Raj Transport and Trading Company v. Barge Madhwa and another

(C) of the Plaint in the Admiralty Suit in the sum of Rs. 15,04,797/- in addition to further interest and costs.

16. Mr.Gandhi has relied upon the decision of this Court in the case of Raj Shipping Agencies Vs. Barge Madhwa and Ors.[1] in support, submitting that this Court has allowed the Interim Application seeking decree on admission in almost identical facts in the case of a sister 1 IAL 15746 of 2023 in ADMS 6 of 2015 dated 24th January, 2025. Nikita Gadgil/Kanchan Dhuri 8/40 concern.

17. Mr.Gandhi submits that, therefore, this Interim Application has also been filed seeking a decree on admission and the same be allowed in view of the aforesaid submissions.

18. On the other hand, Mr. Malhar Zatakia, learned Counsel appearing for the Liquidator of Defendant No. 2 submits that a reply has been filed on behalf of the Liquidator opposing the Application under Order XII, Rule 6 of the CPC and submits that although this Court in the case of Raj Shipping Agencies Vs. Barge Madhwa and Ors. (supra), which is a sister concern of the Plaintiff herein, has allowed the Application, however, while reiterating the submissions made in the said case, learned Counsel submits that he would like to address this Court on two additional submissions pertaining to approbation/ reprobation and costs.

19. Mr.Zatakia has submitted that after the Suit was filed, pursuant to Corporate Insolvency Resolution Process (“CIRP”) proceedings before the National Company Law Tribunal (“NCLT”), Defendant No. 2 was liquidated by order dated 27th May 2022 of the NCLT. Mr.Zatakia Nikita Gadgil/Kanchan Dhuri 9/40 submits that after the passing of the liquidation order, the Liquidator had invited claims from the creditors and stakeholders in accordance with the liquidation regulations and that the Plaintiff had submitted its claim before the Liquidator for an amount of Rs.32,25,377/- (principal amount being Rs.12,82,717/-) and interest of Rs.19,42,660/- in Form-

20. Mr.Zatakia would further submit that since it has been categorically mentioned by the Plaintiff in Form-C that the Plaintiff has relinquished its security interest and that the claim of the Plaintiff has been admitted in accordance with the Insolvency and Bankruptcy Code, 2016 (“IBC”) and will be treated as per Section 53 of the said Code, the Plaintiff cannot be permitted to pursue two remedies for the same claim and that therefore, the Application be dismissed.

21. Mr.Zatakia would further submit that by way of this Application, the Plaintiff is seeking a summary judgment on the basis of admissions made by Defendant No. 2. It is submitted that the Plaintiff cannot be permitted to recover its claim in priority over other creditors when the company is under liquidation but would have to follow the priorities as per Section 53 of the IBC. Mr.Zatakia further submits that the claims of Nikita Gadgil/Kanchan Dhuri 10/40 all creditors of the Corporate Debtors viz. Defendant No. 2 will be treated in accordance with the IBC and the regulations thereunder and that the claim of the Plaintiff cannot be given any priority, as the Plaintiff’s claim has been admitted by the Liquidator.

22. Mr.Zatakia seeks to rely upon the decision of this Court in the case of Raj Shipping Agencies Vs. Barge Madhwa and Another alongwith the connected matters[2] (“Barge Madhwa”) submitting that in paragraph no. 101 of the said decision, this Court has observed that a claimant, who has a maritime claim or a maritime lien and has obtained an order of arrest before liquidation, will be considered a secured creditor and will be entitled to enforce and realize the security interest in accordance with the applicable law viz. Admiralty Act as provided under Section 52(4) of the IBC. Mr.Zatakia however submits that the Plaintiffs being a secured creditor but having given up its security interest viz. the interest in the sale proceeds of Defendant NO. 1 and the claim of the Plaintiff before the Liquidator of Defendant NO. 2 having been admitted, the Plaintiff has subjected itself to distribution of assets under Section 53 of the IBC and in particular under Section 53(1)(b)(ii) of the IBC and cannot jump the process or

2. 2020 SCC OnLine Bom 651. Nikita Gadgil/Kanchan Dhuri 11/40 the priorities set out under Section 53 of the IBC by obtaining a decree on admission by way of this Application, having already relinquished its security interest under Section 52(1)(a) of the IBC.

