortgages and statutory liens. A mortgage generally has precedence over a statutory lien. A possessory lien ranks after all liens which have attached before, and before all liens which attach after, the possessory lien holder has taken possession of the ship.
1026. Priority of maritime liens generally. Maritime liens are of two classes: (1)those arising ex delicto; and (2)those arising ex contractu or quasi ex contractu, such as wages, bottomry and salvage. Although all maritime liens, whether arising ex delicto or ex contractu or quasi ex contractu, are the same, in practice they usually rank according to two broad principles. First, liens arising ex delicto, in the absence of laches, rank as between themselves pari passu, but in priority to liens arising ex contractu, except a subsequent lien for salvage. Secondly, as a general rule, maritime liens arising ex contractu or quasi ex contractu, that is to say those for master's wages, disbursements and liabilities, seamen's wages, bottomry and salvage, are payable in the inverse order of their attachment on the property in respect of which the claim is brought (or privilege claimed), although as between themselves masters' wages and seamen's wages rank pari passu.
1032. Seamen's lien for wages. The seamen's lien for wages takes priority over a bottomry bond whenever given, over the claim of a mortgagee, over a claim for goods, materials etc supplied to the ship, over towage, and over a shipwright's possessory lien to the extent of the wages earned up to the time the vessel is put into the hands of the shipwright; but their claim for wages ranks pari passu with the master's claim for wages. The seamen's lien is postponed to a damage lien, to salvage rendered after the wages are earned, to a shipwright's lien from the time he had possession, and to the claim of a dock or harbour authority in respect of dock and harbour dues, damage to dock or harbour works or conservancy charges for the removal of wrecks and other obstructions.".
19. On a reading of the above proceedings, more particularly Article 4(1)(a) of the International Convention of Maritime Liens and Mortgages, 1993, it is clear that claim for wages and other sums due to the master, officers and other members of the Vessel in respect of their employment on the Vessel, including costs of repatriation, etc., stands on a higher pedestal, except the claim for salvage of the vessel, which takes priority over all other maritime liens, as stated in Article 5(2) of the International Convention of Maritime Liens and Mortgages, 1993, where the ranking of maritime liens set out in Article 4 is specified. Article 5(3) clearly states that the various maritime liens set out in each of subparagraphs (a), (b), (d) and (e) of paragraph 1 of Article 4 each lien will rank pari passu as between themselves, which means that the claims falling under Article 4(1)(a), namely claim for wages and other sums between master, officers and other crew of the Vessel, will rank pari passu as between themselves. Likewise, claims under Article 4(1)(b), (d) and (e) would rank equally among themselves. Clause (c) of Article 4(1) has been excluded in the priority of maritime liens as it has been clearly stated under Article 5(2) that reward for the salvage of the Vessel will take precedence over all other maritime liens.
20. While dealing with the claim of maritime lien in consonance with the International Convention of Maritime Liens and Mortgages, 1993, referred to above, and considering the attributes of a maritime lien, a Division Bench of this Court in the Commander Coast Guard Region (East) v. O.Konavalov and 4 others, 2001 (1) CTC247has held as under: ".35. The Supreme Court, in a case reported in M.V. AL. Quamar v. Tsavliris Salvage (International) Ltd., 2000 AIR SCW3101had an occasion to deal with the nature of a right viz., maritime lien and observed thus:- ".Be it noted that there are two attributes to maritime lien : (a) a right to a part of the property in the res; and (b) a privileged claim upon a ship, aircraft or other maritime property in respect of services rendered to, or injury caused by that property. Maritime lien thus attaches to the property in the event the cause of action arises and remain attached. It is, however, inchoate and very little positive in value unless it is enforced by an action. It is a right which springs from general maritime law and is based on the concept as if the ship itself caused the harm, loss or damage to others or to their property and this must itself make good that loss. (See in this context 'Maritime Law' Christopher Hill. 2nd Edn.) 36. As we have seen above, the Apex Court has indicated that the Textbook ".Maritime Law By Christopher Hill". can be referred to for further understanding about the nature of the right. We quote what the said Author has stated with reference to the right viz.. Maritime lien : ".A maritime lien is a proprietory interest in the 'res' it detracts from the absolute title of the 'res' owner. There has been a division of judicial opinion as to whether it is a right in the property (a jus in re) or a right against the property (a jus in rem) only. It is submitted that the lien is both, a right in the property perfected by action (in rem) against it. Thus, a claimant who holds a maritime lien may bring an action in rem against the ship under Section 2 (3), even though the ownership of the 'res' may have changed since the cause of action arose. The plaintiff an unqualified right to take proceedings in rem against the ship, irrespective of ownership. It is important to realise that whether or not a particular cause of action confers upon the claimant a maritime lien is determined by reference to the common maritime law. Nowhere will this question be answered in the wording of any statute, either the Administration of Justice Act, 1956 or any previous statute. In English Law, it is customary to regard the following causes of action as conferring a maritime lien: (i) damage resulting from a collision; (ii) bottomry (and respondentia) (it is interesting to note that the Admiralty Court has not heard a case concerning bottomry for many years and the Admiralty jurisdiction in this type of claim might be regarded as obsolete); (iii) salvage (see the Tequita below which although not a decision of an English Court, illustrates this point); (iv) Wages of seamen (see the Hal cyan Skies below); (v) ship's Master's wages and disbursements (this is a product of statute rather than the common law; whether the Admiralty court would willingly entertain a claim for wages brought by the Master or crew of a non-British ship would, in olden time, have been contingent upon the consent of the parties, or at least someone representing their native country (these days an English Court would require to know that notice to the relevant consul had been given before it would agree to issue an arrest warrant); and (vi) fees and expenses incurred by a receiver of wreck. The damage lien holder, on the other hand, being a person who has suffered loss or damage by reason not of broken contract but as a result of another's wrongful or tortious act has got, by the very nature of the incident, this benefit of such forewarning or foreknowledge of the likelihood of such loss or damage; the innocent, injured passenger after collision at sea is an obvious example. That damage lien holders should rank for priority, generally speaking, before the holders of contractual liens is not only logical but also is the basic rule. In relation to the ranking of claims it is interesting to note that salvage has priority over (a) earlier salvage, (b) earlier damage, (c) earlier wages, (d) earlier claims to forfeiture by the crown, (e) subsequent possessory liens, (f) necessaries, and (g) mortgages. A salvors lien ranks first (and in reverse order of time if there is more than one salvor -ie., later before earlier) simply because without the emergency services he renders there would be no funds preserved out of which anybody could be satisfied. The 1993 Convention does not define maritime liens but only lists them under Article 4 (Convention liens), namely:- (a) Master and crew wages including costs of repatriation and social insurance contributions; (b) claims for loss of life of personal injury in direct connection with the operation of the vessel; (c) salvage; (d) claims for port, canal and other waterway dues and pilotage dues; (e) claims based on tort arising out of physical loss or damage caused by the operation of the vessel other than loss of or damage to cargo, containers and passenger's effects carried on the vessel.".
