IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 14.09.2010 CORAM THE HONOURABLE MR. JUSTICE C.NAGAPPAN and THE HONOURABLE MR. JUSTICE P.R.SHIVAKUMAR O.S.A.Nos.299, 300 and 301 of 2010 and M.Ps.No.1 in O.S.A.Nos.299, 300 and 301 of 2010 and M.Ps.No.2 in O.S.A.Nos.300 and 301 of 2010 1.Chennai Port Trust Rajaji Salai Chennai 600 001 Rep by its Chairman 2.The Traffic Manager Chennai Port Trust Chennai 600 001 3.The Deputy Conservator Chennai Port Trust Rajaji Salai Chennai 600 001 4.Harbour Master Chennai Port Trust Rajaji Salai Chennai 600 001 .. Appellants in all the OSAs (Defendants) Vs. M/s.Jansee Steel Industries (P) Ltd No.25, II Street, Jamalia Perambur High Road Perambur Chennai 600 012 Rep. By its Director Mrs.J.Banu .. Respondent in all the OSAs (Plaintiff) Prayer : Original Side Appeals filed under Order XXXVI Rule 1/11 of Original Side Rules read with Clause 15 of the Letters Patent to set aside the common order dated 26.07.2010 made in A.Nos.3566 to 3568 of 2010 in C.S.No.751 of 2008. https://hcservices.ecourts.gov.in/hcservices/ For Appellants :: Ms.Anitha Thomas for M/s.V.J.Mathew and Co For Respondent :: Mr.R.Singgaravelan for for Mr.T.K.S.Gandhi J U D G M E N T P.R.SHIVAKUMAR, J. The Chennai Port Trust and its Officers, namely the Traffic Manager, Deputy Conservator and Harbour Master, who are the defendants in C.S.No.751/2008 pending before the learned single judge of this court are the appellants in all the three original side appeals. The plaintiff in the said civil suit is the respondent in these appeals. These three appeals have been filed against the common order dated 26.07.2010 made in A.Nos.3566 to 3568 of 2010 in the above said suit C.S.No.751/2008. 2. The facts leading to the filing of these appeals, can be stated thus:- i) The respondent/plaintiff is a company incorporated under the Companies Act, 1956. It is the owner of the scrap vessel "MV-ELENI", which was originally berthed in "Chokkani Yard" of Chennai Port Trust. The same is now found berthed in the Boat Basin of the Chennai Port Trust. It was purchased by the respondent/plaintiff under a sale certificate dated 21.10.1998 as a scrap vessel through the court proceedings in C.S.No.97/1997 in the court auction sale. However due to the pendency of various legal proceedings, the respondent/plaintiff was not able to immediately break the ship and remove the materials even though the scrap vessel was handed over to the respondent/plaintiff company in the year 1998 itself. At last, by an order dated 31.08.2000, this court permitted the plaintiff to break the ship and remove the materials. However, at that point of time, the authorities of the Port Trust, namely the appellants/defendants raised huge claims as berth hire charges, pursuant to which the respondent/plaintiff approached this court by filing application No.361/2004 in C.S.No.97/1997 and a final order was passed on 12.03.2004 fixing the berth charges at Rs.460.28P per 8 hours on the basis that the said vessel was a scrap vessel. As against the said order, the appellants herein/defendants filed an appeal in O.S.A.No.1008/2004. The said appeal was dismissed by an earlier Division Bench of this court on 11.09.2004 confirming the order of the learned single judge dated 12.03.2004. ii) Meanwhile, the customs authorities also sought to collect customs duty for the value of the ship. The respondent/plaintiff contended that it was not liable to pay https://hcservices.ecourts.gov.in/hcservices/ customs duty. Despite such a contention, the customs authorities insisted upon payment of customs duty demanded by them and thereby drove the respondent/plaintiff company to file a writ petition in W.P.No.20131/2000 seeking a declaration that it was not liable to pay customs duty for the breaking of the ship and removal of the materials from the scrap vessel. In W.P.M.P.No.29245 of 2000 in W.P.No.20131 of 2000, a learned single judge of this court, passed an order on 13.12.2000 permitting the respondent/plaintiff company to dismantle the ship and remove the scrap materials by furnishing immovable property as security to the tune of Rs.60.00 Lakhs to the Customs department. As against the said order, the customs authorities filed a writ appeal in W.A.No.573/2001. In view of the unsettled dispute regarding payment of customs duties, the respondent/plaintiff was not able to remove the scrap materials and continued the breaking activities alone. But, in order to avoid further delay in completing the breaking of the ship and removing the scrap materials from the premises of the Port Trust, the respondent/plaintiff company remitted the entire amount of Rs.50,87,877/- demanded by the customs department as customs duty under protest, without prejudice to the contentions of the plaintiff that no customs duty is payable in respect of the said ship. The customs department also received the amount paid under protest by the respondent/plaintiff and issued a receipt. As such the impediment for completing the breaking of the ship and removing the materials came to be