23. Mr. Zatakia also submits that by voluntarily submitting to the statutory process under the Insolvency and Bankruptcy Code (the “IBC”), the Plaintiff has elected to relinquish its security interest and avail itself of the waterfall mechanism under Section 53 of the IBC. Mr. Zatakia submits that the Plaintiff cannot approbate and reprobate. Having made this election, the Plaintiff cannot now enforce the same claim, that too in respect of security which it has relinquished, before this Court. Such an attempt amounts to approbating and reprobating qua the same security interest i.e. Defendant No.1 vessel, which is impermissible under law. The Plaintiff, having exercised the option of relinquishing its security interest and participate in the liquidation process as a secured creditor who has relinquished its security interest (and would thus receive its dues under Section 53(1)(b)(ii) as opposed to Section 53(1)(e)(ii) under the Code, cannot now assert an inconsistent position to redeem the same security interest through an alternative remedy under the admiralty jurisdiction. Mr. Zatakia relies upon the decision of the Hon’ble Supreme Court in the Nikita Gadgil/Kanchan Dhuri 12/40 case of Union of India & Ors Vs. N. Murugesan & Ors.[3] in support of his submissions.

24. Mr. Zatakia has further submitted that costs ought not be imposed upon the Liquidator of Defendant No. 2 liquidator as:a. The present Suit was filed by the Plaintiff on 5th January, 2015. The above interim application has been filed on the basis of a purported admission by Defendant No.2 by a letter dated 15th November, 2014 i.e. prior to filing the present Suit. However, the present Interim Application seeking a decree on admission was filed by the Plaintiff only on 6th February, 2025 i.e. nearly 10 years after filing of the instant Suit, despite the documents relied upon by the Plaintiff in the present Interim Application being already available with it. b. The Plaintiff has placed no new documents on record before this Hon’ble Court and ought to have sought the decree on admission at the time of filing the Suit or soon thereafter. The Plaintiff has therefore been lackadaisical in its approach and cannot take the benefit of its own in filing the present Interim Application by seeking costs from the

Nikita Gadgil/Kanchan Dhuri 13/40 c. Separately, on 27th May, 2022, the application for liquidation fo the Defendant No.2 company, Punj Lloyd Limited, was allowed by the Hon’ble National Company Law Tribunal, Delhi (“NCLT, Delhi”) and the Liquidator was appointed. The Plaintiff filed its proof of claim with the Liquidator on 20th June, 2022. The Interim Application was served on the Liquidator on 6th February, 2014, after which date the Liquidator has been consistently appearing before this Hon’ble Court. That therefore, the Liquidator of Defendant No.2 ought not be made to suffer costs due to delays on the part of the Plaintiff in filing the present application seeking a decree basis an admission dated 15th November, 2014. Importantly, the said costs would be recoverable from the liquidation of the Defendant No.2, which would cause grave loss and irreparable harm to the other stakeholders of the Defendant No.2.

25. Mr. Zatakia accordingly submits that the Application be rejected.

26. Mr.Gandhi as noted above has relied upon the decision of this (supra) and submits in rejoinder that this Court has already dealt with and rejected the very same arguments of the Liquidator of the Defendant No.2. Mr. Gandhi submits that the claimant is a secured Nikita Gadgil/Kanchan Dhuri 14/40 creditor of the vessel and not of the owner and draws this Court’s attention to paragraph 87 of the decision in the case of Barge Madhwa (supra) as well as paragraphs 36 to 41 and 44 of the decision of this (supra).

27. As regards reliance by the learned Counsel for the Liquidator of the Defendant No.2 upon the decision of the Union of India & Ors Vs.

28. Mr.Gandhi, learned Counsel accordingly submits that this Court reject the objections raised by Mr.Zatakia, learned Counsel for the Liquidator of Defendant No.2 and allow the application for decree on admission, as where a claim is admitted, the Court has jurisdiction to enter a judgment for the Plaintiff and to pass a decree on the admitted claim and admission in this case is one that can be inferred from the facts and circumstances of the case without any dispute. Nikita Gadgil/Kanchan Dhuri 15/40

29. Mr.Gandhi has further submitted that the costs in accordance with prayer clause (D) of the Interim Application also be granted submitting that the litigation has been going on since last 12 years and that the amount of Rs. 7,32,400/- claimed as costs is justified towards the cost of litigation. That the arguments on behalf of the Liquidator of the Defendant No.2 to oppose the same are completely irrelevant and be rejected.

30. I have heard the learned Counsel at length and considered the submissions.

31. While Mr. Zatakia’s arguments have already been dealt with by this Court in the decision of the Applicant’s sister concern in the case of Raj Shipping Agencies vs. Barge Madhwa and others (supra), it is to be noted that Mr. Zatakia, learned Counsel for the Liquidator of Defendant No.2 has sought to raise two additional issues herein as set out in the earlier part of this decision.