37. The other notable and well known Book is ".Maritime Lien and Claims By William Tetley".. We would like to mention here what the Author has opined in his Book : ". A traditional maritime lien is a secured right peculiar to maritime law (the lex maritima). It is a privilege against property (a ship) which attaches and gains priority without any court action or any deed or any registration. It passes with the ship when the ship is sold to another owner, who may not know of the existence of the lien. In this sense the maritime lien is a secret lien which has no equivalent in the common law, rather it fulfills the concept of a ".privilege". under the civil law and the lex mercatoria. The seaman's lien is a true traditional maritime lien. They key is service to the ship; the lien is not dependent on who hired the seaman, be it the owner of the charterer. Thus seamen were , granted a lien even where they were employed by person who had stolen the ship, there being no complicity on their part; Similarly a master had a lien despite having been hired by a fraudulent possessor. This is confirmed in Section 21 (3) of the Supreme Court Act, 1981 which is the statutory recognition of considerable judicial findings. Seamen in the U.K. have been traditionally treated with respect and care, if not with benevolence, and in consequence, even after the arrest of the ship, the salaries of the chief officer and the chief engineer ".doing necessary maintenance work". have been held to be proper items of Marshal's costs. Subsistence monies incurred after the arrest and crew repatriation expenses have also been ordered as a first charge against the ship, probably as wages rather than custodia legis. Compensation for termination of the contracts of the master, officers and crew, as well as repatriation expenses, deductions for taxes and crew's welfare funds and union does have all been granted as emoluments although a number arose after arrest. They thus ranked ahead of the mortgage and necessaries. Seamen, throughout history, have been treated with respect, admiration and gratitude after the fact, but often harshly and unfairly at the moment. The various ancient sea codes attempted to provide seamen with rights against their employers and over the centuries, maritime liens evolved in favour of seamen against their employers and over the centuries, maritime liens evolved in favour of seamen against the ship. Finally seamen were given a lien second only to custodia legis and court costs. (Lawyers somehow always managed to protect themselves and have never required the same solicitude). Seamen have had and still have a high priority maritime lien under the general maritime law in the U.K. It is a lien which follows the ship no matter who is the owner. It survives even against a foreign purchaser. One of the characteristics of maritime liens is that, once they come into existence, they follow the ship (droit de suite) into whosesoever hands it may come. In order, therefore, to answer the question ".who can bind the ship". in the case of a maritime lien, one need only be concerned with that moment in time the actual claim arose. In order to answer the question ".who binds the ship". in the case of-a statutory right in rem two moments in time are relevant; when the cause of action arose and when the action was brought. It is clear that if the owner, his servants or his agents are in charge of the ship when the maritime lien arises, then the ship is bound. The lien continues even the ship taken legally from an owner by requisition:- Where a ship is taken legally from an owner by requisition, a difficult question arises but the answer follows logically; the ship should be bound. This is because maritime liens are against the ship. It does not matter who is in control as long as that person is legally in control. The owner who gives up his ship by requisitioning under law to the government, does so because he believes in the social contract and complies with the law of society. The owner whose ship is requisitioned has of course a claim at the end of the requisition period for the damage done to the ship and the obligations of the ship. Normally, as well. a requisitioned ship will be transferred into the name of the government who will be bound in personam and the ship in rem, if sovereign immunity does not apply. The fact that a ship is requisitioned should not affect the claim of third parties against the ship for maritime liens being collision damages, salvage, wages of master's disbursements. In any case in which there is a maritime lien or other charge on any ship, aircraft or other property for the amount claimed, an action in rem may be brought in the High Court against that ship, aircraft or property. Maritime liens are a common law concept in India. India nevertheless follows the laws of the U.K. in respect of maritime liens. In dealing with cases relating to maritime liens, Indian Courts recognise the law of flag. ie.. law of the State where the ship is registered.".
38. With reference to maritime lien, the legal position appears to be that seamen had always higher priority maritime lien and it follows the ship, no matter who is the owner. In fact, the Apex Court in M.V. AL Quamar v. Tsavliris Salvage (International) Limited, 2000 AIR SCW3101has noted that there are two attributes to maritime lien viz., (i) right over a part of the property in the res; (ii) a privileged claim upon a ship in respect of services rendered to, or injury caused by that property. Maritime lien attaches to the property in the even the cause of action arises and remains attached. It is a right which springs from general maritime law and it is based on the concept as if the ship itself caused the harm and that itself must make good that loss. A lien continues even if the ship is taken legally from a owner by requisition.".