removed by the receipt issued by the customs authorities on 11.07.2006. iii) Meanwhile, there arose some misunderstanding between the fourth appellant and the respondent/plaintiff. Also there arose a dispute regarding the actual amount due to the Port Trust towards berth charges. A demand was made that a sum of Rs.13,19,346/- towards berth charges, which according to the respondent/plaintiff included a sum of Rs.2.00 Lakhs paid along with its letter dated 30.09.2005. Apart from the demand towards berth charges, a demand for payment of a sum of Rs.65,92,581/- was also made for charges for the utilisation of the floating crane "Thangam" for lifting the scrap materials from the respondent/plaintiff's ship "MV-ELENI" and for bailing out water from the same. Contending that the floating crane "Thangam" was not utilised at any point of time and that there was absolutely no necessity for using the floating crane for bailing out the water from the ship "MV-ELENI", as the respondent/plaintiff had provided its own provisions for bailing out water from the ship through two motor pumps and had made its own arrangements for manual and mechanical lifting of the scrap materials from the said vessel, the respondent/plaintiff company denied its liability to pay the said amount of Rs.65,92,581/- demanded as utilisation charges for the use of floating crane "Thangam". As the said amount demanded as usage charges for the utilisation of the floating crane "Thangam" was not met with, the fourth respondent affixed a notice in the ship stating that the total amount due was Rs.1,05,00,000/- for which a reply dated 10.05.2006 denying the said liability was https://hcservices.ecourts.gov.in/hcservices/ sent by the respondent/plaintiff. The receipt of the same by the defendants on 15.05.2006 was acknowledged and only thereafter, the respondent/plaintiff paid the above mentioned Rs.50,87,777/- under protest to the customs department to meet the demand of the customs department as customs duty. iv) When the respondent/plaintiff took steps to remove the materials from the said vessel after such payment of customs duty under protest on 04.07.2006, the third appellant/third defendant passed an order on 15.07.2006 claiming a sum of Rs.80,36,914/- towards berth charges informing the respondent/plaintiff that the above ship would be sold invoking the powers of the appellants under Section 64 of the Port Trust Act, if the said amount was not settled within five days from the date of receipt of the said order. The respondent/plaintiff, contending that the actual berth charges was only Rs.3,85,686.52, made payment of the said amount on 19.07.2006 and sought permission through his agent M/s.Galaxy Commercial to remove the materials from the plaintiff's ship. The said agent of the respondent/plaintiff made a representation on 22.07.2006 requesting the appellants to grant permission and due permission was granted to remove the materials from the ship through Gate No.2A of the Chennai Port Trust. Subsequently, a further sum of Rs.6,00,000/- by way of two cheques was also collected towards berth charges. However since the respondent/plaintiff did not agree to make the payment of the usage charges for the alleged use of floating crane "Thangam", the third appellant/third defendant refused to allow the plaintiff to continue the removal of the material from the ship. However, the plaintiff calculated the berth charges for the scrap ship "MV-ELENI" and paid the amount. But the appellants/defendants, insisting upon payment of the amount demanded by them for the alleged use of crane, refused to permit the plaintiff to continue the breaking work. Thereafter the respondent/plaintiff faced other problems as a demand was made by the third appellant/third defendant in his order dated 15.07.2006 demanding a sum of Rs.80,36,914/- which was again followed by another order dated 31.07.2006 claiming an amount of Rs.65,92,581/- for the alleged use of floating crane "Thangam" for the removal of scrap materials. As the said claims made in the orders dated 15.07.2006 and 31.07.2006 were disputed by the respondent/plaintiff, the appellants brought the ship for auction under a tender notification dated 17.07.2006, pursuant to which the respondent/plaintiff had to approach this court by way of the above said civil suit, namely C.S.No.751/2008, for a declaration that the order of the third appellant/third defendant dated 15.07.2006 and the consequential order dated 31.07.2006 and the tender notification dated 17.07.2008 for the sale of the plaintiff's vessel "MV-ELENI", are illegal and not enforceable and for a permanent injunction restraining the appellants/defendants from preventing the plaintiff and their staff from carrying out the ship breaking activities in the ship "MV-ELENI" and also for a mandatory injunction directing the appellants/defendants to render https://hcservices.ecourts.gov.in/hcservices/ all assistance to the respondent/plaintiff and their staff for carrying out the ship breaking activities and for the removal of the scrap