: 1 : IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO.2534 of 1989 SUIT NO.2534 of 1989 SUIT NO.2534 of 1989 The Board of Trustees of the Port of Bombay, a body corporate constituted under the provisions of the Major Port Trusts Act, 1963 as amended by the provisions of the Major Port Trust Amendment Act, 1974 and having their office at Vijay Deep, Shoorji Vallabhdas Marg, Ballard Estate, Bombay - 400 038. .. Plaintiffs. Versus 1. M/s.Purpun Enterprises, a firm carrying on business at 0116, Defence Colony, New Delhi - 110 024 and also carrying on business at F-12 (Basement), Geetanjali Enclave, New Delhi. 2. Maersk India Private Limited, a Company incorporated under the Companies Act, 1956 and carrying on business at 8th floor, C.G.House, Dr.Annie Besant Road, Near Worli Colony, Bombay - 400 030. .. Defendants. Mr.U.J.Makhija i/b.Mulla & Mulla for the plaintiffs. None for the defendant No.1 as decree is passed against defendant No.1 on 8.1.1997. Mr.S.Sivaraman i/b.M/s.Pimenta Kapasi & Co. for defendant No.2. CORAM : R.Y. GANOO, J. CORAM : R.Y. GANOO, J. CORAM : R.Y. GANOO, J. DATE : 4th September, 2008. DATE : 4th September, 2008. DATE : 4th September, 2008. JUDGEMENT :- JUDGEMENT :- JUDGEMENT :- : 2 : 1. The Board of trustees of the port of Bombay, who are governed by the Major Port Trusts Act, 1963 (hereinafter referred to as the said "Act") are the plaintiffs. The plaintiffs are the owners of the dock at Bombay and are required to take charge of the goods landed from the ships coming to Bombay. Defendant No.1 was the consignee of 4 containers and 239 drums of Brass Dross in them. These goods shall hereinafter be referred to as the said "cargo". Originally M/s.Tata Tea Limited were the agents of the vessel s.s. "Esperance Bay" through which the cargo was imported in India as set out in paragraph 2(a) of the plaint. After the filing of the suit in the year 1989, developments took place with reference to the transfer of rights then held by M/s.Tata Tea Limited and ultimately present defendant No.2, namely, M/s.Maersk India Pvt. Ltd. were concerned with the interest of then M/s.Tata Tea Ltd. and that is how M/s.Maersk India Pvt. Ltd. are brought on record pursuant to the amendment which was granted by the court. In substance, present defendant No.2 are the agents of the vessel s.s. "Esperance Bay" and the plaintiffs have filed the suit against defendant No.2 as they are the agents of the said vessel. : 3 : 2. According to the plaintiffs, the suit cargo came to be imported vide I.G.M.No.1628 dated 9.7.1985. The general landing date was 9.7.1985 and the last free date was 12.7.1985. According to the plaintiffs, the said cargo ought to have been cleared within 7 days from the last free date. However, defendants did not clear the same. Plaintiffs by their letter dated 7.8.1986 at Exhibit-P-2 and P-3, Exhibit-P-2 and P-3, Exhibit-P-2 and P-3, called upon defendant No.2 to pay port trust charges in the nature of wharfage and demurrage. The plaintiffs decided to put the said cargo for sale and a Notification came to be published in the Government of Maharashtra Gazette on 7.8.1986 which is at Exhibit-P-4. Exhibit-P-4. Exhibit-P-4. A notice was also published in the newspaper. It is at Exhibit-P-5. Exhibit-P-5. Exhibit-P-5. Thereafter, 2 containers consisting of 110 drums were sold on 26.8.1986. The sale proceeds were to the tune of Rs.5,07,996/- vide Lot No.T/3912. The plaintiffs claim that expenses for sale to the tune of Rs.66,813.10 were incurred and the customs duty was to the tune of Rs.2,09,174.82. The ITC fine was to the tune of Rs.2,94,110/- and upto the date of the sale, the port trust charges were to the tune of Rs.3,78,894.88. The plaintiffs took into account the sale proceeds of Rs.5.00 lacs and odd as mentioned aforesaid and in the first place appropriated Rs.66,813.10 towards : 4 : expenses for sale, Rs.2,09,174.82 towards the customs duty, Rs.1,17,339.88 towards port trust charges and Rs.1,14,668.20 towards ITC fine. This appropriation came to be done by the plaintiffs in accordance with the priorities set out in the provisions of Section 63 of the said Act. 3. According to the plaintiffs, after the appropriation of the sale proceeds of Rs.5.00 lacs and odd as mentioned above, the port trust charges to the extent of Rs.2,61,555/- and ITC fine to the extent of Rs.1,79,442/- remained to be paid by the defendants. The plaintiffs had, therefore, filed this suit against both the defendants for recovery of port trust charges to the tune of Rs.2,61,555/- and the plaintiffs have also claimed the interest @15% from the date of demand notice till the filing of the suit i.e. from 18.8.1989 till 25.8.1989. The plaintiffs have also claimed interest @15% per