21. As regards the claim of the crew for wages, which also includes the period during the arrest and signing off, it will be relevant to consider the decision of the Supreme Court in O. Konavalov v. Commander, Coast Guard Region, (2006) 4 SCC620 wherein it was held as under: ".26. The seamens right to their wages have been put on a high pedestal. It is said that a seaman had a right to cling to the last plank of the ship in satisfaction of the wages or part of them as could be found in Neptune, 166 ER81and also The Ruta, (2000) 1 Lloyd's Rep.
359. ....
28. Seamen who have a right to wages, which right is enforceable against the ship can legitimately lay a claim to the payment of such wages out of the proceeds of the ship obtained by its sale. In our view, it is immaterial as to why and what process brings up the ship for sale either by way of proceedings in rem or otherwise. What is material is that the proceeds of the sale of the ship are available for satisfaction of the maritime liens. The absolute character of vesting following confiscation can be absolute only against persons having proprietary right in the ship or goods, and more particularly denoting a suspension or abeyance of such rights, till the confiscation is lifted in accordance with law. It would be misconceived to extend the scope of such vesting to the point of extinction of maritime liens particularly seamens wages. It is equally well settled that public undertakings such as the port, dock or a harbour possessing statutory power to detain and sell a ship cannot sell the res free of the liens which have attached prior to the sale. (See Corps & Corps v. Queen of South, (1968) 1 Lloyd's rep 182) The seamens lien will follow the ship and its proceeds in whatsoever hand they may come by title or purchase from the owner and the lien reattaches to the thing after sale and to whatever is substituted for it. [See James Sheppard v. Lemuel Taylor, 8 L Ed 269. See also Halsburys Laws of England, para 1907, Vol. 43(2), 4th Edn. (Reissue).]. Obtaining jurisdiction to the res in pursuance of statutory powers should be put on the same footing as acquisition of the title following the transfer of res. ....
37. A seamans maritime lien for wages arises from the fact of service rendered to the ship and is independent of agreement and of personal liability on the part of the ship-owner. Section 16(1) of the (English) Merchant Shipping Act, 1970 provides that, a seamans lien, his remedies for the recovery of his wages shall not be capable of being renounced by any agreement.
38. According to English law, it is customary to regard the following causes of action as conferring a maritime lien: (i) damage resulting from a collision; (ii) bottomry; (iii) salvage; (iv) wages of seamen; (v) ships masters wages and disbursements; (vi) fee and expenses incurred by a receiver of wreck.
39. A convention had come into place in 1993 (International Convention on Maritime Liens and Mortgages, 1993) which dealt with maritime regulations, however, the Convention does not define maritime liens but only listed them under Article 4 (convention liens), namely: master and crew wages including costs of repatriation and social insurance contributions; claims for loss of life or personal injury in direct connection with the operation of the vessel; salvage; claims for port, canal and other watering dues and pilotage dues; claims based on tort arising out of physical loss or damage caused.
40. William Tetly in Maritime Claim and Liens observed that: The seamans lien is a true traditional maritime lien. The key is service to the ship, the lien is not dependant on who hired the seaman, be it the owner of the vessel or not. Thus seamen were granted a lien even where they were employed by the master or not. 41. Maritime lien of the crewmen attaches to the ship in respect of which the employment service is rendered including the vessels tackle, apparel and furniture. In the words of Sir John Nicholl, If any portion of the ship be saved, the mariner has a lien on the thing for wages. (The Lady Durham (1835) 3 Hag Adm 196, Hag Adm at p. 201.) The lien extends to freight as well including freight payable by sub-charterers. Therefore in case of any deficiency in the proceeds from the sale of the vessel the freight can be called to the court (D.R. Thomas: Maritime Liens, p. 181). The ship however represents the first charge and the lien on the freight is only consequential, therefore, if there is no lien on the vessel there can be no lien on the freight. However there is no lien for wages on the cargo (ibid., p. 182).
43. There exists a maritime lien on the vessel of its crew as established by judgments and authorities earlier cited. And also as understood maritime lien is a concept that evolved through ages by way of customs prevailing in the law of the seas, no legislation specifically provides for maritime lien to the crew on the vessel. And it is very clear in judicial practice that no statutory rule can ever come in the way of the implementation of any customary practice which has the force of law. The requirement for any customary practice to have force of law is its practice for a long time and the absence of any statutory provision expressly prohibiting the implementation of that particular custom in force: the customary practice of the exercise of maritime lien by the crew members satisfies both these requirements. Thus Section 115 of the Customs Act which talks about confiscation will not operate to disentitle the crew of the lien that they can exercise on the vessel for the recovery of their wages which is an established practice in the law of the seas.
45. Further, the right to wages of seamen as wages of any employee is integral to Article 21 of the Constitution, which talks about the right to life and liberty of every individual. Also Section 144 of the Merchant Shipping Act states that the right of the seaman to wages is unfettered and there is no limitation on the entitlement under the Merchant Shipping Act. Therefore it can be safely concluded that Section 144 of the Merchant Shipping Act and Article 21 of the Constitution are tantamount. In this respect the appellants referred to Bank of Bihar v. State of Bihar, (1972) 3 SCC196which laid down that the right to wages out of proceeds of the ship obtained after sale is available with the crewmen of the ship if their wages are not paid which is integral to the right to life and liberty guaranteed as a fundamental right to every individual under the Constitution.