material without any delay. v) Along with the suit, the respondent/plaintiff filed an application in A.No.3716/2008 seeking interim stay of operation of the orders dated 15.07.2006 and 31.07.2006. Another application in O.A.No.867/2008 seeking an order of Interim Injunction restraining the appellants/defendants from preventing the respondent/plaintiff from carrying on the ship breaking activities was also filed on 08.08.2008 and an interim order of injunction was granted in O.A.No.867/2008 and an interim order of stay was also granted in A.No.3716/2008. Another application in A.No.1158/2008 was also filed by the respondent/plaintiff against the Port Trust to prevent it from initiating any proceedings pursuant to the tender notification published on 02.10.2008. All the above said three applications, namely O.A.No.867/2008, A.No.1158/2008 and A.No.3716/2008 were disposed of by a common order on 19.01.2009 with the following directions:- "There shall be an order of injunction in O.A.No.1158 of 2008 pending disposal of the suit and an order of stay in A.No.3716 of 2008 pending disposal of the suit on conditions that: i)the applicant/plaintiff shall make payment, within two weeks from today to the Port Trust, of berth charges calculated up to the date of this order at the rate of Rs.460.28P per eight hours, after deducting whatever amount already paid. ii)berth hire charges for the subsequent period shall be continued to be paid on or before 10th of every month till the disposal of the suit or the complete removal of the scrap, whichever is earlier; iii)The applicant shall produce security in the form of immovable property to the tune of Rs.65,00,000/- towards the claim of utilisation charges for the use of floating crane "Thangam" or bank guarantees for the above said amount within a period of four weeks from the date of this order. iv)On such payment being made towards berth hire charges and security is being produced towards the utilisation charges https://hcservices.ecourts.gov.in/hcservices/ for the use of floating crane "Thangam" in compliance with clauses 1 and 3, the petitioner shall be permitted to remove the scrap. v)In case of default with any one of the conditions 1 and 3, the applications shall stand dismissed and the respondents are at liberty to move before the court for appropriate direction. vi)In case of default in payment of subsequent berth charges as per the condition (ii), the respondents shall be at liberty to move the court for appropriate direction." Some of the conditions stipulated therein were complied with. But the respondent/plaintiff did not furnish security in the form of immovable property towards the crane utilisation charges. Hence the appellants/defendants moved an application on 23.12.2009 seeking permission to proceed with the auction of the vessel "MV- ELENI" to realise the amount due to the Port Trust. vi) It was represented on behalf of the respondent/plaintiff that, though belatedly the security was furnished, but the same was not accepted by the Assistant Registrar (O.S.II), as he was of the view that the security was not adequate. Hence, a further order was passed on 17.11.2009 by a learned single judge of this court directing the respondent/plaintiff to furnish adequate security within two weeks thereafter as per the earlier order dated 19.01.2009. Since the said order was not complied with, the application No.3716/2008 was dismissed by an order dated 08.02.2010 and application No.2312/2009 for proceeding further with the auction sale was allowed. When such an order was passed, the respondent/plaintiff was not represented by a counsel and the said order came to be passed based on the representation of the learned counsel for the appellants herein to the effect that security was not furnished in compliance with the order dated 17.11.2009. vii) In the meanwhile, auction for the sale of the vessel "MV-ELENI" for the recovery of amounts due to Port Trust was held on 02.10.2008 and because of the operation of stay, the highest bidder was not directed to make payment. Consequent to the order dated 08.02.2010, the highest bidder was asked to make payment of 25% of the bid amount in addition to the earnest money deposited at the time of participating in the tender. Subsequently, the highest bidder paid a sum of Rs.93.00 Lakhs on 06.04.2008, the date within which he had to make payment of 25% of the bid amount. He also paid a sum of Rs.16,18,967/- on 20.04.2010 towards customs duty. When the respondent/plaintiff https://hcservices.ecourts.gov.in/hcservices/ came to know of the orders passed on 08.02.2010 and the subsequent developments, it filed application Nos.1929 to 1932 of 2010, for (i) recalling the order dated 08.02.2010 passed in A.No.2312 of 2009, (ii) extending the time for complying with the order dated 17.11.2009; (iii) modifying the order dated 17.11.2009 so as to enable the plaintiff to furnish bank guarantee; and (iv) recalling the order dated 08.02.2010 made in A.No.3716 of 2008. In those applications, while granting time to file