32. In my view the said two issues sought to be raised as new issues are in respect of the very same issues raised earlier but a fresh attempt Nikita Gadgil/Kanchan Dhuri 16/40 and different reason to justify the very same issues raised in the case of Raj Shipping Agencies vs. Barge Madhwa and others (supra) albeit with respect to a sister concern of the Applicant, is being attempted.

33. In the case of Raj Shipping Agencies vs. Barge Madhwa and others (supra), it was held by this Court in paragraph 31 to 48 as under:

31. It is at the outset to be noted that Mr. Zatakia, learned Counsel for the Liquidator of Defendant No.2 has not disputed the aspect of admission of liability, under Order XII Rule 6 of the Code of Civil Procedure, 1908. His entire opposition revolves around the proposition that if this Application is allowed, the Plaintiff will claim priority over other creditors and despite the Plaintiff’s claim having been admitted under IBC, the Plaintiff would jump the priorities under Section 53 of the IBC and in particular under Section 53(1)(b)(ii) which the Plaintiff cannot be permitted to do, having already relinquished the security interest under Section 52(1)(a) of the IBC. Mr.Zatakia, learned Counsel has relied upon paragraph 101 of the decision in the case of Barge Madhwa, which is usefully quoted as under:-

32. On the other hand, Mr.Gandhi, learned Counsel has relied upon paragraphs No.84, 87, 102 and 103 of the very same decision in support of his contentions that parties having a maritime lien or a maritime claim are entitled to file an action in rem against the sale proceeds and that the determination of priorities would be done in accordance with Section 10 of the Admiralty Act and inter se priorities of maritime liens under Section 9 of the Admiralty Act and that Section 53 of the IBC which refers to distribution of assets will not apply. Paragraphs No.84, 87, 102 and 103 of the said decision in the case of Barge Madhwa are also usefully quoted as under:

102. Since the sale proceeds represent the res, the Admiralty Court will be entitled to invite claims against the sale proceeds by following the Admiralty procedure prescribed in the Rules. In admiralty law there is no difference between an action in rem against a ship and an action in rem against the proceeds of sale of that ship (See m.v. The Convenience Container). Parties having a maritime lien or a maritime claim will be entitled to file an action in rem against the sale proceeds. The determination of priorities will also be done in accordance with Section 10 of the Admiralty Act and inter se priorities of maritime liens will be decided in accordance with Section 9 of the said Act. Section 53 of the IBC which refers to Nikita Gadgil/Kanchan Dhuri 19/40 distribution of assets will not apply. If the ship is sold by the Admiralty Court in exercise of its jurisdiction in rem then the machinery of the Admiralty Act will apply and the sale proceeds will be distributed on the basis of priorities determined under the Admiralty Act.

103. All those claimants who are unable to recover their claim from the sale proceeds will have to pursue their claim in the liquidation as unsecured creditors.”

33. The decision in the case of Barge Madhwa has very succinctly captured the inter play between the provisions of the Admiralty Act and the IBC.

34. An action in rem against a ship is not an action against the owner of the ship who may be the corporate debtor as defined under the IBC. That neither is the action in rem considered as a proceeding against the assets of the owner/corporate debtor. That it is a proceeding against the ship to recover the claim from the ship and not an action against the owner/corporate debtor to recover the claim by attachment of the assets of the owner/corporate debtor or by lodging a claim with the Liquidator of the corporate debtor.

35. In maritime law, once a ship is arrested in respect of a maritime lien or a maritime claim, the claimant becomes a secured creditor vis-a-vis the arrested vessel and the vessel is encumbered with the Plaintiff’s claim as all those who have maritime lien and claims can enforce them by filing an action against the sale proceeds.

36. The claimant is not a secured creditor of the owner but only that of the particular ship and to the extent of the value of the ship. Nikita Gadgil/Kanchan Dhuri 20/40

37. Holding that the Admiralty Act and the IBC are to be construed harmoniously, so as to give effect to both, the decision in the case of Barge Madhwa has categorically held that a ship against whom a maritime claim can proceed in an action in rem does not fall within the definition of corporate debtor under the IBC. Neither is the ship being proceeded against as an asset of the corporate debtor. It is the ship itself which is liable and which is arrested for crystallizing the maritime claim. The ship is an independent juridical entity which is sued in its own name dehors the status of its own owners, who may be the corporate debtor and without reference of its owner.

