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ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
INTERIM APPLICATION (L) NO.2893 OF 2021
IN
COM. ADMIRALTY SUIT (L) NO.5166 OF 2020
Irwin Edmund Sequeira and Ors. … Applicants/Plaintiffs
Mr. Prathamesh Kamat with Ms. Arpeeta Panvalkar, Mr. Vinod Kumar i/by Renata
Partners, for Applicants/Plaintiffs.
Mr. Ajai Fernandes with Ms. Sneha Pandey i/by Motiwala and co., for Defendant.
JUDGMENT
1. This is an application to treat the wages paid to the Applicant Nos.[1] to 44, the crew members who were on board the Vessel M.V.Karnika (Defendant Vessel), for the period prior to 26 October 2020, and expenses incurred towards supply of food, fresh water provision, bunkers, lubricating oil and other necessities by Aeghiscorp Maritime Ventures LLP (P&I Correspondent - Applicant No.45) as Sheriff’s expenses and reimburse the same to P&I Correspondent, in priority, from the sale proceeds of the Defendant Vessel.
2. Initially, application was preferred by Applicant Nos.[1] to 44 – crew members only. The Board of Trustees of the Port of Mumbai – Defendant No.2 raised a preliminary objection to the tenability of the application as the crew members were already paid and in the absence of P&I Club, the Applicant Nos.[1] to 44, could not have sought the reliefs of treating the wages so paid, as Sheriff’s expenses to be paid out in priority. Thereupon, P&I Correspondent has joined as a Co-Applicant No.45.
3. The Applicant Nos.[1] to 44 were appointed as Seafarers / crew members on board the Defendant Vessel under various employment agreements. Applicant Nos.[1] to 44 rendered services on board the Defendant Vessel. It was arrested at the instance of Monjasa DMCC on 17 March 2020. Despite arrest, the Applicant Nos.[1] to 44 continued to man Defendant Vessel and rendered services till the date of their repatriation for the safety and preservation of the Defendant Vessel. By an order dated 28 October 2020, this Court confirmed the sale of the Defendant Vessel in favour of M/s.NKD Maritime Limited for a sum of USD 11,650,000.00.
4. Applicant Nos.[1] to 44 have instituted the instant Suit to enforce the maritime lien against the Defendant Vessel and recovery of USD 292,248.90 towards the unpaid wages along with interest of USD 6960.29 till the date of the Suit. The owner of the Defendant Vessel – Jalesh Cruises Mauritius Limited ( Jalesh), neglected and abandoned the Applicant Nos.[1] to 44 and other crew and failed to discharge its obligation to pay the wages and provide essential supplies to the crew and the Defendant Vessel. On 10 October 2020, the Applicant No.1 addressed a letter to the American Steamship Owners Mutual Protection & Indemnity Association, Inc, (P&I Club) requesting it to make provisions for the necessities for the survival of the crew on board the Defendant Vessel and for the repatriation of the crew and settlement of outstanding wages. Pursuant to the said request, P&I Club, despite insurance cover having been already cancelled, arranged the supply of the essentials through its local correspondent – Applicant No.45, on humanitarian grounds.
5. The Applicant Nos.[1] to 44 claim, the owner of the Defendant Vessel stopped paying wages to Applicant Nos.[1] to 44 around the month of August 2020. The wages of the crew remained unpaid post the arrest of the Defendant Vessel. Thus, the wages of the crew post order of arrest and the expenses incurred by the P&I Club to provide essentials and necessities for the sustenance and survival of the crew on board the Defendant Vessel are liable to be treated as Sheriff’s expenses.
6. The Applicants further assert that by an order dated 5 November 2020, this Court permitted the Applicants to disembark from the Defendant Vessel and get repatriated. Applicant No.45 made provisions for disembarkment and repatriation of 21 crew members on 10 November 2020 and the remaining 23 crew members on 11 November 2020. The wages of Applicant Nos.[1] to 44 from the date of filing of Interim Application (L) No.5169 of 2020 till the respective dates of repatriation aggregating to Rs.50,42,551.40 deposited by P&I Club – Applicant No.45 has been ordered to be treated as Sheriff’s expenses and paid out.
