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Judgment
The Court : Vessel M. V. VSEVOLOD BELETSKIY flying a Russian flag has been berthed in Haldia since the beginning of November, 2017. An order of arrest was passed at the behest of Rigveda Maritime Pte Limited, the plaintiff in one of the several suits brought against the vessel, on November 24, 2017.
Several other orders of arrest followed. Many creditors of the vessel approached this Court, including the Board of Trustees for the Port of Kolkata. According to the Port, its dues today are in excess of Rs.16 crore and it says that it has a lien under Section 64 of the Major Port Trusts Act, 1963. The vessel was valued in the range of Rs.58 crore to Rs.64 crore. The essential facts leading upto the attempt by this Court for the sale of the vessel have been recorded in an order dated September 30, 2019 passed in the previous set of appeals arising out of the order confirming the sale of the vessel at about Rs.25 crore and the connected matters.
Since there were better offers in Court than the highest bid at which the sale was confirmed, the initial order of confirmation of sale passed on July 25, 2019 was set aside and divers directions were issued by the appellate order of September 30, 2019 for immediate steps to be taken for conducting a fresh sale. In short, an officer of the Port was reappointed as special officer without remuneration for taking all steps to conduct a fresh sale. Such sale was to be conducted by e-auction and was to be subject to confirmation by the Admiralty Bench of this Court. It was the Director (Marine) of the Port who was entrusted with the task and the e-auction was completed before the matter for confirmation of sale was due to appear before the Admiralty Bench on November 8, 2019. It will be evident from the order dated September 30, 2019 that the time-line was so set to ensure that the sale was completed and the confirmation concluded as expeditiously as possible so that the ultimate purchasers could remove the vessel and unblock the relevant berth at Haldia. As to how the sale proceeds would be dealt with, could wait since the suits remained pending and the creditors have to be invited for the priorities to be decided.
Pursuant to the exercise conducted by the Port and its said special officer in terms of the order dated September 30, 2019, one Glory Ship Management Pte Limited of Singapore has emerged the highest bidder at Rs.40.73 crore. The special officer engaged MSTC Limited, a Government of India enterprise, to conduct the e-auction and a bid-sheet has been filed along with the special officer's report. Such bid-sheet reveals that from the Rs.24.15 crore level, there were only two bidders, the other being Nina Services Corporation which last bid at Rs.40.72 crore before Glory improved it by a lakh and Nina relented.
Though the appellate order of September 30, 2019 made every endeavour to ensure that all tasks preparatory to the confirmation of the sale were completed during the puja vacation of the Court and the matter pertaining to confirmation could be taken up on November 8, 2019 or November 11, 2019, it is of some concern that the matter as to the confirmation was not taken up by the appropriate Bench till even the end of January, 2020. The appeal here has been filed by the plaintiff in one of the suits complaining of, inter alia, the delay in the sale being confirmed and pointing out the likelihood of the highest bidder withdrawing from the process. Several of the other key players in the previous appeal, including Leela Ship Recycling Private Limited, in whose favour the previous sale was confirmed by the order dated July 25, 2019 at Rs.24.15 crore, have filed applications or affidavits for the expeditious conclusion of the sale since Leela's money remains blocked till the subsequent sale is confirmed and the sale price received.
According to the affidavit filed by Leela on January 18, 2020, the matter pertaining to the confirmation of sale was not taken up by the appropriate Bench since an appeal was pending. It may be recorded that the appeal was not taken up since the matter pertaining to confirmation of the sale had not been completed by the Admiralty Bench.
Since it is almost the end of January, 2020, nearly three months after the e-auction was conducted and since the appropriate Single Bench will not be available for the next fortnight, the matter pertaining to the confirmation of the sale need not be delayed any further. The matter pertaining to confirmation of the sale is taken up at the invitation of all the appearing parties so that the blocked berth at Haldia is freed and the vessel can be removed.
At the time that the order dated September 30, 2019 was passed, at least two other bidders had entered the fray, one by the name of Sharva Shipping Inc. and another by the name of Golden Fortune Limited SA. Both such bidders indicated that they were willing to purchase the vessel in the Rs.35 crore range. The present highest bidder, Glory, is an associate concern of Golden Fortune.
The sale of vessel M. V. VSEVOLOD BELETSKIY is confirmed in favour of Glory Ship Management Pte Limited of Singapore at Rs.40.73 crore, subject to the entire money being put in by such bidder. An initial earnest deposit of about Rs.1.95 crore has been made and the Port says that such amount is deposited with the Registrar, Original Side. The terms set for the sale require Glory to put in 25% of the bid amount within five days from today and the balance within 15 days from today. In view of the Chinese New Year in the interregnum, Singapore-based Glory seeks time till February 5, 2020 to put in the 25% of the bid amount in terms of clause 4.1 of the special terms and conditions pertaining to the sale. Such modification of the terms is permitted. The confirmation of the sale by this order will remain subject to 25% of the bid amount being deposited by February 5, 2020 and the remainder of the amount being deposited by February 11, 2020. In default of the 25% bid amount being paid by February 5, 2020, to the Registrar, Original Side, by a demand draft or banker's cheque or RTGS or like instrument, not being a personal cheque, the earnest deposit made by the highest bidder will stand forfeited and the sale will stand confirmed in favour of the second highest bidder, Nina at Rs.40.72 crore, subject to similar terms.
If after paying 25% of the bid amount by February 5, 2020, the balance amount due is not paid by Glory by February 11, 2020, the amount deposited till then will stand forfeited and the sale will be confirmed in favour of Nina, subject to Nina complying with the similar conditions as to payment. In the event Nina is not interested in abiding by its bid, the earnest deposit put in by Nina will stand forfeited. In the event of default on the part of Glory, the special officer will issue a notice to Nina and Nina will have five days from the receipt of such notice to put in 25% of its bid and a further 10 days thereafter to put in the balance amount and obtain the vessel.
In case of default on the part of both Glory and Nina, fresh directions for sale will be sought. In such an event, the earnest deposits put in by both Glory and Nina or the amounts till then deposited by Glory and Nina, whichever is higher, will stand forfeited.
Till such time that the entire consideration is received from Glory, no repayment will be made to Nina of its earnest deposit. Upon the entire payment being received from Glory, inclusive of any previous deposit and the earnest deposit, the Registrar, Original Side, will release the money earlier put in by Leela after making ad hoc payment of a sum of Rs.1.20 crore to the Port as tentative costs assessed for the sale. The remainder of the Port's bill on account of sale (the Port has claimed about Rs.1.34 crore) will be subject to further orders of the Admiralty Bench when the matter of disbursement of the sale proceeds is taken up.
The payment of the sum of Rs.1.20 crore to the Port should be made within three days of receipt of the entire consideration from Glory or Nina, whichever is later.
The payment due to Leela in terms of the order dated September 30, 2019 should be released to Leela within seven days of the costs for the sale in terms of this order being released to the Port.
The refund of the balance amount earlier deposited by Sharva would be subject to orders of the Admiralty Bench after the aforesaid payments are made. However, Sharva will be entitled to an immediate adjudication on its right to obtain the refund since Leela did not participate in the subsequent sale and such adjudication should be completed long before priorities are decided and the disbursement of the sale proceeds is taken up.
It is only after the entire payment is made, whether by Glory or by Nina, that the purchaser will be entitled to remove the vessel. The purchaser will have 30 days' time from the date of its final payment to remove the vessel. It is made clear that the purchaser will be liable to pay demurrage, berth charges and other amounts as may be imposed by the Port if such time schedule is not adhered to.
Let the matter now appear on February 12, 2020 to ascertain the position.