annum from the date of filing of the suit till realisation. It must be mentioned that before institution of the suit by demand notice dated 18.8.1989 at Exhibit-P-6, Exhibit-P-6, Exhibit-P-6, defendant No.2 were called upon to pay Rs.4,40,996.80 being the port trust charges and ITC fine as mentioned aforesaid. It is required to be mentioned that though ITC fine of : 5 : Rs.1,79,442/- was to be recovered, the plaintiffs have not filed the suit for the said amount as according to them, the same is not being recovered by the Govt. of India from them and to that extent, they have given up their claim which was otherwise made in the demand notice dated 18.8.1989. The plaintiffs were constrained to file the suit as demand notice was not complied with by the defendants as mentioned aforesaid. 4. Sofar as defendant No.1 is concerned, suit came to be decreed against defendant No.1 on 8.1.1997. As defendant No.2 had filed written statement, the suit became a contested suit. 5. Defendant No.2 raised contentions stating that defendant No.2 were not the owners of the cargo and, therefore, they were not liable to pay port trust charges as well as customs duty. It was also their contention that the suit is beyond the period of limitation. They also contended that the defendant No.2 were not entitled to take the delivery of the cargo and, therefore, they were not liable to pay any amount to the plaintiffs much less towards port trust charges and customs duty. Defendant No.2 have also raised the question of delay in : 6 : disposal of the suit cargo and, according to them, the plaintiffs were negligent in not complying with the requirements of the provisions of said Act as regards the sale of the cargo for recovery of the port trust charges and that the plaintiffs were not entitled to recover the port trust charges. Defendant No.2 have otherwise denied various allegations levelled against them and in substance, defendant No.2 have contended that they are not liable to pay the suit claim. 6. Based on the aforesaid pleadings, issues came to be framed on 28.11.2007. They are as follows :- I S S U E S I S S U E S I S S U E S i) Whether the 2nd defendants are not personally liable for the plaintiffs’ claim in the suit? .. In the negative. .. In the negative. .. In the negative. ii) Whether almost the whole of the plaintiffs’ claim in the suit is barred by limitation? .. In the negative. .. In the negative. .. In the negative. iii) Whether the 2nd defendants were the owners of the suit consignment within the meaning of the expression as contained in Section 2(o) of the Major Port Trust Act, 1963? .. In the .. In the .. In the affirmative. affirmative. affirmative. iv) Whether the 2nd defendants were the bailors or the owners of the suit consignment? .. .. .. In the affirmative. In the affirmative. In the affirmative. v) Whether the 2nd defendants were bound or : 7 : liable to take delivery or clear the suit consignment within seven days from the date of landing thereof? .. Does not arise. .. Does not arise. .. Does not arise. vi) Whether the 2nd defendants were liable to pay to the plaintiffs wharfage or demurrage or any other charges which had accrued on the suit consignment? .. As per the final order. .. As per the final order. .. As per the final order. vii) Whether the suit consignment was sold on 26th August, 1986 for Rs.5,07,996/-? .. As per .. As per .. As per the final order. the final order. the final order. viii) Whether the sale of the suit consignment resulted in a deficit of Rs.4,49,996.80? .. As .. As .. As per the final order. per the final order. per the final order. ix) Whether there would have been no deficit on the sale of the suit consignment if the plaintiffs had disposed of the said consignment promptly on the expiry of two months after it was discharged? .. In the negative. .. In the negative. .. In the negative. x) Whether the 2nd defendants are bound or liable to pay to the plaintiffs the aggregate sum of Rs.2,82,414.90 or further interest on Rs.2,61,555/- at the rate of 15% per annum from the date of the suit till payment or realisation? .. As per the final order. .. As per the final order. .. As per the final order. xi) What order? .. As per the final order. .. As per the final order. .. As per the final order. 7. My answer to each of the issue is mentioned against the respective issue. 