In a probably first-of-its-kind order, the Bombay High Court has cleared the sale of six ships originally owned by Varun Resources Ltd – once the biggest liquefied petroleum gas ship owners – as its creditors were not paying the cost for the ships’ management.
Justice KR Shriram, in an order passed on Tuesday, allowed the sale of LPG Maharshi Devatreya, Maharshi Krishna Treya, Maharshi Bhavatreya, Maharshi Bhardwaj, Maharshi Shubhatreya and Maharshi Mahatreya already arrested under HC orders in Indian waters.
The court has directed the Sheriff, assisted by an independent surveyor, to fix the terms and conditions of sale, issue advertisement and take all steps to complete the sale and report to the court for confirmation of the sale as per the timeline set by the court.
The unique point about this order is that the company concerned – Varun Resources – is already under liquidation based on Insolvency and Bankruptcy Code proceedings filed by a consortium of banks led by the State Bank of India before the Mumbai bench of National Company Law Tribunal (NCLT). The NCLT has already appointed an insolvency resolution professional (IRP), and a committee of creditors (CoC), too, is in place.
The case before the HC was, in fact, against the IRP and CoC, saying that they were not bearing the cost of managing the ships, its crew’s salaries and supplies to them. Darya Shipping Pvt Ltd, represented by Advocate Abhishek Khare before the HC, was appointed by the IRP — as the head of the CoC — to manage the ships after the NCLT appointed the IRP last year.
Khare submitted before the court that all the ships were LPG carriers and, therefore, time bombs, and that any deficiency in safety procedures or requirements could result in an explosion, putting the property and life of crew members as well as the marine life at risk. There are 98 crew members on-board these six ships.
Khare added that Darya had already spent around Rs 23 crore on the six ships, while it hadn’t been paid a single penny by the CoC. “Due to non-availability of even basic necessities like fresh water on all the vessels, some of the crew members have been afflicted with communicable skin diseases such as scabies and chicken pox, and no medical treatment had been made available,” Khare told the court.
He also presented a communication from Deputy Conservator of Kandla Port, which asked them to take urgent steps to prevent any untoward incident, as “the vessels were not displaying lights and shapes in accordance with regulations of SOLAS Convention. They were a danger to navigation, unseaworthy and a threat to safety of life and environment.” SOLAS stands for International Convention for the Safety of Life at Sea, 1974.
Senior Advocate JP Sen, appearing for the consortium of the lender banks to whom Varun Resources owed around Rs 800 crore, deposited a demand draft of Rs 12 crore in the court. Of this, Darya has been allowed by HC to withdraw Rs 9 crore for various expenses incurred by it up to February. Sen, however, did not object to the sale of ships, saying that it would help restrict the problem as well as the cost of maintaining the six vessels and that the lender banks would probably be able to recover their money earlier.
The entire sale process is to be completed by April 20.
Source: Mumbai Mirror