38. Thus an action in rem filed under the Admiralty Act for arrest of the ship would not amount to an institution of suit against a corporate debtor as defined under the IBC nor would continuation of an action in rem amount to continuation of a suit against a corporate debtor.

39. As an action in rem proceeds in accordance with the applicable law, namely, the Admiralty Act, the priorities for payment out of the sale proceeds will also be determined in accordance with the said Act and Section 53 of the IBC will not apply.

40. In paragraphs 99 and 100 of the said judgment in the case of Barge Madhwa, it has been held that, if CIRP is not successful and the company is ordered to be liquidated, the security provided for Plaintiff's claim will inure to the benefit of Plaintiff alone. It is in such a case that the Plaintiff will be a secured creditor in liquidation and will be entitled to realise its security interest as provided in Section 52(4) of the IBC which provides “A secured creditor may enforce, realise, settle, compromise or deal with the secured assets in accordance with such law as applicable to Nikita Gadgil/Kanchan Dhuri 21/40 the security interest being realised and to the secured creditor and apply the proceeds to recover the debts due to it.” The law as applicable would be the Admiralty Act. Consequently, upon an order of liquidation being made and a liquidator being appointed, the Suit will proceed in personam under the Admiralty Act and the Plaintiff will be entitled to realise its security and it will be open to the Liquidator to defend the suit which right is available to him as provided in Section 35(1)(k) of the IBC. It is in this context that in paragraph 101 it has been held that, if the company is liquidated then Plaintiff's action being an action in rem will proceed and the vessel will be sold by way of an Admiralty sale to maximize its realisation value and the Plaintiff and any other claimant who has a maritime claim or a maritime lien and has obtained an order of arrest before liquidation, will be considered a secured creditor and will be entitled to enforce and realize his security interest in accordance with the applicable law, viz., Admiralty Act, as provided in Section 52(4) of the IBC.

41. In the facts of this case, pursuant to CIRP the claim lodged by the Applicant with the Liquidator has been admitted and therefore even if the Applicant has given up its security interest under Section 52(1)(a) of the IBC, the Applicant admittedly having a maritime lien/maritime claim against the sale proceeds, the determination of priorities will be in accordance with Section 10 of the Admiralty Act and inter se priorities of the maritime liens will be decided in accordance with Section 9 of the said Act and as held in paragraph 102 of the said decision in the case of Barge Madhwa, Section 53 of the IBC which refers to distribution of assets will not apply as the ship has been sold by the Admiralty Court in exercise of its jurisdiction in rem and the machinery of the Admiralty Act will apply and the sale proceeds will be distributed on the basis of priorities determined under the Admiralty Act. Nikita Gadgil/Kanchan Dhuri 22/40

42. Of course needless to say that after having recovered the entire claim under the Admiralty Act, the Applicant cannot seek to recover the same claim even though admitted by the Liquidator under the IBC. Therefore, the question of Plaintiff/Applicant jumping the process or the priorities set out under Section 53 of the IBC would not arise, if this Court decrees the Suit in favour of the Plaintiff/Applicant.

43. No doubt if the claim is unable to be recovered or satisfied from the sale proceeds, the said part will have to be pursued under the IBC.

44. In my view, therefore, by allowing this application and decreeing the suit, would not result in the Plaintiff’s jumping the process of priorities set out under Section 53 of the IBC in as much as, the said provision will not apply in view of what has been held as above in view of the decision in the case of Barge Madhwa. Therefore, the objection by Mr.Zatakia, learned Counsel is to be rejected.

45. Mr.Gandhi, learned Counsel has also relied upon the decision of this Court in the case of Uttam Singh Duggal & Co. Ltd Vs. United Bank of India and Others (supra), to submit that where a claim is admitted, the Court has jurisdiction to enter a judgment for the Plaintiff and to pass a decree on the admitted claim.

46. Paragraphs 12 and 17 of the decision of the Hon’ble Supreme Court in the case of Uttam Singh Duggal & Co. Ltd Vs. United Bank of India and Others (supra), which summarize the law of decree on admission is usefully quoted as under:

47. Mr.Gandhi, learned Counsel has also relied upon the decision of the Hon’ble Supreme Court in the case of Nikita Gadgil/Kanchan Dhuri 24/40 Charanjit Lal Mehra and Others Vs. Kamal Saroj Mahajan (Smt) and Anr (supra), to submit that admission includes one that can be inferred from the facts and circumstances of the case without any dispute.

