In THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST vs M/S AREBEE STAR MARITIME AGENCIES PVT. LTD. & ORS, a reference was made to the larger bench of the Supreme Court by Division Bench in lieu of appeals filed before the Supreme Court against the original judgment dated 27-9-2011 [Arebee Star Maritime Agencies (P) Ltd. v. Cochin Port Trust, Original Petition No. 21041 of 1999, decided on 27-9-2011 (Ker)] of a Division Bench of the Kerala High Court in a batch of writ appeals and original petitions, preferred by various shipping agents.
The question before the High Court was whether the liability to pay “ground rent” on containers unloaded at Cochin Port, but not cleared by the consignees/importers and refused to be destuffed by the Port, on the ground of inadequate storage space, can be imposed on the owners of the vessel/steamer agents beyond the period of 75 days, fixed by the Tariff Authority of Major Ports [TAMP], a statutory body constituted under Section 47-A of the Major Port Trusts Act [MPT Act], 1963.
The sequence of events that led to the stalemate refers to the incidents which happened in 1998 when there (sic) imports synthetic woollen rags (in containers) in the Cochin Port Trust premises. The said containers were destuffed to facilitate Customs examination and to return the empty containers to the steamer agents. The destuffed cargo occupied much larger space and was not promptly cleared by the consignees in view of the hurdles placed by the Customs stating that the cargo actually did not constitute old woollen rags as declared, but mostly were brand new clothes which could not have been cleared. The “modus operandi” of the consignees/importers attracted wide attention of all concerned and taking note of the probable extent of liability to be imposed by the Customs Department, and the liability to be satisfied to the Port and others concerned, the consignees did not turn up to clear the goods and they were lying idle in the Port premises for quite long. The Port Trust charged “ground rent” from the steamer agents/owners of the containers.
As the matter came up before the Divison Bench of the Supreme Court, after then setting out the relevant provisions of the Major Port Trusts Act, 1963 [“MPT Act”] and the relevant portions of five decisions of this Court, namely, Port of Madras v. K.P.V. Sheik Mohamed Rowther & Co. 1963 Supp. (2) SCR 915 [“Rowther-I”]; Port of Madras v. K.P.V. Sheik Mohd. Rowther & Co. P. Ltd. (1997) 10 SCC 285 [“Rowther-II”]; Port of Bombay v. Sriyanesh Knitters (1999) 7 SCC 228; Forbes Forbes Campbell & Co. v. Port of Bombay (2015) 1 SCC 228 [“Forbes-II”] and Rasiklal Kantilal & Co. v. Port of Bombay (2017) 11 SCC 1, it was observed by the the Division Bench that the decisions in Rowther-I, Rowther-II, Sriyanesh Knitters, Forbes-II and Rasiklal do not seem to follow a consistent line about whom the Port Trust has to fasten the liability for payment of its charges.
Taking note of the above inconsistencies in the judgments which have been delivered after the pronouncement by the Constitution Bench in Rowther-I, the Division Bench observed that the following issues need to be resolved by a larger Bench:
1) Whether in the interpretation of the provision of Section 2(o) of the MPT Act, the question of title of goods, and the point of time at which title passes to the consignee is relevant to determine the liability of the consignee or steamer agent in respect of charges to be paid to the Port Trust;
2) Whether a consignor or a steamer agent is absolved of the responsibility to pay charges due to a Port Trust, for its services in respect of goods which are not cleared by the consignee, once the bill of lading is endorsed or the delivery order is issued;
3) Whether a steamer agent can be made liable for payment of storage charges/demurrage, etc. in respect of goods which are not cleared by the consignee, where the steamer agent has not issued a delivery order; if so, to what extent;
4) What are the principles which determine whether a Port Trust is entitled to recover its dues, from the steamer agent or the consignee; and
5) While the Port Trust does have certain statutory obligations with regard to the goods entrusted to it, whether there is any obligation, either statutory or contractual, that obliges the Port Trust to destuff every container that is entrusted to it and return the empty containers to the shipping agent.