50. In our view, the impugned judgment is contrary to the principles of law laid down by this Court in MV Al Quamar (2000) 8 SCC278and MV Elisabeth, 1993 Supp (2) SCC433cases. In these cases, this Court has held that maritime lien is a right which continues even if the ship is taken legally from an owner by requisition. The argument advanced by learned counsel for the first respondent that the maritime lien is extinguished by confiscation has no force and is without any merit. The courts have recognised and upheld the welfare of the citizens and have always recognised the rights of those who are in the lowest strata of the society especially when it comes to workers and their wages. The seamen have suffered a lot without wages from May 1999 till the time they were deported by the Consulate. They have suffered a lot of mental and physical agony in spite of that they have not been given their wages till date due to a narrow approach. The State should always be fair and reasonable in settling the lawful claims. It is seen from the counter-affidavit filed by the Customs Department that the ship was sold for Rs 2.36 crores through tender sale and the cargo was sold off by the Customs through auction and a sum of Rs 18.75 crores was realised. The seamen can claim their wages only from and out of the sale proceeds of the vessel.
52. The Merchant Shipping Act, 1958 has laid down exhaustive provisions for seamens wages. The Act itself recognises that recovery of wages shall not be subject to attachment. Section 445 of the Act provides that payment of wages of seamen can be made by sale of the ship. In the Companies Act, under Section 529(a) an overriding effect has been given and it has been provided that in winding-up proceedings the workers dues have priority over other claims. The Madras High Court has failed to appreciate that India has travelled very far from 1950 and that the courts have given way to a dynamic constructive approach in the aspect of social justice while referring to international conventions, etc.".
22. In Interaccess Marine Bunkering Ltd. v. K.M.Allauddin, 2009 (3) CTC611 a learned Single Judge of this Court has held as under: ".32. ..... Section 138 states that a seaman's right to wages and provisions shall be taken to begin either at the time when he commences work or at the time specified in the agreement, whichever is earlier. Section 139 makes it clear that a seaman shall not, by any agreement, ".forfeit his lien on the ship".. Thus, Section 139 positively recognises the fact that a seaman has a lien on the ship in respect of his wages and that the owners of the vessel cannot contract out. Section 145 provides for summary proceedings before a Judicial Magistrate of First Class or Metropolitan Magistrate, at the instance of a seaman or apprentice, for any wages due to him. Section 146 bars the institution of a Suit for recovery of wages due to a seaman or apprentice, in a Civil Court, except where (i) the owner of the ship is declared insolvent (ii) the ship is under arrest or sold by the authority of any Court (iii) a Judicial Magistrate refers a claim to the Court. ...
45. That a maritime claim and a maritime lien cannot be identified with each other, was made clear by the Supreme Court in M.V. Al Quamar v. Tsavliris Salvage (International) Ltd., 2000 (8) SCC278 after referring to the Encyclopaedia Brittanica. The relevant portion reads as follows: ".A word of caution at this juncture ought to be introduced by reason of the confusion in populas (sic populus) between a maritime claim and maritime lien whereas claim cannot but be termed to be a genus lien is a particular species arising out of the genus and the two terms namely, claim and lien cannot be identified with each other so as to accord same meaning. Let us, however, address ourselves on maritime lien as is available in the encyclopaedia and the same reads as below: Maritime liens: although admiralty actions are frequently brought in personam, against individual or corporate defendants only, the most distinctive feature of admiralty practice is the proceeding in rem, against maritime property, that is, a vessel, a cargo, or 'freight', which in shipping means the compensation to which a carrier is entitled for the carriage of cargo. Under the American maritime law, the ship is personified to the extent that it may sometimes be held responsible under no liability. The classic example of personification is the 'compulsory pilotage' case. Some State statutes impose a penalty on a shipowner whose vessel fails to take a pilot when entering or leaving the waters of the State. Since the pilotage is thus compulsory, the pilot's negligence is not imputed to the shipowner. Nevertheless, the vessel itself is charged with the pilot's fault and is immediately impressed with an inchoate maritime lien that is enforceable in Court. Maritime liens can arise not only when the personified ship is charged with a maritime tort, such as a negligent collision or personal injury, but also for salvage services, for general average contributions, and for breach of certain maritime contracts.
33. Be it noted that there are two attributes to maritime lien: (a) a right to a part of the property in the res; and (b) a privileged claim upon a ship, aircraft or other maritime property in respect of services rendered to, or injury caused by that property. Maritime lien thus attaches to the property in the event the cause of action arises and remains attached. It is, however, inchoate and very little positive in value unless it is enforced by an action.".".
23. A Division Bench of the Calcutta High Court in the Board of Trustees for the Port of Calcutta v. Swadesh Kumar Khatua and others, (2000) 3 Cal LT558 has held as under: ".10. In British Shipping Laws-Vol. 14 by D. R. Thomas it is noted as under:- ".Seamen's Wages-Maritime Lien The contemporary maritimes lien 309. It has long been recognised that under the general maritime law as administered in the English Court of Admiralty a seaman possesses a maritime lien in respect of a claim for wages. To the present day the source of the lien remain unchanged for the lien has never been expressly incorporated into the marchant shipping legislation. Statutes enlarging the jurisdiction of the Court to entertain claims for wages have been construed by the Courts as impliedly extending the ambit of the lien. It is probably accurate to comment therefore that to the extent that the Admiralty Court has jurisdiction, there exists to an equal extent a lien. The jurisdiction of the Court and the existence of a maritime lien are conterminous.
11. A seaman's lien for wages is treated as sacrosanct and afforded comprehensive protection by the legislature which has made it incapable of being renounced by agreement. Section 16 (1) of the Merchant Shipping Act 1958 provides; ".A seaman's lien, his remedies for the recovery of his wages shall not be capable of being renounced by any agreement. The power of a seaman to transfer his maritime lien for the recovery of wages, subject to the consent and supervision of the Court, is unaffected by section 16 (1). A seaman's maritime lien for wages arises from the fact of service rendered to a ship and is independent of agreement and of personal liability on the part of a ship owner. ".
16. For the foregoing reasons therefore the appeals are dismissed. The judgment of the learned single Judge is upheld. It is directed that the claim of the three parties involved in this appeal shall rank priority wise as hereunder: (i) Crew members; (ii)CPT. (iii)ICICI. The appeals thus stand disposed of. There will be no order as to costs.".
