IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.T.SANKARAN WEDNESDAY, THE 10TH DECEMBER 2008 / 19TH AGRAHAYANA 1930 WA.No. 620 of 2002(B) AGAINST THE JUDGEMENT IN OP.4723/1990 DATED 26/02/2002 APPELLANT: PETITIONER: ----------------------------------- M/S. W.H.D. 'CRUZ & SONS, STEVEDORES & TERMINAL OPERATORS XLV/394, IST FLOOR, WILLINGDON ISLAND, COCHIN - 3, REPRESENTED BY ITS PRESENT MANAGING PARTNER P.A. JOSEPH STANLEY. BY ADV. SRI.M.C.SEN (SR.) SRI.M.P.SREEKRISHNAN SMT.SHAHNA KARTHIKEYAN RESPONDENTS:RESPONDENTS: --------------------------------------- 1. THE BOARD OF TRUSTEES OF THE PORT OF COCHIN, REPRESENTED BY ITS CHAIRMAN, COCHIN PORT TRUST, COCHIN - 3. 2. THE ADDITIONAL TRAFFIC MANAGER, COCHIN PORT TRUST, COCHIN - 3. ADV. SRI.A.K.JAYASANKER NAMBIAR THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 19/09/2007, ALONG WITH WA NO.712 OF 2003 AND CONNECTED CASES, THE COURT ON 10/12/2008 DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & K.T.SANKARAN, J. ------------------------------------------------------------- W.A.NOS.620 of 2002, 712 of 2003, 2022 of 2003, 887 of 2005 & 1146 of 2005 and O.P.NO. 1161 of 1996 ------------------------------------------------------------- Dated this the 10th December, 2008 JUDGMENT K.T.Sankaran, J. The validity of “Scale of Rates and Statement of Conditions for the Levy of Charges” (hereinafter referred to as “Scale of Rates”) framed by the Cochin Port Trust is under challenge in these Writ Appeals (except W.A. No. 2022 of 2003) and the Original Petition. The Writ Appeals are filed by the respective writ petitioners. Their contention is that the Scale of Rates framed under Sections 48, 49 and 50 of the Major Port Trusts Act (hereinafter referred to as “the Act”) is arbitrary and violative of Article 14 of the Constitution of India and that the Scale of Rates is beyond the rule making power under Sections 48, 49 and 50 of the Act. Since common questions are involved in all these Writ Appeals and the Original Petition, they are being disposed of by this common judgment. 2. Hereinafter the appellants as well as the writ petitioner are referred to as the petitioners. The petitioners except the petitioner in O.P.No.11547 of 1992 (from which W.A.No.2022 of 2003 arose) are stevedores and/or terminal operators in the Cochin Port Trust. They were engaged in carrying out the loading operations of the containers. W.A. NO.620 OF 2002 AND CONNECTED CASES :: 2 :: The handling of the containers requires hiring of mobile cranes belonging to the Cochin Port Trust. Disputes arose between the petitioners and the Port Trust when the Port Trust made demands from the petitioners on various grounds relating to dealing with the containers using the cranes. 3. For the sake of convenience, we shall state the facts in O.P.No.4723 of 1990 (from which W.A.No.620 of 2002 arose). The petitioner therein is engaged in the business of stevedores and/or terminal operators. The vessel “M.V.BRAVE-SIF” arrived at Cochin for loading containers under the agency of M/s.PATVOLK. The agents of the ship engaged the petitioner to carry out the loading operation of the containers as stevedores agents. The petitioner had hired a mobile crane of the Port Trust. The petitioner declared the weight of the load and the Port Trust allotted one 35 tonnes mobile crane to be used for the night shift. While the mobile crane was lifting the container, the derrick steel wire of the crane broke. As a result of the fall of the derricks together with the container and its spreader, damage was caused to the derrick jib of the crane. Due to the impact of the fall, one of the four tubular steel wires got buckled and the derrick steel wire got parted. Letter was issued by the petitioner to the first respondent reporting the incident. A survey was conducted as directed by the first respondent. Officials of the first respondent inspected the premises and report of the inspection was also W.A. NO.620 OF 2002 AND CONNECTED CASES :: 3 :: prepared. As insisted by the first respondent, petitioner executed a guarantee letter under protest, undertaking to reimburse the loss. The mobile crane was operated by the employees of the first respondent and the accident occurred only due to their negligence. The Port Trust fastened the liability on the petitioner and claimed damages. The petitioner repudiated the allegations made by the Port Trust. The petitioner denied the allegation made by the Port Trust that the correct weight of the container was not declared. There was no mis-declaration on the part of the petitioner. Huge amounts were claimed by the Port Trust as the cost of rectification of the damage. The demand was repeated by the first respondent. When coercive steps were attempted to be taken, the petitioner filed the Writ Petition. 