CAS(L)-04/2020-HC

Hon’ble High Court holds when one reads Section 33(5), it is ex-facie clear that the said provision does not in any way prohibit the institution of a suit or other legal proceeding against a ship/Vessel owned by the Corporate Debtor when invoking the Admiralty Jurisdiction of this Court under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 because under the Admiralty Act, the Vessel is treated as a separate juristic entity which can be sued without joining the owner of the said 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 of the said Vessel. It is for this very reason that there is no requirement to serve the writ of summons on the owner of the Vessel and the service of the warrant of arrest on the Vessel is considered adequate.
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.