7. The Applicants claim that the Applicant No.45 have paid a further sum of USD 296,338.80 ( Rs.219,79,451.30) towards unpaid wages to the crew members upto 25 October 2020 (tabulated at Exhibit C). Likewise, Applicant No.45 has incurred expenses to provide the essentials and necessities to the crew and the Vessel (particularized in the statement of expenses Exhibit D). The Applicants, thus, claim that these expenses incurred by Applicant No.45 towards payment of unpaid wages post arrest till 25 October 2020 and for providing essential supplies and necessities to the Vessel and the crew are liable to be treated as Sheriff’s expenses as post arrest, it was the responsibility of the Sheriff to make such provisions. Hence, this Application seeking declaration that the said expenses partake the character of Sheriff’s expenses, and deserve to be paid out first out of the sale proceeds.
8. In the initial Affidavit in Reply, as noted above, Defendant No.2 had resisted the Application on the ground that having been already paid out, crew members could not have sought reliefs as prayed in the Application. Defendant No.2 further contended that in view of the order dated 5 November 2020 passed in Interim Application (L) No.5169 of 2020, this Court had ruled that the question as to whether the expenses which had already been incurred by the P& I Club till the date of the said order ought to be treated as Sheriff’s expenses or otherwise would be decided at the time of final distribution.
9. In view of the said order, according to Defendant No.2, instant application does not deserve to be entertained as it is barred by the principle of resjudicata. Referring to the provisions contained in Rule 1087 of the Bombay High Court (Original Side) Rules, 1980, Defendant No.2 contends, any person having claim against the vessel or the sale proceeds is enjoined to institute a suit to establish her claim and, thereafter, the priorities are required to be determined in the manner ordained by the Admiralty ( Jurisdiction and Settlement of Maritime Claims) Act,
2017. Therefore, at this stage, the Applicants cannot seek relief of pay out in priority. The tenability of the application is also called in question by asserting that the Applicants cannot bank upon the provisions contained in Section 1084 of the Bombay High Court (Original Side) Rules as, in the case at hand, P&I Club has not incurred expenses, either pursuant to the order of the Court or at the instance of the Sheriff.
10. In the further Affidavit in Reply, post amendment of the Application, it is contended that since the cover between Applicant No.45 and Jalesh was terminated on 6 October 2020, the Applicant No.45 was under no obligation to pay the wages of the crew after termination of the cover. In any event, Applicant No.45 being fully cognizant of the arrest of the vessel was duty bound to seek leave of the Court to make the payment to the crew. Since Applicant No.45 has made payment to the crew, without leave of the Court, according to Defendant No.2, Applicant No.45 can neither step into the shoes of the crew nor seek the relief that the said payment be treated as Sheriff’s expenses.
11. Defendant No.2 further contended that even the payment to the crew members was made almost one month after the sale of the Defendant Vessel on 28 October 2020 and possession thereof was delivered to the auction purchaser on 9 November, 2020. The letter of subrogation came to be executed on 17 November 2020, after the sale of the vessel. In the backdrop of this time lag, according to Defendant No.2, the Applicant No.45 who had volunteered to pay the crew wages without the leave of the court cannot be permitted to seek reimbursement of the expenses as Sheriff’s expenses. The claim of the Applicants for the expenses towards supply of essentials and necessities is also contested on the aforesaid grounds.
12. An Affidavit in Rejoinder is filed on behalf of the Applicants refuting the contentions in the Affidavit in Reply.
13. In the wake of the aforesaid pleadings, I have heard Mr. Kamat, learned Counsel for the Applicants and Mr. Fernandes, learned Counsel for Defendant No.2 at some length. With the assistance of the learned Counsel for the parties, I have perused the documents and material on record.
