Bombay High Court Upholds Port Authority’s Statutory Lien | ‘Anchorage Charges Are Secured Claims’ Under Section 64 | Directs Liquidator To Prioritise Dues Over Secured Creditors
Sanchayita Lahkar
The High Court of Judicature at Bombay Single Bench of Justice Abhay Ahuja held that claims made by a Port Authority under Section 64 of the Major Port Trusts Act, 1963, constitute secured claims that must be accorded priority over other classes of claims in the liquidation proceedings of a company. The Court directed that the dues claimed by the Mumbai Port Authority be paid in priority to all other claims against the company. Interim applications filed by the Port Authority were allowed in full, with the Court affirming the Port's statutory lien rights and rejecting the objections raised by the Official Liquidator regarding the maintainability and nature of the claim.
Four interim applications were filed by the Mumbai Port Authority seeking to set aside the Official Liquidator's adjudication categorizing their dues as unsecured in the liquidation proceedings of GoL Offshore Limited. The claims pertained to anchorage and port charges for four vessels, including Malviya-18, owned by the company in liquidation.
The Company, prior to liquidation, operated vessels providing offshore logistics and support services. Upon cessation of business, the vessels were docked at Mumbai Port. The Port Authority claimed charges for anchorage services that were rendered to prevent the vessels from drifting and being lost. The claims arose post-liquidation and were for safekeeping services rendered after the winding-up order passed on 5th May 2017.
The Applicant Port Authority relied on provisions of Section 64 of the Major Port Trusts Act, 1963 and Section 4(1)(n) and (w) of the Admiralty Jurisdiction and Settlement of Maritime Claims Act, 2017. It submitted that its statutory lien arising from unpaid port dues takes precedence over claims of secured creditors. Reference was also made to the Supreme Court judgement in Board of Trustees, Port of Mumbai v. Indian Oil Corporation [(1998) 4 SCC 302], where similar statutory rights were recognized as overriding in nature.
The Official Liquidator had admitted the monetary claims but categorized them as unsecured, basing its decision on procedures laid out under the Companies (Court) Rules, 1959. The Liquidator argued that maritime claims could only be adjudicated under the Court's admiralty jurisdiction and that any challenge to the categorization should have been in the form of an appeal within 21 days under Rule 164.
The Applicant countered by asserting that the claim was made in personam, not in rem, and therefore within the jurisdiction of the winding-up court. Further, the Applicant stated that these were preservation expenses falling under Rule 338 and Section 476 of the Companies Act, 1956, which should be given priority.
The vessels were subsequently sold under judicial orders. The Port Authority did not raise objections during the auction but contended that their lien had not been waived and that the claim must be honoured against sale proceeds retained by the Liquidator.
Justice Abhay Ahuja observed that "the claim has been filed against the Official Liquidator as a claim in personam and not as a claim in rem." The Court clarified that claims made to the Liquidator based on invoices for services rendered do not amount to maritime actions in rem, thereby negating the jurisdictional objection.
In reference to the statutory lien under Section 64, the Court recorded "the claim of the port authority is a secured claim which ought to be paid in priority to all other classes." Citing the Supreme Court's judgment in Port of Mumbai v. Indian Oil Corporation, the Court noted that, "the statutory right under Section 64 embodies this overriding right of the harbour authority over the vessel for the recovery of its dues."
It further observed, "this right stands above the rights of secured and unsecured creditors of a company in winding up" and "cannot be extinguished without its express or implied consent."
Regarding the objection on the form of the petition, the Court recorded that Rule 164 is a procedural mechanism and not a bar to maintainability, stating: "procedure is the handmaiden of justice." It stated that the applications complied with Section 460(6) of the Companies Act, 1956, which empowers the Court to review decisions of the Liquidator.
The Court rejected the Official Liquidator’s argument that the Applicant forfeited its lien by not asserting it during vessel auctions. It held, "the submission...is without merit."
Additionally, the Court dismissed the need to examine Rule 338 and Section 476 claims for preservation expenses as redundant in light of its findings on the secured nature of the claims.
The Court dismissed the Official Liquidator's procedural objection, affirming that "procedure is the handmaiden of justice" and cannot obstruct substantive adjudication. It stated that the applications complied with Section 460(6) of the Companies Act, 1956, enabling review of the Liquidator’s decisions.
It noted that the only reason the claims were rejected was due to their classification as unsecured. The Court found no dispute over the amounts claimed or the invoices submitted. Therefore, it concluded that reappraising evidence was unnecessary in this case.
Based on these findings, the Court allowed the Interim Applications fully, directing that the Port Authority’s claims be treated as secured and be paid in priority from the sale proceeds held by the Liquidator.
Accordingly, it held: "The Interim Applications stand allowed in terms of prayer clauses (a) to (d) and are disposed as such."
Advocates Representing the Parties:
For the Applicants: Mr. Kanishk Kejriwal (through video conferencing), Mr. Amit Meharia, Ms. Paramita Banerjee, Mr. Shubham Sawant, Mr. Harshit Trivedi, Mr. Tushar Awasthi, Ms. Mansi Deore i/by M/s. Meharia & Co., Advocates
For the Respondents: Mr. Mutahhar Khan, Advocate for the Official Liquidator. Mr. Chandan Kumar, Official Liquidator (present)
Case Title: Export Import Bank of India and Anr. vs. Official Liquidator of GOL Offshore Limited (Vessel Malviya-18)
Neutral Citation: 2025: BHC-OS:7973
Case Number: Company Petition No.756 of 2014 with Interim Applications Nos. 3292, 3293, 3294, and 3296 of 2023
Bench: Justice Abhay Ahuja
[Read/Download order]