4. The petitioner contended that the respondents have no right to determine the liability of the petitioner unilaterally. The dispute has to be resolved by an impartial third party or a competent civil court. The attempt of the Port Trust to recover huge amounts from the petitioner instead of resorting to a suit as provided under Section 131 of the Act is malafide. No guidelines are provided to enable the respondents to determine the quantum of damages. No provision is made to hear the affected party. Being a statutory authority, the respondents could enter into a finding against the petitioner only after affording an opportunity of W.A. NO.620 OF 2002 AND CONNECTED CASES :: 4 :: being heard to the petitioner. The petitioner executed the guarantee under undue pressure exerted by the respondents. The guarantee is vitiated by undue influence and coercion. The first respondent relies on the Scale of Rates. Rule 8 of Part I Chapter II laying down the conditions for hire is beyond the rule making power under Sections 48, 49 and 50 of the Act. The said rule, making the hirer liable for any loss or damage, caused to the property of the Port, even for the negligence of the employees of the Port, is unjust, arbitrary and violative of Article 14 of the Constitution. The petitioner has no control over the employees of the first respondent. There is no statutory provision making the petitioner liable for the demand made by the Port Trust. 5. For the sake of convenience, we would like to extract Rule 8 of Part I Chapter II paragraph (d) (now Rule 11 of Part IV of Chapter II(A)). “Rule 8: The Port shall not be responsible to the hirer or any person for any loss or damage or injury to life arising directly or indirectly from the use of the crane or slings during the period of its supply on hire. The hirer shall indemnify the Port against all loss or damage or injury to life arising directly or indirectly from the use of the crane or slings during the period of supply on hire, to any property belonging to the Port, including the crane or slings or to any person or property. The liability of the hirer shall not be affected by the fact that such loss or damage or injury to the life may have arisen due to any act or default of any employee of the Port. The hirer shall also indemnify the Port for all liabilities under the Workmen’s Compensation Act.” W.A. NO.620 OF 2002 AND CONNECTED CASES :: 5 :: 6. In the counter affidavit filed by the Cochin Port Trust, after referring to the various provisions of the Act, it is inter alia contended as follows: The Scale of Rates is legal and valid and it does not offend Article 14 of the Constitution. The Scale of Rates were framed under Section 48 to 50 of the Act. Where services are offered by the Port on payment of the rates prescribed, the conditions governing the offer and acceptance of the service reflect an agreement between the Port and agents like the petitioner. The Board of Trustees of the Cochin Port Trust constituted under Section 3 of the Act is a representative body consisting of the prescribed number of trustees which include representative of the labour, representatives of the trade, chamber of commerce and other interests. The Scale of Rates framed by the Board of Trustees was required to be submitted to the Central Government for sanction and only after sanction, it got the force of law. The Act itself provides for necessary safeguards, checks and counter checks as against fixation and levy of harsh and unjust rates. The conditions in the Scale of Rates challenged by the petitioner form part of the contract between the Port and the petitioner, as accepted by the petitioner. The petitioner, therefore, cannot challenge the Scale of Rates. The hirer is liable, irrespective of the cause/reason, for any loss, damage or injury caused by the use of any of the property or machine belonging to the Cochin Port Trust. The Scale of Rates and the terms and conditions therein have been in force for a long W.A. NO.620 OF 2002 AND CONNECTED CASES :: 6 :: time. The action taken by the Port Trust was justified in the counter affidavit. 7. Similar contentions are raised in the other Writ Petitions, except O.P.No.11547 of 1992. 