14. Mr. Kamat strenuously submitted that the application for treating expenses incurred by P&I Club towards the payment of wages of the crew and for providing necessities to the Vessel and the crew is required to be appreciated in the light of the pivotal fact that these expenses have been incurred post the arrest of the vessel. The fact that the res was in the custody of the Court is of paramount significance. The expenses post arrest of the vessel till it is released from arrest or sold, according to Mr. Kamat, stand on a different and higher pedestal. In effect, these expenses to secure the vessel and ensure sustenance and survival of the crew on board the vessel are the expenses which the Sheriff is supposed to incur, post order of arrest. Therefore, the objection on behalf of the Defendant No.2 that no leave of the Court was sought before making the said payment and/or incurring the expenses, is not sustainable, urged Mr. Kamat.
15. Amplifying the submission, Mr. Kamat would urge that the obligation of P&I Club to provide financial security stems from Maritime Labour Convention as well as the provisions contained in Merchants Shipping (Maritime Labour) Rules,
2016. It was further submitted that it is well settled by a number of judgments including the Division Bench judgment of this Court in the case of Swedish Club V/s. V[8] Pool Inc. and Ors.,[1] that the absence of leave of the Court to incur the expenses which P&I Club is otherwise enjoined to incur, is not of decisive significance. On the contrary, if the exigency of the situation in which P&I Club is called upon to make the payment to the crew and incur the expenses is appreciated, according to Mr. Kamat, the absence of leave of the Court which is essentially a matter in the realm of procedure, cannot be pressed into service to deny the legitimate claim to treat the expenses as the Sheriff’s expenses.
16. To bolster up this submission, Mr. Kamat placed a strong reliance on the judgments of Singapore High Court in the cases of ‘The Nagasaki Spirit’2 and the 1 COMAP 108 OF 2021 2 [1994] SGHC 115.
17. In opposition to this, Mr. Fernandes, learned Counsel for Defendant No.2 stoutly submitted that the Applicants endeavour to bank upon the provisions contained in Merchant Shipping (Maritime Labour Rules), 2016 is unsustainable as Defendant Vessel was flying Bahamas flag. Plainly, Merchants Shipping (Maritime Labour) Rules, 2016 would not govern the case at hand. Secondly, it is well settled that there can be no transfer of maritime lien without prior approval of the Court. Applicant No.45 having already paid the amount to the crew members, without the leave of the Court, cannot enter into the shoes of the crew. Resultantly, the Applicant No.45 cannot claim priority on the strength of the provisions contained in Section 9(a) of the Admiralty ( Jurisdiction and Settlement of Maritime Claims) Act, 2017. At best, the claim of the Applicant No.45 would fall under clause (c) of sub-Section (1) of Section 10 of the Act of 2017.
18. To lend support to this submission, Mr. Fernandes placed reliance on judgments in the cases of The Petone[4] and The Leoborg No.25.
19. Mr. Fernandes invited the attention of the Court to the order passed by this Court on 5 November 2020, to buttress the submission that Applicant Nos.[1] to 44 had, in fact, prayed for the very same reliefs as prayed in the instant application and the Court had specifically ruled that the issue as to whether expenses incurred by the 3 [2002] SGHC 138 4 1917 Fol. 474 5 1964 Vol. 1 P&I Club till the date of the said application, were to be treated as Sheriff’s expenses or otherwise would be decided at the time of final disbursement. The said order, according to Mr. Fernandes, precludes the Applicants from reagitating the issue as res-judicata operates at different stages of one and the same proceedings.
20. On the aspect of the necessity of obtaining leave of the Court before incurring expenses which are sought to be treated as Sheriff’s expenses, Mr. Fernandes would urge that reliance on the judgment of Division Bench in the case of the Swedish Club (Supra) is not of much assistance to the Applicants for, in the said case, the P&I Club had, in fact, made an application seeking leave of the court to incur the expenses (which was rejected by the learned Single Judge). In contrast, in the case at hand, according to Mr. Fernandes, what accentuates the situation is the fact that despite this Court having expressly declined the prayer of the Applicant Nos.[1] to 44 to treat the expenses as Sheriff’s expenses, other than the ones allowed under the order dated 5 November 2020, the Applicant No.45 went on to make the payment even post sale of the Defendant Vessel and deposit of the sale proceeds with this Court. Therefore the judgment of the Division Bench in the case of the Swedish Club (Supra) would not govern the facts of the case at hand, submitted Mr. Fernandes.