24. In Epoch Enterrepots v. M.V. Won Fu, AIR2003SC24 the Supreme Court has held as under: ".16. In M.V. Al Quamar, AIR2000SC2826this Court spoke of two attributes of maritime lien as noticed hereinbefore. The International Convention for Unification of Certain Rules Relating to Maritime Liens and Mortgages at Brussels in 1967 defined the maritime lien to be as below: (a) wages and other sums due to the master, officers and other members of the vessels complement in respect of their employment on the vessel; (b) port, canal and other waterways and pilotage dues; (c) claims against the owner in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel; (d) claims against the owner based on tort and not capable of being based on contract, in respect of loss of or damage to property occurring, whether on land or on water in direct connection with the operation of the vessel; (e) claims for salvage, wreck removal and contribution in general average.
19. We have in this judgment hereinbefore dealt with the attributes of maritime lien. But simply stated, maritime lien can be said to exist or restricted to in the event of (a) damage done by a ship; (b) salvage; (c) seamens and masters wages; (d) masters disbursement; and (e) bottomry; and in the event a maritime lien exists in the aforesaid five circumstances, a right in rem is said to exist. Otherwise, a right in personam exists for any claim that may arise out of a contract.
21. Further on the issue, we find Thomas on Maritime Liens stated it to represent a small cluster of claims which arise either out of services rendered to a maritime res or from damage done to a res and listed five several heads of maritime liens as under: (a) Damage done by a ship (b) Salvage (c) Seamens wages (d) Masters wages and disbursements (e) Bottomry and respondentia 22. The limited applicability of such a lien thus well illustrates that not every kind of service or every kind of damage which arises in connection with a ship gives rise to a maritime lien. We, however, hasten to add that this is apart from the statutory enactments which may further list out various other forms of maritime claims. In the Ripon City, ((1897) P. 226, 246), Gorell Barnes, J.
upon appreciation of this facet of a maritime lien and also, in part, to the surrounding policy considerations observed: ............ A maritime lien travels with the vessel into whosesoever possession it comes, so that an innocent purchaser of a ship may find his property subject to claims which exist prior to the date of his purchase, unless the lien is lost by laches or the claim is one which is barred by the Statutes of Limitation. This rule is stated in The Bold Buccleugh.... to be deduced from the civil law, and, although it may be hard on an innocent purchaser, if it did not exist a person who was owner at the time a lien attached could defeat the lien by transfer if he pleased. A conspectus of judicial decisions as above would make it clear that wages of the crew and the Master is clearly a maritime lien to be appropriately secured against the res.
25. With regard to the priority claim of the crew, it will be useful to refer to the the rights of seamen in respect of wages and the various provisions provisions of the Merchant Shipping Act, 1958, which read as under: ".Section 138. Rights to wages and provisions. - A seamans right to wages and provisions shall be taken to begin either at the time at which he commences work or at the time specified in the agreement for his commencement of work or presence on board, whichever first happens. Section 139. Right to recover wages and salvage not to be forfeited.- (1) A seaman shall not by any agreement forfeit his lien on the ship or be deprived of any remedy for the recovery of his wages to which, in the absence of the agreement, he would be entitled, and shall not by any agreement abandon his right to wages in case of he loss of the ship or abandon any right that he may have or obtain in the nature of salvage, and every stipulation in any agreement inconsistent with any provisions of this Act shall be void. (2) Nothing in this section shall apply to a stipulation made by the seaman belonging to any ship which according to the terms of the agreement is to be employed on salvage service with respect to the remuneration to be paid to them for salvage service to be rendered by that ship to any other ship. Section 145. Summary proceedings for wages. - (1) A seaman or apprentice or a person duly authorised on his behalf may, as soon as any wages due to him become payable, apply to any Judicial Magistrate of the first class or any Metropolitan Magistrate, as the case may be, exercising jurisdiction in or near the place at which his service has terminated or at which he has been discharged, or at which any person upon whom the claim is made is or resides, and such magistrate shall try the case in a summary way and the order made by such magistrate in the matter shall be final. (2) An application under sub-section (1) may also be made by any officer authorised by the Central Government in this behalf by general or special order. Section 146. Restrictions on suits for wages.- A proceeding for the recovery of wages due to a seaman or apprentice shall not be instituted by or on behalf of any seaman or apprentice in any civil court except where - (a) the owner of the ship has been declared insolvent; (b) the ship is under arrest or sold by the authority of any court; (c) a Judicial Magistrate of the first class or a Metropolitan Magistrate, as the case maybe, refers a claim to the court.".
26. On going through the various provisions, referred to above, and the decisions of the Apex Court and other Courts and the International Convention of Maritime Liens and Mortgages, 1993, it is evident that in a case of forced sale, certain maritime liens issues have to be considered on priority before maritime claims are considered. The effect of forced sale is considered in Article 12 of the International Convention of Maritime Liens and Mortgages, 1993. For better appreciation, it is relevant to reproduce Article 12 of the said convention, which reads as under: ".Article 12 - Effects of forced sale 1. In the event of the forced sale of the vessel in a State Party, all registered mortgages, hypothhques or charges, except those assumed by the purchaser with the consent of the holders, and all liens and other encumbrances of whatsoever nature, shall cease to attach to the vessel, provided that: (a) at the time of the sale, the vessel is in the area of the jurisdiction of such State; and (b) the sale has been effected in accordance with the law of the said State and the provisions of article 11 and this article.