48. The following portion of paragraph 8 of the said decision is relevant and is usefully quoted as under: “8……………….. In fact, Order 12 Rule 6 CPC is enacted for the purpose of and in order to expedite the trials if there is any admission on behalf of the defendants or an admission can be inferred from the facts and circumstances of the case without any dispute; then, in such a case in order to expedite and dispose of the matter such admission can be acted upon. In the present case, looking at the terms of the lease deed, there can be no two opinions that the tenancy was joint/composite and not an individual one. Therefore, on these admitted facts the view taken by learned Single Judge of the High Court appears to be justified. In this connection, a reference may be made to a decision of this Court in the case of Uttam Singh d Duggal & Co. Ltd. v. United Bank of India. Their Lordships have held as follows: (SCC p. 121) “In the objects and reasons set out while amending Rule 6 of Order 12 CPC it is stated that 'where a claim is admitted, the court has jurisdiction to enter a judgment for the plaintiff and to pass a decree on admitted claim. The object of the rule is to enable the party to obtain a speedy judgment at least to the extent of the relief to which according to the admission of the defendant, the plaintiff is entitled. The Supreme Court should not unduly narrow down the meaning of this rule as the object is to enable a party to obtain speedy judgment…………… ” Nikita Gadgil/Kanchan Dhuri 25/40

34. Accordingly, the said Interim Application was allowed. As can be seen, the issues raised by the Liquidator of the Defendant No.2 herein are similar to those raised in the case of Raj Shipping Agencies vs. Barge Madhwa and others (supra) and which have been adequately dealt with and I do not propose to take any other view.

35. However, since the learned Counsel for the Liquidator of the Defendant No.2 has purported to raise two additional issues, the same are dealt with hereunder.

36. The issue that the Plaintiff cannot approbate or reprobate is taken up first.

37. As observed above, this additional issue is sought to be raised in support of the same proposition that since the Plaintiff has elected to relinquish its security interest and avail itself of the waterfall mechanism under Section 53 of the IBC, having made this election, the Plaintiff cannot now enforce the same claim in respect to the security which has been relinquished. It is in this context and in respect of the very same issue that has been raised in the case of Raj Shipping Agencies vs. Barge Madhwa and others (supra), it has been submitted Nikita Gadgil/Kanchan Dhuri 26/40 that such an attempt amounts to approbation and reprobation in respect of the same security interest, viz. Defendant No.1-vessel and that same is impermissible in law. It has been sought to canvass that having exercised the option of relinquishing the security interest and having participated in the liquidation process as a secured creditor who has relinquished its security interest to receive its dues under Section 53(1)(b)(ii) as opposed to Section 53(1)(e)(ii) under the IBC, the Applicant cannot now assert an inconsistent position regarding the same security interest through the alternative remedy under the Admiralty jurisdiction.

38. I am of the view that the above argument on behalf of the liquidator of the Defendant No.2 is completely misplaced, and rather misconceived. Firstly, the notion that the remedy under admiralty jurisdiction is an alternative remedy, in my view, needs to be dispelled. It has been observed in the case of Barge Madhwa, that the action against a vessel is an action in rem and action against the corporate debtor or owner of vessel is an action in personam. In the said decision, conflict between Admiralty Law and Insolvency Law has been reconciled. It has been held in paragraph 84 of the said decision in the case of Barge Madhwa that an action in rem against the ship is not an Nikita Gadgil/Kanchan Dhuri 27/40 action against the owner of the ship who may be the corporate debtor as defined under the IBC. Neither is the action in rem considered as a proceeding against the asset of the owner/corporate debtor. It is a proceeding against the ship to recover the claim from the ship, not an action against the owner/corporate debtor to recover the claim by attachment of the asset of the owner/corporate debtor. Once a ship is arrested in respect of a maritime lien or a maritime claim, the claimant becomes a secured creditor of that arrested vessel and not the owner. Having arrested the ship, the security of the claim is perfected. The holder of maritime lien is a secured creditor from the moment the maritime lien arises. The said claimant is not a secured creditor of the owner, but only that of the particular ship and to the extent of the value of the ship. As also noted in the case of Barge Madhwa (Supra) and reiterated in the case of Raj Shipping Agencies vs. Barge Madhwa and others (supra) that, Section 53 of the IBC or the priorities set out thereunder will not apply. That therefore the question of application of Section 53(1)(b)(ii) as opposed to Section 53(1)(e)(ii) would not arise and the Applicant cannot be said to be asserting an inconsistent position to redeem the same security interest through an alternative remedy under the admiralty jurisdiction. Nikita Gadgil/Kanchan Dhuri 28/40