21. Before adverting to deal with the rival submissions, it may be apposite to note few uncontroverted facts, so as to narrow down the controversy. Indisputedly, Defendant Vessel came to be arrested pursuant to an order passed by this Court on 17 March 2020. Eventually, the Defendant Vessel was sold on 28 October 2020. Defendant Vessel was delivered to the auction purchaser on 9 November 2020. It would be contextually relevant to note that there is not much controversy over the fact that the cover of the P&I Club had expired by 6 October 2020.
22. At this juncture, the circumstances in which the order dated 5 November 2020 came to be passed deserve to be noted as submissions revolved around the remit and consequences of the said order. Interim Application (L) No.5169 of 2020 was preferred by the Applicants seeking permission of the Court to allow Applicant Nos.5, 12, 13, 14, 16, 21, 22, 24, 26, 27, 28, 29, 30, 31, 32, 33, 36, 38, 41, 43, 44 to disembark the Defendant Vessel and also permit them to be repatriated.
23. Prayer clauses (a) to (d) of the said application relate to disembarkation and repatriation. In addition, the Applicants had prayed for the following reliefs: “(e) that pending the hearing and final disposal of the Suit, this Hon’ble Court be pleased to treat any and all expenses incurred and/or to be incurred by the Club and/or its correspondents, on behalf of the Owners towards wages, repatriation expenses, supply of food, fresh water, provisions, bunkers, lubricating oil, garbage and sewage disposal and other necessities as Sheriff’s expenses; (f) that the wages of Applicant Nos.[1] to 4, 6 to 11, 15, 17 to 20, 23, 25, 34, 35, 37, 39, 40, 42 / original Plaintiff Nos.[1] to 4, 6 to 11, 15, 17, 18 to 20, 23, 25, 34, 35, 37, 39, 40 and 42 as sea going safe manning crew on board the Defendant Vessel, for the period between filing the present Interim Application till their final repatriation be treated as Sheriff’s expenses and paid out first as priority from the sale proceeds of the Defendant Vessel;” (emphasis supplied)
24. This Court was persuaded to allow the said Application in terms of prayer clauses (b), (d) and (f). The Court also considered prayer clause (e) from the perspective of treating the expenses as Sheriff’s expenses. The observations in paragraph Nos.[7] to 10 are material as they bear upon the determination of the instant application. They read as under:
25. In view of the aforesaid order and the subsequent order dated 18 December, 2020 in Sheriff’s Report No.67 of 2020, the situation which thus emerges is that the Applicant Nos.[1] to 44’s wages from the date of the filing of the said Application i.e. 26 October 2020 till the date of repatriation have been initially paid by Applicant No.45 and they have been reimbursed by the Sheriff as Sheriff’s expenses. The controversy revolves around the payment of wages since they remained unpaid (post arrest), till 25 October 2020 qua each of the Applicants Nos.[1] to 44 and the expenses claimed to have been incurred by Applicant No.45 towards the supply of necessities to the Vessel and the crew members.
26. Indisputably, the Sheriff, or for that matter Applicant Nos.[1] to 45, especially Applicant No.45, had not sought leave of the Court to make the payment of the due wages prior to 26 October 2020. The question which thus wrenches to the fore is whether the said expenses can be treated as Sheriff’s expenses to be paid out first in priority, despite there being no specific permission of the court to incur the same ?.
27. Rule 1084 of the Bombay High Court (Original Side) Rules, 1980, dealing with the Sheriff’s expenses, reads as under:
1084. Sheriffs expenses – In the event any expenses are required to be incurred by the Sheriff during the period of the arrest for the safety and preservation of the ship and its crew, the Sheriff shall make a report to the Court and the Court, shall after hearing the parties direct payment of such sums as the court may deem fit by any party the Sheriff for incurring such expenses, which shall be treated as Sheriffs expenses. These expenses shall be paid in priority to the Sheriff from the sale proceeds of the ship or by the defendant or other party seeking release of the ship as the case may be, and the same shall be reimbursed to the parties who have paid the amounts to the Sheriff in the first instance.”
