The plaintiff sought a summary judgment against the first defendant vessel, Tag 15, for INR 93,719,098 for port charges, berth hire charges, penal berth hire charges, salvage operations, and mooring crew charges. The suit as originally filed was only against the vessel. Once the owner of the vessel, Tag Offshore Ltd, went into liquidation, Sudip Bhattacharya was appointed as the liquidator, and was added as the second defendant.

The vessel entered the plaintiff's port on 13 February 2019 and started occupying berth space. On 4 March 2019, EXIM Bank Ltd, a secured creditor of Tag Offshore Ltd, arrested the vessel. On 24th April 2019, insolvency proceedings were initiated against Tag Offshore Ltd by RH Petroleum Ltd under s 9 of the Insolvency and Bankruptcy Code 2016 (the IBC). On 7 May 2019, the crew abandoned the vessel. On 16 June 2019, on account of strong winds and currents brought on by the monsoon, the vessel began drifting away from the plaintiff’s berth. The vessel broke its mooring rope, floated away, and posed a serious threat to the port, its navigational channels, and the nearby village. The plaintiff immediately engaged and deployed a nearby tug, the Shambhavi, to salvage and bring back the vessel to safe harbour. On 26 September 2019, Tag Offshore Ltd was liquidated. On 20 January 2020, the plaintiff had the vessel arrested. On 28 January 2020, the liquidator filed an interim application seeking modifications/recall of the arrest order. The Court, by an order dated 29 January 2020, granted limited relief to the liquidator by allowing him to sell the vessel subject to certain terms and conditions. However, he was unable to do so.

On 26 February 2020, the plaintiff filed an interim application seeking judicial sale of the vessel. The ground on which sale was sought was that there was a severe risk of deterioration of the vessel which had been lying uncrewed for a long period of time and the plaintiff's maritime lien was likely to be prejudiced. Finally, on 9 July 2020, the Court directed sale of the vessel. On 22 September 2020, the Court confirmed the sale of the vessel to JT Marine Services Pvt Ltd for INR 107,500,000.

The defendants argued, among other things, that the plaintiff's admiralty suit was not maintainable in light of the bar contained in s 33(5) of the IBC; and, alternatively, that the plaintiff's suit was barred by res judicata - the plaintiff had already filed its claim before the liquidator of Tag Offshore Ltd, and was thus not entitled to bring the same claim again.

Held: Summary judgment and a decree in favour of the plaintiff against the sale proceeds of the vessel for INR 55,100,016. The salvage claim is not granted at this stage due to a lack of detailed documentary evidence, and will have to be proved at trial of the suit.

The first argument is that the present suit is not maintainable considering the bar contained in s 33(5) of the IBC. What s 33(5) contemplates is that subject to s 52, when a liquidation order is passed against the corporate debtor, no suit or other legal proceeding shall be instituted by or against the corporate debtor. Section 52 deals with the rights of the secured creditor in liquidation proceedings. The proviso to s 33(5) stipulates that a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the adjudicating authority. When one reads s 33(5), it is clear that the provision prohibits the institution of a suit or other legal proceeding against the corporate debtor only. It does not in any way prohibit the institution of a suit or other legal proceeding against a ship owned by the corporate debtor when invoking the admiralty jurisdiction of the Court. Under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017 (the Admiralty Act), the vessel is treated as a separate juristic entity which can be sued without joining the owner of the vessel to the proceeding. The action against the vessel under the Admiralty Act is an action in rem, and a decree can be sought against the vessel without suing the owner. The purpose of an action in rem against the vessel is to enforce the maritime claim against the vessel, and to recover the amount of the claim from the vessel by an admiralty sale of the vessel and payment out of the sale proceeds. It is the vessel that is liable to pay the claim. This is the fundamental basis of an action in rem. The plaintiff is not concerned with the owner, and neither is the owner a necessary or a proper party. In other words, the presence of the owner is not required for adjudication of the plaintiff’s claim. It is for this very reason that there is no requirement to serve the writ of summons on the owner of the vessel, and service of the warrant of arrest on the vessel is considered adequate. The action in rem is distinct from an action in personam which is a proceeding inter partes founded on personal service on the defendant within jurisdiction of the court, leading to a judgment against the person of the defendant.

This has been succinctly explained by this Court in its decision in Raj Shipping Agencies v Barge Madhwa 2020 SCC OnLine Bom 651 (CMI782). That case also examined the interplay between the provisions of the Admiralty Act and the IBC. In that case, the Court opined that the bar under s 33(5) of the IBC applies to suits against the corporate debtor, and this necessarily means that it is a suit in personam. An action in rem is not against the corporate debtor, but against the vessel. The vessel is a distinct juridical entity and the action proceeds without reference to the owner who is not a party to the suit when filed. Liquidation of the corporate debtor does not affect the ownership of the res so as to defeat a maritime claim in respect of the vessel. The res continues to be in the ownership of the corporate debtor and the liquidator merely acts as a custodian. The status of the res does not change. Hence, the action in rem can be entertained even at the stage of liquidation of the corporate debtor as the claim is against the res and not against the corporate debtor. By arrest of the vessel, the plaintiff would become a secured creditor to the extent of the value of the res only, but not a secured creditor of the corporate debtor's other assets. Hence, this will not affect other secured creditors of the corporate debtor. However, by not permitting the action in rem and arrest of the vessel, the rights in rem given to a maritime claimant under the Act would be defeated and denied. The entire purpose of these rights (whether a maritime lien or a maritime claim) is to enable a maritime claimant to have its claim perfected in law by arrest of the vessel. If a claimant is not permitted to do so, its right in rem may stand extinguished and be lost forever. The decision in Raj Shipping Agencies clearly answers the argument regarding the maintainability of the present suit, which is rejected.

As to the second argument, that the plaintiff's suit is barred under the principles of res judicata, this argument proceeded on the basis that there is no qualitative difference between the claim made against the corporate debtor and the claim made against the vessel because the claim is based on the same cause of action. This argument is not correct in view of the decision in Raj Shipping Agencies, where this Court clearly drew a distinction between the claim made against the vessel, which is an action in rem; and the claim made against the owner of the vessel (in this case, the corporate debtor Tag Offshore Ltd), which is a claim in personam.