counter, the court granted an order of interim stay of confirmation of sale and the payment of balance consideration by the highest bidder until further orders. The said order was passed on 09.04.2010. Thereafter, the highest bidder came forward with four applications in A.Nos.2440 to 2443/2010 to get impleaded in all the above said four applications filed by the respondent/plaintiff. All the eight applications, namely A.Nos.1929 to 1932/2010 and 2440 to 2443/2010 came to be taken up for joint hearing and were disposed of by the learned single judge by the impugned common order dated 26.07.2010. By the said common order, all the impleading applications, namely A.Nos.2440 to 2443/2010 were dismissed and the applications filed by the respondent/plaintiff, namely A.Nos.1929 to 1932 of 2010 were allowed. The respondent/plaintiff was permitted to proceed further with its activities subject to the fulfilment of the following conditions:- "(a) The application for impleading in A.Nos.2440 to 2443 of 2010 are dismissed. (b) Application Nos.1929 to 1932 of 2010 are allowed. The order dated 08.02.2010 passed in A.No.2312/2009 is recalled and the plaintiff is permitted to proceed further with his activities subject to his fulfilment of the following conditions: (i)The bankers cheque for Rs.65 lakhs drawn by the plaintiff on Andhra Bank in favour of the Registrar, shall be deposited on or before 30.04.2010 without waiting for the copy of this order. The Registrar is directed to invest the proceeds in a cumulative Fixed Deposit for a period of three years in the first instance, renewable thereafter from time to time. (ii)The Port Trust shall refund the amount of Rs.1 Crore (Rupees One Crore only) deposited by the highest bidder, who is the applicant in A.Nos.2440 to 2443 of 2010, on or before 10.05.2010. (iii)The highest bidder shall make a claim for refund of the custom duty of https://hcservices.ecourts.gov.in/hcservices/ Rs.16,18,967/- within a period of one week with the competent authority. If the refund is not made within the period of fifteen days from the date of the claim, the plaintiff shall pay the interest (and not principal) at the rate of 12% p.a. from the date on which the highest bidder lodges a claim with the customs department. It is open to the plaintiff to produce a copy of this order to the appropriate Customs Department and expedite the refund of money. The Customs Department shall also endeavour to make refund at the earliest, without driving the parties to another round of litigation before a different forum." It was also ordered therein as follows:- (c) The plaintiff shall also pay a sum of Rs.6 lakhs (Rupees Six Lakhs only), determined ad hoc, to the highest bidder on or before 10.05.2010, by way of Demand Draft, since the highest bidder has also suffered a detriment in the form of expenses and opportunity costs. (d) Since the claim of the Port Trust has also increased on account of the further berth hire charges, wharfage, storage etc., the plaintiff shall furnish security in the form of bank guarantee or immovable property to the extent of Rs.50 lakhs on or before 31.05.2010. (e) The plaintiff shall also continue to pay all statutory charges and other dues so long as the vessel, or any part thereof, or any of the materials of the plaintiff continue to remain within the precincts of the Port Trust. viii) The respondent/plaintiff had also filed three more applications, namely A.Nos.3566 to 3568 of 2010 to allow the respondent/plaintiff to deploy his men along with adequate cutting equipments and other essential accessories to dismantle the vessel "MV-ELENI" and to remove the scrap, 2) to allow the respondent/ plaintiff to bring the transportation vehicles inside the port to take out the scrap materials dismantled from the vessel "MV-ELENI" and 3) for a direction to issue delivery order to take delivery of the scraps already dismantled and scraps yet to be dismantled. All the three applications were taken up by the learned single judge and were disposed of by a common order dated 26.07.2010, the date on which the other eight applications referred to above were also disposed of. https://hcservices.ecourts.gov.in/hcservices/ ix) In the common order passed in A.Nos.3566 to 3568/2010, the learned single judge referring to a tabulation containing (i) berth hire charges payable, (ii) charges upto 30.04.2010, (iii) charges up to 31.07.2010 and (iv) charges from 01.05.2010 to 31.07.2010, came to the conclusion that in the earlier order dated 29.04.2010 at paragraph 25(d), entire amount payable up to 30.04.2010 was taken into consideration and the said order itself would cover the entire due on all accounts and that the respondent/plaintiff had to be directed to pay the charges only subsequent to 30.04.2010. Thus the learned single judge came to the conclusion that up to the date of order, only a sum of Rs.6,18,549/- was to be paid and accordingly directed the respondent/plaintiff to make payment of the said amount. The learned single judge also, by the impugned order, directed the appellants to permit the respondent/plaintiff to bring in the transportation vehicles inside the port to take out the scrap and other materials dismantled from the vessel immediately upon making payment of the said amount within a period of one week from the date of the said order. 