28. On its plain reading, Rule 1084 provides that in event the expenses are required to be incurred for the safety and preservation of the vessel and its crew during the period the vessel remains under arrest the Sheriff shall make report to the Court. Upon such a report being filed, the Court may direct any of the parties to put the Sheriff in funds, to facilitate incurring of such expenses. Those expenses would then be treated as Sheriff’s expenses. The rule further provides that the expenses shall be paid in priority to the Sheriff from the sale proceeds of the Vessel or by the Defendant or any other party seeking release of the Vessel. In the event, the Sheriff had been put in funds by a party, to facilitate the said expenses, such party is entitled to be reimbursed in the first instance.
29. Whether this procedure is of mandatory nature ? It was urged on behalf of the Defendant No.2 that the party who incurs the expenses on its own without leave of the Court and intimation to the Sheriff is not entitled to be reimbursed, treating such gratuitous expenses as Sheriff’s expenses.
30. In contrast, the Applicants banked upon the judgment of the Division Bench of this Court in the case of the Swedish Club (supra) to bolster up the submission that the report by the Sheriff is not the only method by which a provision for safety and preservation of the Vessel and crew whilst the Vessel remains under arrest can be made.
31. In the case of Swedish Club (supra), the Division Bench considered two questions. First, whether crew wages accrued on board the Vessel after her arrest by an Admiralty Court would rank as Sheriffs expenses ? Second, whether a party who has approached the Admiralty Court for leave to pay the crew wages can stand in the shoes of the crew members and claim such amount from the sale proceeds of the vessel as Sheriff’s expenses and/or in priority, as a maritime lien.
32. For proper understanding of the determination in the case of the Swedish Club (supra), it is necessary to note that the learned Single Judge had disallowed the application preferred by the crew members in the said case to treat the crew wages accrued post arrest as Sheriff’s expenses, opining, inter alia, that it was open to the crew to prove their entitlement by way of a suit. Whereas, the Application of P&I Club (Swedish Club) was disallowed by the learned Single Judge on the ground that under the Maritime Labour Convention, a P&I Club was obligated to make payment of four months wages and, thus, was not a volunteer and if P&I Club makes payment for expenses post arrest, including the wages, it would not be entitled to treat the same as Sheriff’s expenses and would have to file a suit to prove the claim and get the priorities determined and then seek reimbursement from the sale proceeds.
33. After an elaborate analysis of the provisions of Maritime Labour Convention, Merchants Shipping (Maritime Labour Rules), 2016 and Rule 1084 of the Bombay High Court (Original Side) Rules, 1980, and the precedents, the Division Bench could not persuade itself to subscribe to the view of the learned Single Judge and, thus, allowed the Appeals by the crew members and the P&I Club. The observations in paragraph Nos.45 to 49 of the Judgment encapsulate the reasons which weighed with the Division Bench in holding that the wages of the crew, post arrest of the Vessel, partake the character of Sheriff’s expenses. As a necessary corollary if the crew are entitled to claim such amounts as Sheriff’s expenses, the P&I Club, which makes such payment is also entitled to claim it as Sheriff’s expenses. The Division Bench observed the said dispensation seems to accord with international practice.
34. The aforesaid judgment of the Division Bench is, however, required to be considered in the light of the fact that in the said case The Swedish Club had, in fact, made an application to the Court seeking leave to pay the wages of the crew members on board the Vessel (which was disallowed by the learned Single Judge). In the case at hand, Applicant No.45 did not seek permission of the Court. In fact, the Court declined to entertain the prayer of the Applicant Nos.[1] to 44 to treat the expenses as Sheriff’s expenses, albeit at that stage, and postponed the determination to final disbursement. Whether these factors bear upon the instant application and disentitle the Applicants from recovering the said expenses as Sheriff’s expenses, is the moot question that crops up for consideration.