The larger 3 judge bench in an 87 page judgment answered the questions framed in the reference order as follows:
1. The point of time at which title to the goods passes to the consignee is not relevant to determine the liability of the consignee or steamer agent in respect of charges to be paid to the Port Trust;
2. and 3. The bill of lading being endorsed by the steamer agent is different from the bill of lading being endorsed by the owner of the goods. In the first case, the endorsement leads to delivery; in the second case, the endorsement leads to passing of title. For the reasons mentioned in the judgment, both stages are irrelevant in determining who is to pay storage charges – we have held that upto the point that the Port Trust takes charge of the goods, and gives receipt therefor, the steamer agent may be held liable for Port Trust dues in connection with services rendered qua unloading of goods, but that thereafter, the importer, owner, consignee or their agent is liable to pay demurrage charges for storage of goods;
4. Until the stage of landing and removal to a place of storage, the steamer’s agent or the vessel itself may be made liable for rates payable by the vessel for services performed to the vessel. Post landing and removal to a place of storage, detention charges for goods that are stored, and demurrage payable thereon from this point on, i.e. when the Port Trust takes charge of the goods from the vessel, or from any other person who can be said to be owner as defined under section 2(o), it is only the owner of the goods or other persons entitled to the goods (who may be beneficially entitled as well) that the Port Trust has to look to for payment of storage or demurrage charges;
5. The Larger Bench divided the answer to question number 5 into two parts: first, as to whether carrying goods in a container would make any difference to the position that only the owner of the goods or person entitled to the goods is liable to pay for demurrage; and second, as to whether the Port Trust is obliged to destuff containers that are entrusted to it and return empty containers to the shipping agent. The answer to the first question is contained in paragraphs 45 to 51 of our judgment. The answer to the second question is that a container which has to be returned is only a receptacle by which goods that are imported into India are transported. Considering that the container may belong either to the consignor, shipping agent, ship-owner, or to some person who has leased out the same, it would be the duty of the Port Trust to destuff every container that is entrusted to it, and return destuffed containers to any such person within as short a period as is feasible in cases where the owner/person entitled to the goods does not come forward to take delivery of the goods and destuff such containers. What should be this period is to be determined on the facts of each case, given the activities of the port, the number of vessels which berth at it, together with the volume of goods that are imported. While it does not lie in the mouth of the Port Trust to state that it has no place in which to keep goods after they are destuffed – as in the facts in the present case – yet a court may, in the facts of an individual case, look into practical difficulties faced by the Port Trust. This may lead to the “short period” in the facts of a particular case being slightly longer than in a case where a port is less frequented, and goods that are stored are lesser in number, given the amount of space in which the goods can be stored.
83.Having answered the questions that have been posed before this Court, we do not, on the facts of this case, think that the justice of the case demands that we should interfere with the impugned High Court judgment. The steamer agents themselves did not dispute liability to pay ground rent upto 75 days before the High Court, and have admittedly paid the said charges long ago. As a matter of fact, the steamer agents paid ground rent even beyond the period of 75 days – the High Court having ordered the Appellant Port Trust to recompute the liability of the steamer agents, and return the balance to the parties concerned within two months from the date of receipt of a copy of the impugned judgment. To order a refund of ground rent paid for 75 days to the steamer agent, and direct the Board to then recover the same from the importer, consignor and/or the owner of the goods at this late stage of the proceedings would not be in the interest of justice.
Further, the impugned judgment had construed sections 61 and 62 of the MPT Act, by which a Board “may”, after the expiry of two months from the time when any goods passed into its custody, sell such goods under certain circumstances. The impugned judgment went on to hold that the expression “may” in the said provisions must be read as “shall”, as a duty is cast on the Port Trust to get rid of the goods as soon as possible in a fact situation where the consignee does not lift such goods.
The Larger Bench in its judgment set aside the above one question of law, stating, that the expression “may” in sections 61 and 62 of the MPT Act cannot be read as “shall”, subject to the caveat that as the “State” under Article 12 of the Constitution, a Port Trust must act reasonably, and attempt to sell the goods within a reasonable period from the date on which it has assumed custody of them.
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