39. Accordingly, I am of the view that an endeavour to apply the principle of approbation and reprobation in support of the aforesaid proposition, in the facts of this Application, is only a misconceived attempt to once again raise conflict of the two jurisdictions, one in rem and other in personam as the issue has already been settled in the case of Barge Madhwa. The decision of the Hon’ble Supreme Court in the case of Union of India and others vs. N. Murugesan and others (supra), relied upon by the learned Counsel for the Liquidator of the Defendant No.2 is in an entirely different context and the present Application is based on a completely different context and therefore the said principle of approbation and reprobation is not applicable to the present case. It has been held in the said decision that a person who knows that if he objects to an instrument, he will not get the benefit he wants, cannot be allowed to do so, while enjoying the fruits; one cannot take advantage of one part while rejecting the rest; a person cannot be allowed to have the benefit of an instrument while questioning the same; it discourages a practice that if a party enjoys the one part fully and on near completion of the said enjoyment, thereafter questions the other part. It is a common law principle and there is an element of fair play which is inbuilt in this principle and also a species of estoppel dealing with the conduct of a party. Learned Counsel for the Liquidator Nikita Gadgil/Kanchan Dhuri 29/40 of the Defendant No.2 has drawn attention of this Court to paragraph 26 of the said decision in respect of his contentions, which is usefully quoted as under:

40. As can be seen from the afore-quoted paragraph, no party can be allowed to accept and reject the same thing and thus one cannot blow Nikita Gadgil/Kanchan Dhuri 30/40 hot and cold; a person cannot be allowed to have a benefit of an instrument while questioning the same. Such a party either has to affirm or disaffirm the transaction. The maxim that a person cannot approbate and reprobate is only one application of the doctrine of election, and that its operation must be confined to reliefs claimed in respect of the same transaction and to the persons who are parties thereto. A person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn around and say it is void for the purpose of securing some other advantage. Once the person has elected that the transaction is valid then a party cannot be permitted to turn around and say that the transaction is invalid. Several decisions of the Hon’ble Supreme Court have been quoted in the decision of Union of India vs. N. Murugesan (supra) and certainly these are time tested principles of law, but in the facts of this case, what we are concerned with, is not a transaction or an instrument where the Applicant has first accepted it and thereafter is turning around and saying that the same is unacceptable or invalid. In the present case, we are concerned with the right of the Applicant in two jurisdictions. One is the admiralty jurisdiction and the other is civil jurisdiction and as noted above, the Applicant is making the claim in rem i.e. against the vessel and in the Nikita Gadgil/Kanchan Dhuri 31/40 other is a claim in personam i.e. against the owner of the vessel. The Applicant herein is a secured creditor of the vessel and not of the owner. Paragraph 87 of the decision in the case of Barge Madhwa as well as paragraphs 36 to 41 of the decision in the case of Raj Shipping Agencies vs. Barge Madhwa and others (supra) as quoted above clearly elucidate this position.

41. Also as noted in the decision in the case of Barge Madhwa and reiterated in the decision of Raj Shipping Agencies vs. Barge Madhwa and others (supra), and in particular paragraph 41 thereof, pursuant to the CIRP, the claim lodged by the Applicant with the Liquidator has been admitted however, since the Applicant admittedly has a maritime lien / maritime claim against the sale proceeds, the claim is to be decided in accordance with Section 9 of the Admiralty Act and as held in the case of Barge Madhwa (supra), as well as in the case of Raj Shipping Agencies vs. Barge Madhwa and others (supra), Section 53 of the IBC which refers to distribution of assets will not apply as the ship has been sold by the Admiralty Court in exercise of its jurisdiction in rem and the machinery of the Admiralty Act will apply and the distribution of the sale proceeds will be in accordance with the Admiralty Act. Nikita Gadgil/Kanchan Dhuri 32/40

42. In my view, therefore, the principle of approbation or reprobation or the doctrine of election would not apply to the facts of this case and the proposition on behalf of the learned Counsel for the Liquidator of the Defendant No.2 is completely misconceived and is therefore, rejected. Accordingly, the decision of the Hon’ble Supreme Court in the case of Union of India vs. N. Murugesan (supra) does not assist the case of Liquidator for the Defendant No.2.

43. Of course needless to say that if the entire claim is recovered under the Admiralty Act, the Applicant cannot seek to recover the same claim even though admitted by the Liquidator under the IBC. Therefore, the question of Plaintiff/Applicant jumping the process or the priorities set out under Section 53 of the IBC would not arise, if this Court decrees the Suit in favour of the Plaintiff/Applicant.