2. The costs and expenses arising out of the arrest or seizure and subsequent sale of the vessel shall be paid first out of the proceeds of sale. Such costs and expenses include, inter alia, the costs for the upkeep of the vessel and the crew as well as wages, other sums and costs referred to in article 4, paragraph 1 (a), incurred from the time of arrest or seizure. The balance of the proceeds shall be distributed in accordance with the provisions of this Convention, to the extent necessary to satisfy the respective claims. Upon satisfaction of all claimants the residue of the proceeds, if any, shall be paid to the owner and it shall be freely transferable.
3. A State Party may provide in its law that in the event of the forced, sale of a stranded or sunken vessel following its removal by a public authority in the interest of sate navigation or the protection of the marine environment, the costs of such removal shall be paid out of the proceeds of the sales, before all other claims secured by a maritime lien on the vessel.
4. It at the time of the forced sale the vessel is in the possession of a shipbuilder or of a shiprepairer who under the law of the State Party in which the sale takes place enjoys a right of retention, such shipbuilder or shiprepairer must surrender possession of the vessel to the purchaser but is entitled to obtain satisfaction of his claim out of the proceeds of sale after the satisfaction of the claims of holders of maritime liens mentioned in article 4.
5. When a vessel registered in a State Party has been the object of a forced sale in any State Party, the competent authority shall, at the request of the purchaser, issue a certificate to the effect that the vessel is sold free of all registered mortgages, hypothhques or charges, except those assumed by the purchaser, and of all liens and other encumbrances, provided that the requirements set out in paragraph 1 (a) and (b) have been complied with. Upon production of such certificate, the registrar shall be bound to delete all registered mortgages, hypothhques or charges except those assumed by the purchaser, and to register the vessel in the name of the purchaser or to issue a certificate of deregistration for the purpose of new registration, as the case may be.
6. States Parties shall ensure that any proceeds of a forced sale are actually available and freely transferable.".
27. In the present case, it is the case of M/s.Sembmarine Kakinada Ltd. that their claim is on a par with that of the crew. In support of the said plea, Mr.A.K.Mylsamy, learned counsel drew the attention of this Court to Articles 4, 5 and 12 of the International Convention of Maritime Liens and Mortgages, 1993, which read as under: ".Article 4 - Maritime liens 1. Each of the following claims against the owner, demise charterer, manager or operator of the vessel shall be secured by a maritime lien on the vessel: (a) claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf; (b) claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel; (c) claims for reward for the salvage of the vessel; (d) claims for port. canal. and other waterway dues and pilotage dues; (e) claims based on tort arising out of physical loss or damage caused by the operation of the vessel other than loss of or damage to cargo, containers and passengers' effects carried on the vessel.
2. No maritime lien shall attach to a vessel to secure claims as set out in subparaghraphs (b) and (e) of paragraph 1 which arise out of or result from: (a) damage in connection with the carriage of oil or other hazardous or noxious substances by sea for which compensation is payable to the claimants pursuant to international conventions or national law providing for strict liability and compulsory insurance or other means of securing the claims; or (b) the radioactive properties or a combination of radioactive properties with toxic, explosive or other hazardous properties of nuclear fuel or of radioactive products or waste. Article 5 - Priority of maritime liens 1. The maritime liens set out in article 4 shall take priority over registered mortgages, hypothhques and charges, and no other claim shall take priority over such maritime liens or over such mortgages, hypotheques or charges which comply with the require-ments of article 1, except as provided in paragraphs 3 and 4 of article 12.
2. The maritime liens set out in article 4 shall rank in the order listed, provided however that maritime liens securing claims for reward for the salvage of the vessel shall take priority over all other maritime liens which have attached to the vessel prior to the time when the operations giving rise to the said liens were performed.
3. The maritime liens set out in each of subparagraphs (a), (b), (d) and (e) of paragraph 1 of article 4 shall rank pari passu as between themselves.
4. The maritime liens securing claims for reward for the salvage of the vessel shall rank in the inverse order of the time when the claims secured thereby accrued. Such claims shall be deemed to have accrued on the date on which each salvage operation was terminated. Article 12 - Effects of forced sale 1. In the event of the forced sale of the vessel in a State Party, all registered mortgages, hypothhques or charges, except those assumed by the purchaser with the consent of the holders, and all liens and other encumbrances of whatsoever nature, shall cease to attach to the vessel, provided that: (a) at the time of the sale, the vessel is in the area of the jurisdiction of such State; and (b) the sale has been effected in accordance with the law of the said State and the provisions of article 11 and this article.
2. The costs and expenses arising out of the arrest or seizure and subsequent sale of the vessel shall be paid first out of the proceeds of sale. Such costs and expenses include, inter alia, the costs for the upkeep of the vessel and the crew as well as wages, other sums and costs referred to in article 4, paragraph 1 (a), incurred from the time of arrest or seizure. The balance of the proceeds shall be distributed in accordance with the provisions of this Convention, to the extent necessary to satisfy the respective claims. Upon satisfaction of all claimants the residue of the proceeds, if any, shall be paid to the owner and it shall be freely transferable.
3. A State Party may provide in its law that in the event of the forced, sale of a stranded or sunken vessel following its removal by a public authority in the interest of sate navigation or the protection of the marine environment, the costs of such removal shall be paid out of the proceeds of the sales, before all other claims secured by a maritime lien on the vessel.
4. It at the time of the forced sale the vessel is in the possession of a shipbuilder or of a shiprepairer who under the law of the State Party in which the sale takes place enjoys a right of retention, such shipbuilder or shiprepairer must surrender possession of the vessel to the purchaser but is entitled to obtain satisfaction of his claim out of the proceeds of sale after the satisfaction of the claims of holders of maritime liens mentioned in article 4.