35. Mr. Fernandes urged with a degree of vehemence that the leave of the Court is necessary for treating the expenses as Sheriff’s expenses. Without the Sheriff being involved in the process of incurring expenses, post arrest, a party who voluntarily makes payment cannot be permitted to seek payout in priority sans filing a suit to prove the claim and consequent determination of priorities. Mr. Fernandes would urge that even if P&I Club pays off the wages of the crew which command highest priority, there cannot be an automatic transfer of maritime lien without the leave of the Court.
36. In the case of Leoborg (supra), on which reliance was placed by Mr. Fernandes, it was held that the weight of authority is strongly against the doctrine that the man who has paid off a privileged claimant stands in the shoes of the privileged claimant and has his lien, whether it be regarded as a general doctrine or as applied to wages only.
37. The position in law that a maritime lien is not assignable without prior leave of the Court seems to be fairly crystalized. Leave of the Court is considered necessary as a measure to protect the interest of the maritime lien holder – transferor. From this perspective, when the Court permits the transfer of the lien, embargo on inter partes transfer is lifted.
38. In the case of the Swedish Club (Supra) also, the Division Bench enunciated the aforesaid position in law.
39. This propels me to decipher the character of the claim of a party who supplies necessities to vessel and its crew in distress, post arrest, de hors the aspect of transfer of maritime lien. The thrust of the submission on behalf of Defendant No.2 was that leave of the Court is peremptory if those expenses are to be treated as Sheriff’s expenses. Mr Kamat joined the issue by placing reliance on the provisions contained in Maritime Labour Convention and the Merchant Shipping (Maritime Labour) Rules, 2016. Relevant part of the Maritime Labour Convention (Standard A[2] 5.2) reads as under:
9. Having regard to Regulations 2.[2] and 2.5, assistance provided by the financial security system shall be sufficient to cover the following: (a) outstanding wages and other entitlements due from the shipowner to the seafarer under their employment agreement, the relevant collective bargaining agreement or the national law of the flag State, limited to four months of any such outstanding wages and four months of any such outstanding entitlements; (b) all expenses reasonably incurred by the seafarer, including the cost of repatriation referred to in paragraph 10; and
(c) the essential needs of the seafarer including such items as:
adequate food, clothing where necessary, accommodation, drinking water supplies, essential fuel for survival on board the ship, necessary medical care and any other reasonable costs or charges from the act or omission constituting the abandonment until the seafarer’s arrival at home.
10. The cost of repatriation shall cover travel by appropriate and expeditious means, normally by air, and include provision for food and accommodation of the seafarer from the time of leaving the ship until arrival at the seafarer’s home, necessary medical care, passage and transport of personal effects and any other reasonable costs or charges arising from the abandonment.
11. The financial security shall not cease before the end of the period of validity of the financial security unless the financial security provider has given prior notification of at least 30 days to the competent authority of the flag State.
12. If the provider of insurance or other financial security has made any payment to any seafarer in accordance with this Standard, such provider shall, up to the amount it has paid and in accordance with the applicable law, acquire by subrogation, assignment or otherwise, the rights which the seafarer would have enjoyed.”
40. The Merchant Shipping (Maritime Labour) Rules, 2016 also institutionalize the regime of financial security system. Rule 12(14) to 12(17) read as under: “(14) Financial security system shall be sufficient to cover the following, namely - (a) outstanding wages and other entitlements due from the ship owner to the seafarer under the employment agreement, the relevant collective bargaining agreement, limited to four months of any such outstanding wages and four months of any such outstanding entitlements; (b)all expenses reasonably incurred by the seafarer, including the cost of repatriation referred to sub-rule (15);
(c) the essential needs of the seafarer including such items, namely, adequate food, clothing where necessary, accommodation, drinking water, essential fuel for survival on board the ship, necessary medical care and any other reasonable costs or charges from the act or omission constituting the abandonment until the seafarer’s arrival at home.