8. The relevant facts in O.P.No.11547 of 1992 are the following: The petitioner is a private limited company engaged in the business of shipping agency at the Port of Cochin. The petitioner was the steamer agent for a foreign flag vessel by name “M.V.TIGER LIBERTY”, which had called at the Port of Cochin in the last week of November-first week of December, 1990. The vessel was at the Port only for a short duration. All the claims for the services rendered and the liabilities were cleared by the petitioner. After the departure of the vessel, the petitioner received a communication from the Wharf Superintendent of the Cochin Port Trust alleging that the vessel had hit against the rubber fender at about 6.30 p.m. on 1.11.1990 causing damage to the fender. The accident was reported to the Deputy Wharf Superintendent. The petitioner had also provided the guarantee for the damage. However, till 10.12.1990 there was no communication from the respondent. The claim was made after the vessel had left the Port. The petitioner is not liable for the damages. The petitioner repudiated the liability. W.A. NO.620 OF 2002 AND CONNECTED CASES :: 7 :: 9. In the counter affidavit filed on behalf of the respondent, it was contended that as soon as the accident happened, the matter was brought to the notice of the representative of the petitioner who was present at the berth. However, he refused to attend or co-operate in the spot enquiry conducted on the same day. He took the stand that the petitioner was not liable for the damage. The petitioner maintains a deposit account with the Cochin Port Trust for payment of dues, charges and any other amount that may become due in respect of different vessels for which the petitioner is steamer agent. The dues includes any damage that may be caused by the said vessels. The petitioner is liable for the damages. By the claim made by the respondent, no fundamental right or any other right of the petitioner is infringed. The action taken by the respondent is not arbitrary, malafide, capricious or in violation of the principles of natural justice, as alleged. The Cochin Port Trust has authority under the provisions of the Major Port Trusts Act, 1963 to demand and recover the costs of damage caused to the property of the Port. The respondent also raised a contention that the dispute involved being a contractual matter and that too involving disputed questions of fact, the petitioner is not entitled to invoke the extra ordinary jurisdiction of this Court under Article 226 of the Constitution of India. W.A. NO.620 OF 2002 AND CONNECTED CASES :: 8 :: 10. O.P.No.4723 of 1990 was disposed of by the learned single Judge on 26.2.2002 holding that the petitioner therein is not entitled to the reliefs prayed for. The challenge against the validity of the Rule was negatived. Learned single Judge relied on the decision of the Supreme Court in Luga Bay Shipping Corporation and another v. Board of Trustees of the Port of Cochin and another ((1997) 1 SCC 631 = AIR 1997 SC 544), by which the Supreme Court dismissed the appeal arising out of the decision of the Kerala High Court in 1994 (1) KLT 61. Following the judgment in O.P.No.4723 of 1990, the other Writ Petitions were also disposed of (except O.P.No.11547 of 1992). O.P.No.11547 of 1992 was disposed of by another learned single Judge and it was held, following the decision in Luga Bay Shipping Corporation’s case, that the petitioner has an effective alternative remedy and that the petitioner may work out such remedy. 11. The Major Port Trusts Act, 1963 is an Act to make provision for the constitution of port authorities in certain major ports in India and to vest the administration, control and management of such ports in such authorities and for matters connected there with. Under Section 3 of the Act, the Central Government shall constitute a Board of Trustees. Section 3 provides that in the case of ports of Bombay, Calcutta and Madras, the Board shall consist of Chairman, Deputy Chairman and not more than W.A. NO.620 OF 2002 AND CONNECTED CASES :: 9 :: nineteen persons. In the case of other ports, instead of nineteen persons, there shall be seventeen persons. The Board of Trustees consists of the representatives of various departments and representatives of various interests in shipping including ship owners, owners of sailing vessels, shippers and such other interests. Section 42 provides that the Board shall have a power to undertake the various services mentioned therein. 