5. When a vessel registered in a State Party has been the object of a forced sale in any State Party, the competent authority shall, at the request of the purchaser, issue a certificate to the effect that the vessel is sold free of all registered mortgages, hypothhques or charges, except those assumed by the purchaser, and of all liens and other encumbrances, provided that the requirements set out in paragraph 1 (a) and (b) have been complied with. Upon production of such certificate, the registrar shall be bound to delete all registered mortgages, hypothhques or charges except those assumed by the purchaser, and to register the vessel in the name of the purchaser or to issue a certificate of deregistration for the purpose of new registration, as the case may be.
6. States Parties shall ensure that any proceeds of a forced sale are actually available and freely transferable.".
28. Mr.A.K.Mylsamy, learned counsel submitted that their claim falls under three categories as under: (i)Claim for Core Repairs to the tune of Rs.1,19,00,000/- is a maritime claim; (ii)Claim for Berthing Charges to the tune of Rs.1,02,00,000/- falls under the category of Upkeep of the Vessel and, therefore, it is a maritime lien and would be determinable and payable on a par with that the claim of the crew on priority and they are entitled to payment on the ground that it is on account of upkeep of the vessel consequent to the arrest; (iii)Claim for Electricity Charges to the tune of Rs.30,00,000/-, which includes period both prior to the arrest and after arrest. Insofar as electricity charges are concerned, a sum of Rs.12,93,682.50 has been paid as per the order dated 30.8.2013 made in A.No.1814 of 2013 for the electricity supply. The said amount was paid taking into consideration the exchange rate of One USD = Rs.55/- and they now claim the difference amount of Rs.1,99,932.75 based on the exchange rate of One USD = Rs.63.50. (iv)Claim for Bunkering and Towing Charge to the tune of Rs.10,00,000/- is a maritime claim. Mr.A.K.Mylsamy, learned counsel sought permission of the Court to file further application in respect of other incidental charges incurred towards the upkeep of the Vessel and liberty is accordingly granted for filing appropriate application as sought for.
29. Before considering a maritime lien in terms of Article 4 and even before priority of claims is drawn as per Article 5, the claims of persons consequent to the forced sale, which is the case in hand, namely the claims referable under Article 12(2), have to be first discharged. This will be keeping in line with the International Convention of Maritime Liens and Mortgages, 1993 to which India is a signatory.
30. In the present case, the issue is what are all the claims that need to be considered consequent to the arrest and sale of the Vessel. As has been stated, the Court has already directed the payment of charges for power supply made consequent to the direction of this Court after the arrest. The bunker charges and the claim of Ship Chandler, who supplied goods consequent to the arrest, have also been discharged. The claim of Admiralty Marine Services, who valued the abandoned Vessel, which was arrested, for the purpose of sale, has also been paid. This will be in terms of Article 12(2) of the International Convention of Maritime Liens and Mortgages, 1993.
31. The issues that remain to be resolved are whether the claim of the crew for wages for the period during arrest till signing off would fall under the category specified under Article 12(2) of the International Convention of Maritime Liens and Mortgages, 1993 and whether the claim of M/s.Sembmarine Kakinada Limited is a maritime lien or maritime claim, in view of the alleged services rendered to the Vessel at the Port.
32. From a reading of Article 12(2) of the International Convention of Maritime Liens and Mortgages, 1993, it is clear that the cost and expenses arising out of the arrest or seizure and subsequent sale of the vessel shall be paid first out of the sale proceeds of the Vessel and it includes, inter alia, the costs for the upkeep of the Vessel and the crew as well as wages. It also provides for payment of other sums and costs, referred to in Article 4(1)(a) of the International Convention of Maritime Liens and Mortgages, 1993 incurred from the time of arrest or seizure. At the juncture, it is relevant to refer to Article 4(1)(a) of the International Convention of Maritime Liens and Mortgages, 1993, which reads as under: ".Article 4 - Maritime liens 1. Each of the following claims against the owner, demise charterer, manager or operator of the vessel shall be secured by a maritime lien on the vessel: (a) claims for wages and other sums due to the master, officers and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf.". The maritime lien under Article 4(1)(a) takes priority in terms of Article 5 and the effect of forced sale and disbursement is set out in Article 12(2), which makes it clear that the crew is entitled to the payment of their claims at the first instance. It is, therefore, evident that the wages during the period of arrest as well as the wages prior to arrest would rank as a maritime lien on priority basis. The payment of wages is also to be made as per the Rules of High Court in admiralty jurisdiction on release of vessel under arrest.
