Conflict of Jurisdictions : Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 and Recovery of Debts Due to Banks and Financial Institutions Act, 1993

Case Study – ICICI Ltd. V/s. MFV Shilpa, (2002) AIR Bombay 371                

Facts :

• Recovery of  loan of a vessel was being secured by the mortgage of the vessel. 
• Mortgager filed suit for arrest of vessel and subsequent sale as an action in rem against the res.
• The jurisdiction of the  Admiralty court upon the vessel in question was challenged .

Conflict of Jurisdictions :

In ICICI Ltd. V/s. MFV Shilpa, (2002) , It was challenged stating that the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 under the section 18 of the said act barred the jurisdiction of the High Court and only the tribunal under the said act  had the jurisdiction to entertain and decide the Bank’s application.

This contention was being rejected and it was highlighted that admiralty jurisdiction by its nature bears a special impact where a vessel or a ship is being treated as a juristic person and against it the claim is filed which can be arrested to secure the plaintiff’s right.

Such An action against a vessel for recovery of any claim is an action in rem where application if being made upon for arrest of the ship, same can be executed to protect the rights of plaintiff. It is in Admiralty act that a vessel itself is treated as a person upon whom an amount is due for plaintiff.

Defining person under General clauses act for the purpose of DRT Act :                                                         

The term ‘Debt’  under the Sec. 2(g) of the D.R.T. Act was termed as  any liability which is claimed as due by Bank or financial institution from any person. Citing the interpretation of the term ‘Person’ as defined by the General Clauses Act under its Section 3(42) it includes any company or association or body of individuals, whether incorporated or not . It is thus clear that a person is a living person as also a company or association or body of individuals can also be treated as person whereas a vessel cannot be treated as a person under the provisions of the said act.                                                                                      

Additionally the Section 51 of the Merchant Shipping Act, 1958 empowered a High Court to entertain a claim by a mortgagee for recovery of his dues by sale of the mortgaged ship                                

Conclusion :

Thus The jurisdiction of the High Court to entertain the suit couldn’t be ruled out under  the provisions of the RDDB Act . A primary point of law highlighted here that where rights conferred upon a purchaser of a vessel being  sold to are of absolute nature and  is a conclusive proof of his title to the ship and any person who may have a claim against that vessel cannot make any claim against the purchaser or the vessel in his hand.

Whereas a vessel would be sold in execution of a certificate issued by the D.R.T. the sale certificate may not confer a clear title on the purchaser.

In admiralty jurisdiction, the claim of the plaintiff is secured firstly by arrest of the ship and secondly, when the ship is released from arrest by the security furnished.

References :                           

-Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017.                   

-Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

– ICICI Ltd. V/s. MFV Shilpa, (2002)  AIR 2002 Bom 371, 2002 (1) BomCR 724, 2002 (2) MhLj 563

– The General Clauses Act 1977 ( 1920AD).