44. No doubt if the claim is unable to be recovered or satisfied from the sale proceeds, the said part will have to be pursued under the IBC.

45. As regards, the second additional ground sought to be raised with respect to the costs, I am of the view that the said ground has also been dealt with by this Court in the case of Raj Shipping Agencies vs. Nikita Gadgil/Kanchan Dhuri 33/40 Barge Madhwa and others (supra). However, since the said issue has been raised, this Court deems it appropriate to deal with the same here as well.

46. At the outset, it is to be noted that the litigation has been going on since more than 10 years and as also submitted by Mr. Gandhi, that the Liquidator has been appointed as Liquidator of Defendant No.2 and has been acting as liquidator of the Defendant No.2 in liquidation.

47. Legal costs as set out in Exhibit F to the rejoinder have not been disputed by the learned Counsel for the Liquidator of Defendant No.2 except to say that the delay has been on the part of the Plaintiff, as the admission has been sought on the basis of letter dated 15th November 2014 and that the liquidation was dated 27th May 2022 and the claim was filed by the Plaintiff on 20th June 2022 and therefore the liquidator ought not to be saddled with costs due to the delays on the part of the Plaintiff in filing the Application and that grave irreparable loss and harm would be caused to the other stakeholders. No material has been brought before me to substantiate the same and I am not inclined to entertain these submissions. Nikita Gadgil/Kanchan Dhuri 34/40

48. As noted above, the costs claimed are on the basis of legal expenses incurred by the Applicant in respect of professional fees, Court fees and Counsel fees and Miscellaneous expenses which have not been disputed in any manner by the Liquidator of the Defendant No.2.

49. Also, just because the liquidator was not responsible for the action of the company and has been diligent since the time of his appointment, or that other stakeholders will be affected, in my view, cannot be mitigating factors in the award of costs in the facts and circumstances of this case. Accordingly, the said arguments regarding costs are also rejected.

50. As noted above, I find that in almost identical fact situation in the case of the sister concern of the Applicant, viz. in the case of Raj Shipping Agencies vs. Barge Madhwa and others (supra), this Court has considering Mr. Gandhi’s reliance upon the case of Uttam Singh Duggal & Co. Ltd Vs. United Bank of India and Others (supra) as well as in the case of Charanjit Lal Mehra and Others Vs. Kamal Saroj Mahajan (Smt) and Anr (supra) which are decisions in the context of Order XII Rule 6 of the CPC allowed the Interim Application seeking decree on admission. Nikita Gadgil/Kanchan Dhuri 35/40

51. Paragraphs 12 and 17 of the decision of the Hon’ble Supreme Court in the case of Uttam Singh Duggal & Co. Ltd Vs. United Bank of India and Others (supra), which summarize the law of decree on admission is usefully quoted as under: “12. As to the object of Order 12 Rule 6, we need not say anything more than what the legislature itself has said when the said provision came to be amended. In the Objects and Reasons set out while amending the said Rule, it is stated that "where a claim is admitted, the court has jurisdiction to enter a judgment for the plaintiff and to pass a decree on admitted claim. The object of the Rule is to enable the party to obtain a speedy judgment at least to the extent of the relief to which according to the admission of the defendant, the plaintiff is entitled". We should not unduly narrow down the meaning of this Rule as the object is to enable a party to obtain speedy judgment. Where the other party has made a plain admission entitling the former to succeed, it should apply and also wherever there is a clear admission of facts in the face of which it is impossible for the party making such admission to succeed.

17. Learned counsel for the petitioner contended that admissions referred to in Order 12 Rule 6 CPC should be of the same nature as other admissions referred to in other rule preceding this Rule. Admissions generally arise when a statement is made by a party in any of the modes provided under Sections 18 to 23 of the Evidence Act, 1872. Admissions are of many kinds; they may be considered as being on the record as actual if they are either in the pleadings or in answer to interrogatories or implied from the pleadings by non-traversal. Secondly, as between parties by agreement or notice. Since we have considered that admission for passing the judgment is based on pleadings itself it is unnecessary Nikita Gadgil/Kanchan Dhuri 36/40 to examine as to what kinds of admissions are covered by Order 12 Rule 6 CPC.”