15. Cost of repatriation shall cover travel by appropriate and expeditious means, normally by air, and include provision for food and accommodation of the seafarers from the time of leaving the ship until arrival at the seafarer’s home, necessary medical care, passage and transport of personal effect and any other reasonable costs or charges arising from the abandonment.
16. The financial security shall not cease before the end of the period of validity of the financial security.
17. If the providers of financial security has made any payment to any seafarers in accordance with the provisions of these rules, such provider shall, up to the amount it has paid and in accordance with the applicable law, acquire by subrogation, assignment or otherwise, the right which the seafarers would have enjoyed.”
41. It seems that the Merchant Shipping Rules are in substantial accord with the Maritime Labour Convention in the matter of institutionalizing the financial security system providing for, inter alia, four months of outstanding wages and entitlements to the crew, the costs of repatriation, essential supplies and necessities to the crew. If P&I Club has made any payment to any seafarer in conformity with the Maritime Labour Convention or Rules it acquires by subrogation, assignment or otherwise, the rights which the seafarers would have enjoyed. This measure is essential to ensure that the financial security system operates effectively and without default, lest the very basis of the financial security system would collapse. Since the provisions contained in Maritime Labour Convention govern the situation, the submission of Mr. Fernandes that Maritime Labour Rules would have no operation as the Defendant Vessel was flying flag of Bahamas does not advance the cause of
42. In the aforesaid context, Mr. Kamat would further urge that absence of leave of the Court is not fatal to the claim of a person who supplies necessities to Vessel and crew post arrest, in all situations. The Admiralty Court is not precluded from declaring that the expenses incurred by a person without its leave, shall be treated as Sheriff’s expenses. A strong reliance was placed on the judgment in the case of the Nagasaki Spirit (supra), wherein the Singapore High Court considered the question as to whether the expenses incurred without prior sanction of the Sheriff can be treated as Sheriff’s expenses. It was ruled that the Court has wide discretion in balancing equities in a proper case and that the category of ‘Sheriff’s expenses’ is not a closed category. The observations in paragraphs 30 to 32 are material and, hence, extracted below:
43. The aforesaid pronouncement was followed in the case of the Aquarius III (supra), where the question was of treating crew wages and disbursement from the date of the arrest of the Vessel. The Singapore High Court held that, post arrest, wages and disbursement were in substance Sheriff’s expenses. Paragraph Nos.49 to 51 read as under:
44. The aforesaid enunciations deserve to be appreciated in the context of the exigencies of the situation in which a party is constrained to provide essential supplies and make provision for the necessities of the vessel and the crew. This backdrop is necessary to be kept in view while considering the insistence on a prior order of the Court. Undoubtedly, post arrest, res is considered to be custodia legis. Ordinarily, the expenses are incurred with the prior approval of the Court and, more often than not, under the aegis of Sheriff. However, this does not imply that the Court has no jurisdiction to sanction the expenses which have been incurred as the Sheriff’s expenses without its prior approval. In a given case, having regard to the exigencies of the situation, where the supply of provisions and necessities is imperative to ensure the survival of the vessel and the crew, the court retains the jurisdiction to direct that such expenses, even if incurred without its approval, be treated as Sheriff’s expenses. Of course, the exercise of such jurisdiction is discretionary and conditioned by the overarching principle of balancing equities.
45. Rule 1084 of the Rules 1980, in my view, cannot be read in such fashion as to constrict its application only to a Report by the Sheriff. A party who is interested in vessel or crew and/or the crew themselves may move the Court for directions for the supply of the necessities to the vessel under arrest and the crew. A report of the Sheriff is not peremptory. Nor that is the only mode through which the necessities can be supplied to the Vessel and the crew. In the case of the Swedish Club (supra), the Division Bench expressly ruled that Rule 1084 does not prescribe that only the Sheriff Report can be filed. It does not preclude an interim application in relation to such reliefs.
