The Bombay High Court has restrained auction of arrested vessels amid dispute involving Insolvency and Bankruptcy Code (IBC), admiralty law, and customs proceedings.
The bench of Justice Suman Shyam and Justice Advait M. Sethna has observed that the petitioner had made out a strong prima facie case warranting interim protection.
A writ petition filed challenging a show cause notice issued by the Customs Department and seeking protection against the proposed auction of a vessel in which the petitioner claimed substantial rights and interests.
The matter assumes significance as it raises complex questions involving the interplay between insolvency proceedings under the IBC, rights arising under Admiralty Law relating to arrested vessels, and powers exercised by customs authorities under the Customs Act, 1962.
The petitioner approached the High Court expressing serious apprehension that the vessel, which had already been arrested pursuant to an order passed in admiralty proceedings, might nevertheless be put up for auction. According to the petitioner, such an auction would irreversibly prejudice its rights and render the pending proceedings ineffective.
During the hearing, the Court was informed that an order for arrest of the vessel had already been passed by a Single Judge of the Bombay High Court on May 5, 2026 in Commercial Admiralty Suit (L) No. 16232 of 2026.
The respondents, including customs authorities, appeared before the Court and made submissions regarding the status of the auction process. It was also submitted on behalf of the respondents that an earlier attempt to conduct the auction could not proceed because of technical reasons.
The Bench observed that in view of the subsisting arrest order, permitting an auction at this stage would not be appropriate.
The Bench accepted the petitioner’s contention that an auction of the vessel could jeopardize its interests and recorded a finding that the petitioner had established a strong prima facie case for grant of interim protection.
The Court specifically observed that no auction of the vessel would be permissible at this stage, particularly considering the existing arrest order and the circumstances placed before it.
Consequently, the Bench granted ad-interim relief in favour of the petitioner and issued an injunction in terms of prayer clause (g) of the writ petition.
The ad-interim injunction granted by the Court will remain in force until the next date of hearing. The Court has directed the respondents to file their replies within four weeks, with liberty to the petitioner to file a rejoinder thereafter.
The Bench also permitted the petitioner to implement M/s Square Port Shipyard Private Limited as an additional respondent in the proceedings.
The matter has now been listed for further hearing on August 10, 2026.
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