Under the Admiralty Rules of the High courts, the sale of ship
whether pendente lite or after adjudication on the plaintiff's suit, has
to be carried out by the marshal/sheriff, just like a sale of movable
property in an ordinary civil suit. There is no provision for a reserve
price and there is no provision for appraisement as in English Admiralty
practice. Nevertheless, the courts, in order to prevent the ship being
sold at a price a great deal less than its real value, from recent times
have invariably ordered that the ship be appraised at its real value by
a ship's valuer and sold at not less than the appraised value thereof
unless the court, on the marshal's/sheriff's application, orders it to
be sold for a lesser price when the bidding does not reach up to the
appraised value.
The sale is normally by public auction after publication of the notice
of sale in such newspapers as the court may direct. There have been no
known instances of sales by private treaty, though there is nothing in
the Rules preventing such a sale.
In any action a court has power to order the sale of property which is
perishable, likely to deteriorate or in relation to which there is good
reason for sale. Such a sale of itself would be subject to encumbrances
existing prior to the sale. The sale of a ship includes all property on
board other than that owned by someone other than the ship owner.
A sale is confined to property that must be under arrest. A court may
order the discharge and sale of cargo not under arrest where a ship in
which the cargo is loaded is under arrest and an order for sale is made
in respect of it. The Admiralty Court may order the appraisement and
sale of property under arrest on the application of a party to the
action or by an application of the Marshal or the Sheriff. A sale
pending suit is normally ordered on the grounds that retention of the
property will cause the plaintiff's security to diminish if for no other
reason than the mounting costs of arrest. Application must be served on
any person who has obtained judgment against the ship and all caveators.
The Sheriff/ Marshal may sell the property in foreign currency. The
proceeds will be paid into court and will be invested only on
application. The effect of sale of property under arrest in an action in
rem is to give a title free of encumbrances to the purchaser.
The usual order passed by the court is either on the judgment or
pendente lite is that the property be appraised and sold by the
admiralty marshal/sheriff . Appraisement is the official valuation of
the ship by a court appointed valuer in order to prevent the ship from
being sold at too low a price. The marshal/ sheriff is not allowed to
sell the ship for less than the appraised value without the order from
the court. If there are no offers or if the offer is below the appraised
value of the ship an order of the court will be necessary if it is
established that the appraised value is no longer realistic, the court
will consider the potential interest of all the claimants against the
fund.
When the court orders that a ship be sold, the sale is of the ship
together with all property which is on board the ship, including her
bunkers, other than property which is owned by someone other than the
owner of the ship.
The terms and conditions for auction sale of the ship are finalised by
the marshal/sheriff and are made available to intended bidders.
Advertisements/Notice for auction sale of the ship are published
globally, normally in two international shipping newspaper and two
newspaper in India.
Under the terms and conditions of the sale, the successful bidder is
required to pay a percentage, usually 15 per cent, of the purchase price
forthwith and the balance of the price within a period fixed in the
conditions of sale, usually 15 days from the date of the sale. The
payment is to be made by means of bankers' draft or a certified cheque.
Under the Rules, the sale is subject to sanction of the court. The sale
is free and clear of all maritime or other liens and encumbrances.