33. The details of the claim of the crew for wages has been given by Mr.S.Vasudevan, learned counsel appearing for the crew and the total salary for the crew as per calculation in Indian Rupees taking the exchange rate of 1 USD = Rs.63.50 comes to Rs.2,25,54,057/- (USD354330.70). To support the claim for the services rendered by the Master and other officers, the following documents have been marked: S.No.Crew Name Rank Description of Documents Document No.1 Demyanenko Volodymyr Master Employment Contract, Passport, Continuous Discharge Certificate Document (1) Series 2 Juanillo Pablo S. Chief Officer Employment Contract, Passport, Continuous Discharge Certificate Document (2) Series 3 Nim Ildefonso P.Jr. 2nd Officer Employment Contract, Passport, Continuous Discharge Certificate Document (3) Series 4 Cometa Jaime P. 3rd Officer Employment Contract, Passport, Continuous Discharge Certificate Document (4) Series 5 Galupino Roque B. Chief Engineer Employment Contract, Passport, Continuous Discharge Certificate Document (5) Series 6 Sujide Morel C. 2nd Engineer Employment Contract, Passport, Continuous Discharge Certificate Document (6) Series 7 Lapizar John B. 3rd Engineer Employment Contract, Passport, Continuous Discharge Certificate Document (7) Series 8 Amaguin Alfonsito E. 4th Engineer Employment Contract, Passport, Continuous Discharge Certificate Document (8) Series 9 Mansyur L.A.Wandan Electrician Employment Contract, Passport, Continuous Discharge Certificate Document (9) Series 10 Beloso Nestor M. Pumpman Employment Contract, Passport, Continuous Discharge Certificate Document (10) Series 11 Cenita Roberto O.Jr. Bosum Employment Contract, Passport, Continuous Discharge Certificate Document (11) Series 12 Lamosoa Faustino G AB1 Employment Contract, Passport, Continuous Discharge Certificate Document (12) Series 13 Limoso Albert L AB2 Employment Contract, Passport, Continuous Discharge Certificate Document (13) Series 14 Isleta Edward Nell I. AB3 Employment Contract, Passport, Continuous Discharge Certificate Document (14) Series 15 Rasim Chint AB4 Employment Contract, Passport, Continuous Discharge Certificate Document (15) Series 16 Parbo Chester Llyod B OS Employment Contract, Passport, Continuous Discharge Certificate Document (16) Series 17 Cordero Pedro T. Fitter Employment Contract, Passport, Continuous Discharge Certificate Document (17) Series 18 Quitayen Leopoldo C.Jr. Oiler 1 Employment Contract, Passport, Continuous Discharge Certificate Document (18) Series 19 Benny Firmansyah Oiler 2 Employment Contract, Passport, Continuous Discharge Certificate Document (19) Series 20 Alipio Jeofre P. Cook Employment Contract, Passport, Continuous Discharge Certificate Document (20) Series 21 Daryono Tajo Messman Employment Contract, Passport, Continuous Discharge Certificate Document (21) Series 22 Abdel Rahman Attia Master Employment Contract, Passport, Continuous Discharge Certificate Document (22) Series 23 Mohamed Kheir, Khaled Shaaban Chief Engineer Employment Contract, Passport, Continuous Discharge Certificate Document (23) Series 24 Neredimelli, Saibaba Lakshmana Rao Pumpman Employment Contract, Passport, Continuous Discharge Certificate Document (24) Series 25 Akula Rakesh AB2 Employment Contract, Passport, Continuous Discharge Certificate Document (25) 26 Yadav Bipin Kumar Cook Employment Contract, Passport, Continuous Discharge Certificate Document (26) Series 27 Kumar Ashish Messman Employment Contract, Passport, Continuous Discharge Certificate Document (27) Series 34. The claim of the crew is based on the prior contract entered into with the Owners of the Vessel. Though a dispute was sought to be raised with regard to claim filed by the Crew, there appears to be no serious error in the wages claimed. The crew however are agreeable to take 72% of the claim for the entire period (i.e.) pre-arrest and post-arrest, in totality, in full and final settlement of their claim for wages and compensation and such other claims, except repatriation charges. The daily maintenance expenses till they are allowed to be repatriated is also to be paid.
35. Since the claim of the crew forms part of the maritime lien and a major portion of the amount falls under the category of cost and expenses arising out of the arrest, the plea of the crew accepting to receive 72% of the total claim made by them towards full and final settlement of their claim for wages, compensation and such other claims, is accepted in the light of the revised terms as submitted by the crew, through their counsel Mr.S.Vasudevan, at Rs.2,25,54,057/- (USD354330.70 at the exchange rate of 1 USD = Rs.63.50). They however will be entitled to repatriation expenses.
36. For the foregoing reasons, the following order is passed in common in all the three applications preferred by the crew, namely A.Nos.1874, 2436 and 3541 of 2013: (i)The learned Advocate Commissioner is directed to disburse the wages of the Master and crew, including compensation, to the tune of Rs.2,25,54,057/- (Two Crores Twenty Five Lakhs Fifty Four Thousand and Fifty Seven only). The said sum, after obtaining necessary permission from the Reserve Bank of India, shall be paid in US Dollars; (ii)The Advocate Commissioner is directed to obtain necessary clearance from Reserve Bank of India immediately, in terms of this order; (iii)The Reserve Bank of India is directed to grant necessary permission in respect of each one of the crew immediately on receipt of an application or request by the Advocate Commissioner when submitted along with a copy of this order. (iv)The repatriation charges/expenses should be discharged by the Advocate Commissioner based on the best available rates; (v)The Advocate Commissioner shall also pay the boarding and lodging charges for the crew till departure on settlement of their wages.
37. At this juncture, Mr.A.K.Mylsamy, learned counsel appearing for M/s.Sembmarine Kakinada Limited made a claim for electricity charges based on the exchange rate applied in respect of the crew, (i.e.) 1 USD = Rs.63.50, as against the rate of 1 USD = Rs.55/- granted earlier vide order dated 30.8.2013 in A.No.1814 of 2013. The said revised claim is to the tune of Rs.1,99,932.75 based on the difference in dollar conversion. The said claim made by M/s.Sembmarine Kakinada Limited is not disputed, as it is based on exchange rate applicable. Accordingly, M/s.Sembmarine Kakinada Limited is entitled to a further sum of Rs.1,99,932.75 (Rupees One Lakh Ninety Nine Thousand Nine Hundred and Thirty Two and Paise Seventy Five only) towards difference in cost payable for electricity charges incurred by the Vessel post arrest.
38. The learned Advocate Commissioner is directed to issue a cheque in favour of M/s.Sembmarine Kakinada Limited for a sum of Rs.1,99,932.75 (Rupees One Lakh Ninety Nine Thousand Nine Hundred and Thirty Two and Paise Seventy Five only) forthwith. In the result, A.Nos.1874, 2436 and 3541 of 2013 filed by the crew are ordered in the above terms. A.No.2203 of 2013 is dismissed as infructuous. All other applications may be posted on 25.9.2013 for passing further orders. 18.9.2013 Index : Yes/No Internet : Yes/No Note to Registry: Issue order copy immediately. Issue a copy of this order to the Advocate Commissioner forthwith. Mark a copy of this order to Reserve Bank of India. sasi