12. For the sake of convenience, we would like to quote Sections 48, 49 and 50 (in force at the relevant time) of the Act, which relate to the framing of Scale of Rates . “48. Scales if rates for services performed by Board or other person—(1) Every Board shall from time to time, frame a scale of rates at which, and a statement of conditions under which, any of the services specified hereunder shall be performed by itself or any person authorised under Section 42 at or in relation to the port or port approaches --- (a) transhipping of passengers or goods between vessels in the port or port approaches; (b) landing and shipping of passengers or goods from or to such vessels to or from any wharf, quay, jetty, pier, dock, berth, mooring, stage or erection, land or building in the possession or occupation of the Board of at any place within the limits of the port or port approaches; (c) cranage or porterage of goods on any such place; (d) wharfage, storage or demurrage of goods on any such place; W.A. NO.620 OF 2002 AND CONNECTED CASES :: 10 :: (e) any other service in respect of vessels, passengers or goods, excepting the services in respect of vessles for which fees are chargeable under the Indian Ports Act. (2) Different scales and conditions may be framed for different classes of goods and vessels. 49. Scale of rates and statement of conditions for use of property belonging to Board—(1) Every Board shall, from time to time, also frame a scale of rates on payment of which, and a statement of conditions under which, any property belonging to, or in the possession or occupation of, the Board, or any place within the limits of the port or the port approaches may be used for the purposes specified hereunder -- (a) approaching or lying at or alongside any buoy, mooring, wharf, quay, pier, dock, land, building or place as aforesaid by vessels; (b) entering upon or plying for hire at or on any wharf, quay, pier, dock, land, building, road, bridge or place as aforesaid by animals or vehicles carrying passengers or goods; (c) leasing of land or sheds by owners of goods imported or intended for export or by steamer agents; (d) any other use of any land, building, works, vessels or appliances belonging to or provided by the Board. (2) Different scales and conditions may be framed for different classes of goods and vessels. (3) Notwithstanding anything contained in sub-section (1), the Board may, by auction or by inviting tenders, lease any land or shed belonging to it or in the possession or occupation at a rate higher than that provided under sub- section (1). W.A. NO.620 OF 2002 AND CONNECTED CASES :: 11 :: 50. Consolidated rates for combination of services – A Board may, from time to time, frame a consolidated scale of rates for any combination of service specified in Section 48 or for any combination of such service or services with any user or permission to use any property belonging to or in the possession or occupation of the Board, as specified in Section 49. 13. Section 123 of the Act provides for the general power of the Board to make regulations consistent with the Act for the purposes mentioned therein. Section 131 provides for alternative remedy of suit. Section 131 reads as follows: “131. Alternative remedy by suit -- Without prejudice to any other action that may be taken under this Act, a Board may recover by suit any rates, damages, expenses, costs, or in the case of sale the balance thereof, when the proceeds of sale are insufficient, or any penalties payable to, or recoverable by, the Board under this Act or under any regulations made in pursuance thereof.” 14. In Luga Bay Shipping Corporation and another v. Board of Trustees of the Port of Cochin and another ((1997) 1 SCC 631 = AIR 1997 SC 544), the agents and owners of a vessel challenged the claim made by the Cochin Port Trust by filing a writ petition in the High Court. There was also a prayer to declare condition No.6 of the notification fixing the scale of rates and statement of conditions for levy of charges by the W.A. NO.620 OF 2002 AND CONNECTED CASES :: 12 :: Port Trust under Sections 48, 49 and 50 of the Act, as ultra vires of the Act and the Constitution and to declare Regulation Nos.3 and 43 of the Cochin Port Trust Regulations, 1975 ultra vires the provisions of the Indian Ports Act and the Major Port Trusts Act. The High Court dismissed the writ petition as per the judgment reported in 1994 (1) KLT 61. Referring to Section 116 of the Act, which provides for recovery of value or damage to the property of the Board, it was held that the Section provides the manner in which the amount is to be recovered and the Board need approach the Magistrate only for effecting the recovery of that amount. When the Board approaches the Magistrate for effecting the recovery, then the Magistrate has to issue summons to the master of the vessel and hear him. It was held that this hearing is not in any way connected with the quantification of the damages. It was held that the liability of the owner or master of the ship, as regards the damages to the Port is concerned, is absolute. On appeal, the Supreme Court confirmed the decision of the Kerala High Court ((1997) 1 SCC 631). 