46. In my view, a situation is not inconceivable where there is neither the Sheriff’s report nor an application by a party seeking direction/permission to incur the expenses to provide necessities to the vessel and the crew and yet expenses are, in fact, incurred and still the Court, in the circumstances of the given case, would be persuaded to treat those expenses as Sheriff’s expenses. I am, therefore, not inclined to accede to the broad submission on behalf of Defendant No.2 that since the expenses were incurred without the leave of the Court, the Applicants deserve to be non-suited on that count alone.
47. This leads me to the crucial question as to whether the facts of the case warrant the exercise of discretion to treat the expenses incurred by the Applicant as Sheriff’s expenses. There is, in my view, a qualitative difference between the expenses incurred for the payment of unpaid wages of the crew, post arrest, and the expenses incurred for providing the essential supplies and necessities. The claim for wages stands on a higher footing. Adjudication of the wages does not present much difficulty as there are often documents of unimpeachable character like Employment Agreement, Articles of Agreement, Continuous Discharge Certificate, Passport and the endorsement made by the Master of the Vessel. In contrast, the claim for supply of the provisions and necessities hinges upon a number of factors and brings in its trail variables, like proof of sale and delivery, reasonability of the price, terms of the contract, etc. In the case at hand, the Applicant No.45 claims to have incurred expenses under both the heads.
48. Undoubtedly, the order dated 5 November 2020 bears upon the exercise of discretion. However, I am not inclined to accede to the submission of Mr. Fernandes that the order dated 5 November 2020 operates as res-judicata in the sense that the Court had declined to consider the prayer clause (e) of the said application, as the said order does not constitute determination on merits. The Court was simply of the view that the prayer ought to await adjudication at the time of final disbursement. Yet the said order assumes significance from the point of view of the notice to the Applicant Nos.[1] to 44 that the claim for rest of the expenses was to be adjudicated at a later date.
49. The second aspect which bear upon the exercise of discretion is the time of disbursement. As noted above, the Defendant Vessel was sold pursuant to an order dated 28 October 2020. The bill of sale was issued on 7 November, 2020. The possession of the Defendant Vessel was handed over to the auction purchaser on 9 November 2020. It is not controverted that the Applicant No.45 made payment of the unpaid wages to Applicant Nos.[1] to 44 on 26 November, 2020.
50. In the backdrop of the aforesaid sequence of events, indisputably, the sale proceeds stood deposited with this Court before 7 November 2020. This, in my view, is of critical salience. On 5 November 2020 this Court directed that the claim of the Applicant Nos.[1] to 44 in respect of the rest of the expenses would be considered at the time of final disbursement. Thus, at that stage, it could not be urged that there were no funds to make payment of the unpaid wages to the Applicant Nos.[1] to 44. As the sale proceeds already stood deposited with the Court, the question of propriety and necessity of P&I Club making payment to the crew, merits consideration. Had it been a case of Applicant Nos.[1] to 44 not having moved the Court seeking directions from the Court as regards unpaid wages and expenses, different considerations would have come into play. The Court was in full seisin of the matter. The sale proceeds stood deposited with the Court. In such a situation, the pressing exigencies which necessitate payment by a P&I Club do not operate inexorably.
51. It would be contextually relevant to note that Applicant No.45 also faces an impediment in enforcing the payment on the basis of the assignment and/or subrogation as it is the case of the Applicants that the cover stood terminated with effect from 6 October 2020.
52. In the light of the aforesaid peculiar facts, the Applicant No.45 could not have brought about a situation of fait accompli by making the payment to Applicant Nos.[1] to 44 when the Court was seized of the matter and held the sale proceeds. The Applicant No.45, therefore, must await adjudication and determination of priorities.
53. For the forgoing reasons, I am not inclined to allow the Application. Hence, the following order:
(i) The Application stands rejected.
(ii) It is, however, made clear that the observations are confined to the consideration of the prayer for payout from the sale proceeds before the determination of priorities and they may not be construed as an expression of opinion on the merits of the claim of the Applicants, which shall be determined in accordance with law. ( N.J.JAMADAR, J. )