52. The following portion of paragraph 8 of the said decision is relevant and is usefully quoted as under: “8……………….. In fact, Order 12 Rule 6 CPC is enacted for the purpose of and in order to expedite the trials if there is any admission on behalf of the defendants or an admission can be inferred from the facts and circumstances of the case without any dispute; then, in such a case in order to expedite and dispose of the matter such admission can be acted upon. In the present case, looking at the terms of the lease deed, there can be no two opinions that the tenancy was joint/composite and not an individual one. Therefore, on these admitted facts the view taken by learned Single Judge of the High Court appears to be justified. In this connection, a reference may be made to a decision of this Court in the case of Uttam Singh d Duggal & Co. Ltd. v. United Bank of India. Their Lordships have held as follows: (SCC p. 121) “In the objects and reasons set out while amending Rule 6 of Order 12 CPC it is stated that 'where a claim is admitted, the court has jurisdiction to enter a judgment for the plaintiff and to pass a decree on admitted claim. The object of the rule is to enable the party to obtain a speedy judgment at least to the extent of the relief to which according to the admission of the defendant, the plaintiff is entitled. The Supreme Court should not unduly narrow down the meaning of this rule as the object is to enable a party to obtain speedy judgment.”…………… Nikita Gadgil/Kanchan Dhuri 37/40

53. Order XII Rule 6 of the CPC is also usefully quoted as under:- “6. Judgment on admission. — (1) Where admissions of fact have been made either in the pleading or otherwise, whether orally or in writing, the Court may at any stage of the suit, either on the application of any party or of its own motion and without waiting for the determination of any other question between the parties, make such order or give such judgment as it may think fit, having regard to such admissions. (2) Whenever a judgment is pronounced under sub-rule (1) a decree shall be drawn up in accordance with the judgment and the decree shall bear the date on which the judgment was pronounced.”

54. In the facts of this case as noted above, in paragraphs 8 and 9, there is a clear admission of liability in writing by the Defendant No.2, the owner of the Defendant No.1 vessel. Communication 18th November, 2014 from the Defendant No.2 unequivocally and unambiguously admits liability of Rs.14,99,461/- to the Plaintiff. As noted above, Mr.Zatakia, learned Counsel has not disputed the admission of liability. Neither the delivery receipts of the necessaries nor the Tax invoices nor the statement containing outstanding dues to the Plaintiff at Page 104 nor the Particulars of Claim has been disputed. Facts and circumstances clearly suggest admission on behalf of the Defendant No.2 warranting a decree on admission in term of Order XII Rule 6 of the CPC. Nikita Gadgil/Kanchan Dhuri 38/40

55. The Invoices provide that payments made beyond the payment date would be charged interest @ 18% per annum, which has not been disputed by the Defendants.

56. In view of the above discussion, I am inclined to allow this Application.

57. Accordingly, Interim Application is allowed in terms of prayer clauses (A) to (C), which read thus:

Defendant No. 1-vessel shall be appropriated towards satisfaction of the Plaintiff’s claim as declared in prayer clause (A), the costs of the Plaintiff’s suit as sought hereinbelow and poundage;

Plaintiff the balance portion of Rs. 15,04,797/- (Rupees Fifteen Lacs Four Thousand Seven Hundred and Ninety Seven Only), as left unpaid after the sale proceeds are appropriated towards a satisfaction of the Plaintiff’s claims in accordance with prayer clause (B). Nikita Gadgil/Kanchan Dhuri 39/40

58. In view of the above, the Suit is decreed in terms of prayer clause (b) which reads thus: (b) Thus, the Plaintiff is entitled to a judgment and decree for a sum of Rs.15,04,797/- (Rupees Fifteen Lakhs Four Thousand Seven Hundred and Ninety Seven Only). The principal claim amount being Rs. 12,82,717/- (Rupees Twelve Lakhs Eighty Two Thousand Seven Hundred Seventeen Only) and accrued interest of 18% p.a. amounting to Rs. 2,22,080/- from due date of each Invoice till realization of the said monies along with legal costs and expenses and poundage.

59. Considering the submissions on behalf of the Plaintiff and the liquidator of Defendant No.2 on the issue of costs, I deem it appropriate to award the cost of litigation of Rs. 7,32,430/- to be paid to the Plaintiff.

60. It is made clear that the decree does not entitle the Plaintiff to a pay out as yet and therefore, for deciding priorities and payout, a separate application would have to be preferred by the Plaintiff/Applicant. The Suit is therefore kept pending only for the purpose of deciding priorities and pay out.

61. The Interim Application accordingly stands allowed and disposed as above. (ABHAY AHUJA, J.) Nikita Gadgil/Kanchan Dhuri 40/40