15. As regards the scales of rates and the validity thereof, the Supreme Court in (1997) 1 SCC 631 held at paragraphs 12 and 14 thus: “12. Now, we come to the scheme of Sections 48, 49 and 50 of the said Act. Section 48 empowers the Board to frame a scale of rates and a statement of conditions under which any of the services shall be performed by it and these include services to be provided inter alia for landing and shipping of goods from or to vessels in the port, dock, etc. W.A. NO.620 OF 2002 AND CONNECTED CASES :: 13 :: Besides prescribing the rates to be charged for such services, the Board is expected to frame a statement of conditions under which the services would be performed and this could provide for the remedy in case of damage to the Board’s property. So also, under Section 49, the board can frame the rates and statement of conditions for performing the services set out therein. Under these provisions, therefore, it is left to the Board not only to frame the rates of charges for services rendered, but also to make a statement of conditions under which the services would be performed. ...... ...... ...... 14. That takes us to the next contention namely, whether the unilateral action taken by the Board in assessing the damages is in violation of the principles of natural justice. At the first blush, the argument made appears to be attractive but, on closer scrutiny, and having regard to the purpose and object of making the said provision entitling the Board to determine the quantum of damages, it would appear that the urgency of the situation demands that the Board should be allowed to determine the liability and claim payment or security for the same before the vessel leaves the shores of the country. We have already pointed out earlier the anxiety of the legislature to provide for immediate action to be taken before the vessel leaves the shore. Once it has left the shore, it would be impossible for the Board to recover the damage caused by the vessel to its property. In order to protect international trade and at the same time ensure that the damage caused to the property of the port is recovered before the vessel leaves the port, it seems essential that the Board should be empowered to determine the quantum of damages and ensure that the vessel does not leave the port before depositing cash or providing security for the same. Besides, to avoid dislocation of traffic, it is essential that the damage caused to the port or property of the Board is repaired without loss of time, for which funds would be required. In the circumstances, it is therefore inevitable that the power to determine the damage must vest in the Board for, otherwise, the vessel may leave the port and the Board would be left to suffer the damage without recovering it from the offending vessel. Therefore, while conceding that the right to be W.A. NO.620 OF 2002 AND CONNECTED CASES :: 14 :: heard before the quantum of damage is determined is an important right, in the very nature of things and having regard to the urgency of the matter, public interest demands that before the vessel leaves the shores of the country, the estimated damage is paid to or accrued by the Board. The interests of justice, in so far as the Board is concerned, would not be safeguarded if this power is not vested in the Board and consequently the vessel is permitted to leave the shores of the country without securing the damage. Besides, if the master or owner of the vessel desires to question the quantum of damages determined by the Board, the law does not preclude the filing of a civil suit in that behalf. In the civil suit, the basis on which the quantum of damages was worked out by the Board would be fully reviewed and that would provide a post-decisional hearing to the master or owner of the vessel. We are, therefore, of the opinion that in the very nature of things, it is not possible that a pre-decisional hearing should be accorded to the master or owner of the vessel before the Board determines the amount of compensation. Even if the Board can ensure that a port-clearance is not granted to the vessel, that would not serve the objective as the continued presence of the vessel at the dock or port would block up traffic as urgent repairs would not be possible and the presence of the vessel would not permit other vessels to enter that area. In our opinion, therefore, the High Court was right in