3. Aggrieved by and challenging the said order dated 6.07.2010 made in A.Nos.3566/2010 to 3568/2010 in C.S.No.751/2008, the appellants/defendants have come forward with the present Original Side Appeals in O.S.A.Nos.299 to 301/2008 on the grounds stated in the memorandum of appeals and hence prayed that the impugned order be set aside. 4. The respondent/plaintiff had lodged a caveat and thus took notice when the appeals came up for admission. As the appeals have arisen out of an interim order in a pending suit, this court decides to dispose of the appeals at the stage of admission itself, after affording opportunity of being heard to both sides. 5. The common point that arise for consideration in these appeals are "whether the common order dated 26.07.2010 of the learned single judge requires interference in these appeals?". 6. The arguments advanced by Ms.Anitha Thomas, learned counsel representing M/s.V.J.Mathew and Co, counsel on record for the appellants and by Mr.R.Singgaravelan, learned counsel representing Mr.T.K.S.Gandhi, learned counsel on record for the respondent were heard. The materials available on record were also perused. 7. In the narration of facts leading to the filing of these appeals all material facts have been highlighted. Therefore, it is unnecessary and in fact it will be a waste of exercise to repeat it again while discussing the point in issue in these appeals. It is the contention of the learned counsel for the appellants/defendants that Chennai Port Trust, being a https://hcservices.ecourts.gov.in/hcservices/ statutory body, cannot allow the outstanding amounts due to it to remain unsecured; that audit objection will be raised if the respondent is allowed to remove the materials without furnishing sufficient security for the payment of the amount payable; that as per the order dated 29.04.2010, the respondent/plaintiff should continue to pay all statutory charges and other dues so long as the vessel remains in the premises of the Port and that the learned single judge ought to have directed the respondent/plaintiff to pay a total sum of Rs.1,15,00,000/- directly to Port Trust instead of directing deposit of Rs.65.00 Lakhs to the credit of the suit and furnishing bank guarantee for Rs.50.00 Lakhs. It is the further contention of the learned counsel for the appellants/defendants that the observation of the learned single judge that the order dated 29.04.2010 directing to make payment of statutory charges and other dues, shall be attracted for the periods subsequent to 30.04.2010 as the earlier period was covered by paragraph 25(d) of the said order, is erroneous and the same would work out a hardship on the appellants/defendants; that directing the appellants/defendants to permit the respondent/plaintiff to continue the ship breaking work and to take out the scrap materials from the precincts of Chennai Port Trust on payment of the berth charges and other charges from 01.05.2010 onwards alone shall be detrimental to the interest of the appellants; that if the respondent/plaintiff is allowed to take away the scraps from the Port without furnishing adequate security, then the appellants would incur heavy loss, as it would be very difficult for them to recover such dues from the respondent/plaintiff after the goods are allowed to be removed from the precincts of Chennai Port Trust. 8. Per contra, it is the contention of the learned counsel for the respondent/plaintiff that the very attitude of the appellants, right from the beginning towards the respondent/plaintiff, is hostile for the reasons best known to them; that the officer who was there as Harbour Master, was bent upon causing such inconveniences, as his request for giving the work of breaking the ship to a contractor of his choice was not heeded to; that the same was the reason for claiming exorbitant amount on one head or other from time to time; that despite the fact that the admissibility of the claims of the Port Trust as well as the customs authorities was disputed by the respondent/plaintiff, the respondent/plaintiff was keen to see that the scrap vessel is dismantled and the scraps are removed from the precincts of the port at the earliest, so that further loss in the form of payment of berth hire charges and other charges will be minimised, that the same is the reason why the respondent/plaintiff chose to make payment of the entire amount claimed by the customs authorities under protest, without prejudice to their claim that they were not liable to pay customs duty and chose to make payments of the admitted amounts to the Port Trust and furnish security by depositing a sum of Rs.65.00 Lakhs to the credit of the suit and giving bank guarantee to the https://hcservices.ecourts.gov.in/hcservices/ tune of Rs.50.00