BOARD OF TRUSTEES, PORT OF MUMBAI versus INDIAN OIL CORPORATION

Citation: [1998] 2 S.C.R. 774 · Decided: 16-04-1998 · Supreme Court of India · Bench: SUJATA V. MANOHAR · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
BOARD OF TRUSTEES, PORT OF MUMBAI 
v. 
INDIAN OIL CORPORATION 
APRIL 16, 1998 
B 
[SUJATA V. MANOHAR AND D.P. WADHWA, JJ.] 
Major Port Trusts Act, 1963: Section 64. 
Recovery of rates and charges by distraint-Or arrest of vessel and 
C sale-Held: Board of Trustees' lien over the vessel is paramount which is 
even above the claims of the secured creditors in winding up-It cannot be 
exlinguished or the vessel sold by any authority under directions of court 
unless consented to by the Board-Companies Acl, 1955, Ss. 446 and 529. 
D 
A vessel belonging to a Company arrived at the port and was laid up 
at anchorage. It became liable to pay anchorage and other charges leviable 
under the provisions of the Major Port Trusts Act, 1963 and the Dock Scale 
of Rates framed thereunder by the appellant-Board. Due to non-payment of 
Port Trust charges the appellant arrested the said vessel under Section 64 
of the Act and issued a public notice for auction-sale of the said vessel. 
E 
The Company field a writ petition in the High Court challenging the 
proposed auction-sale of the vessel, which was summarily dismissed. In 
appeal, the Company undertook to pay all the charges to the appellant and, 
therefore, the auction was stayed. The Company, however, did not pay the 
charges. Thereafter, further attempts made by the appellant to sell.the vessel 
F were again held up on account of the litigation initiated at the instance of 
the Company. While the ship remained under arrest by the Company, a 
Company Petition was filed by the respondent-petitioning creditor in the 
High Court against the said Company. In the said Company Petition, Official 
Liquidator was appointed and an order of winding up was passed. In the 
G meanwhile, the Official Liquidator directed the appellant to maintain status 
quo in respect of the said vessel and further directed that if the vessel was 
proposed to be sold, leave of the High Court under Section 446 of the 
Companies Act, 1956 should be taken. 
Thereafter, the appellant made an application in the said Company 
H Petition praying that it be permitted to recover its charges from the sale 
774 
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I 
1'-
BOARD OF TRUSTEES, MUMBAI v. INDIAN OIL 
775 
proceeds of the said vessel and claimed that the appellant had a right superior A 
to that of others, in respect of the said vessel. The appellant's prayer that 
it alone be allowed to sell the vessel and retain the sale proceeds towards its 
dues was rejected by the High Court. The High Court directed that the vessel 
be sold after issuing a global advertisement. The High Court further directed 
that since the Company had no money which could be utilised to meet the B 
cost of advertisement or sale, the appellant must meet the costs of such 
advertisement and sale and all incidental charges thereto which amounts, the 
appellant would be entitled to recover as a first charge on the sale proceeds. 
Hence this appeal. 
Allowing the appeal, this Court 
c 
HELD : 1. The harbour authorities allow ships-national or foreign-
to anchor and avail of the services provided by them. For payment they look 
to the vessel. The owner may be foreign or even unknown to the harbour 
authority. The latter's right to recover its dues is not affected by any pending 
proceedings against the owner in any court-whether in winding up or D 
otherwise. The harbour authority can arrest the vessel while it is anchored 
in the harbour and recover its dues in respect of that vessel by sale of the 
vessel if the dues are not paid. This lien of a harbour authority over the 
vessel is a paramount lien and realisation of its dues by the harbour authority 
by the sale of the vessel is above the priorities of secured creditors. The E 
statutory lien of a harbour authority has paramountary even over the claims 
of secured creditors in a winding up. The lien cannot be extinguished or the 
vessel sold by any other authority under the directions of the court or 
otherwise, unless the harbour authority consents to such a sale. (779-F-G) 
Ashok Arya v. M V. Kapitan Mitsos, AIR (1998) Born. 329 and F 
Forwarding Pvt. Ltd. v. Trustees, Port of Vizagapatnam, (1987) 61 Company 
Cases 513 Born., approved. 
MK. Ranganathan v. Government of Madras, [1955] 2 SCR 383 and 
Industrial Credit and Investment Corpn. of India Ltd. v. Srinivas Agencies, 
(19961 4 sec 165, relied on. 
G 
The Emilie Milton [1905] 2 KB 817, Mersey Docks and Harbour 
Boardv. Hay, Re the Queeen of the South, (1968) 1 All ER 11

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