8. At trial, on behalf of the plaintiffs Mr.Santosh Vasant Dighe, P.W.No.1 was examined in support of the case of the plaintiffs. No other witness was examined on behalf of the plaintiffs. No witness was examined on behalf of the defendant No.2. : 8 : 9. I have heard learned Advocate Mr.Makhija appearing on behalf of the plaintiffs and Mr.Sivaraman on behalf of the defendant No.2. I have perused the evidence on record alongwith the documents. Certain judgements were cited across the Bar by the respective Advocates and I have perused the same. Reference to the relevant judgements would be made at an appropriate time. Issue No.2 :- Issue No.2 :- Issue No.2 :- ============= ============= ============= 10. This court was required to go into the question whether the claim of the plaintiffs was barred by the period of limitation. Certain dates would be relevant for the purposes of answering this issue, namely, the sale was conducted on 26.8.1986. The present suit came to be filed on 25.8.1989. Learned Advocate Mr.Makhija appearing on behalf of the plaintiffs had submitted that in a case where the cargo are sold for the recovery of the port trust charges, the date of the sale is very important as the port trust charges get crystalised on the date of the sale and the period of limitation for recovery of port trust charges which could not be recovered after giving credit to the sale proceeds, can be recovered by filing a suit within a period of three years from the date of the : 9 : sale as the cause of action for recovery of the port trust charges would accrue on the date of the sale and that the period of three years is to be determined by applying the provisions of Article 113 of the Indian Limitation Act, 1963. In support of his submission, Mr.Makhija had relied upon the judgement of the Hon’ble Bombay High Court in the case of Trustees of the Port of Bombay v/s.Jayantilal L. Trustees of the Port of Bombay v/s.Jayantilal L. Trustees of the Port of Bombay v/s.Jayantilal L. Gandhi reported in AIR 1979 Bom. 12. Gandhi reported in AIR 1979 Bom. 12. Gandhi reported in AIR 1979 Bom. 12. I have perused the said judgement and I am inclined to accept the argument advanced by the learned Advocate Mr.Makhija. Reliance placed on the judgement in the case of Trustees of the Trustees of the Trustees of the Port of Bombay (supra) Port of Bombay (supra) Port of Bombay (supra) is proper and that the date of the sale being 26.8.1986, institution of the suit on 25.8.1989 will have to be treated as well within the period of limitation i.e. the suit came to be filed within three years from the date of the sale. Hence Issue No.2 is answered in the negative. Issue Nos.1,3 and 4 :- Issue Nos.1,3 and 4 :- Issue Nos.1,3 and 4 :- ====================== ====================== ====================== 11. It is the contention of the defendant No.2 as reflected in Issue No.1 that defendant No.2 were not personally liable for the plaintiffs’ claim in the suit. Issue No.3 relates to the question whether defendant No.2 could be termed as the "owner" of the suit consignment and : 10 : Issue No.4 relates to the question whether defendant No.2 would be considered as the bailors or the owners of the suit consignment. Insofar as this aspect is concerned, it is clear that the defendant No.2 were the agent of the vessel through which the cargo was imported. The plaintiffs have tried to fasten the liability to pay the port trust charges upon defendant No.2 by contending that by virtue of provisions of Section 2(o) of the said Act, the defendant No.2 will have to be branded as the "owners" of the cargo and once that is done, defendant No.2 will be liable to pay the port trust charges in accordance with the provisions of the said Act. Mr.Makhija had placed emphasis on the definition of Section 2(o) of the said Act and had also relied upon the judgement in the case of Trustees of the Port of Madras through its Chairman v/s. Trustees of the Port of Madras through its Chairman v/s. Trustees of the Port of Madras through its Chairman v/s. K.V.P.Sheikh Mohd. Rowther and Co.Ltd. & Anr. reported K.V.P.Sheikh Mohd. Rowther and Co.Ltd. & Anr. reported K.V.P.Sheikh Mohd. Rowther and Co.Ltd. & Anr. reported in AIR 1995 S.C. 1922. in AIR 1995 S.C. 1922. in AIR 1995 S.C. 1922. He had also relied upon the judgement in the case of Forbes Forbes Campbell v/s.Board Forbes Forbes Campbell v/s.Board Forbes Forbes Campbell v/s.Board of Trustees of Port of Bombay reported in AIR 2006 of Trustees of Port of Bombay reported in AIR 2006 of Trustees of Port of Bombay reported in AIR 2006 Bom.162. Bom.162. Bom.162. These two judgements were relied upon by the learned Advocate Mr.Makhija to submit that an agent of the vessel will have to be treated as the "owner" of the cargo as understood in Section 2(o) of the said Act and, therefore, the defendant No.2 would be liable to pay the : 11 : port trust charges. 12. On the other hand, Learned Advocate Mr.Sivaraman, appearing on behalf of the defendant No.2, relied upon the following judgements :- i) The Board of Trustees of the Port of i) The Board of Trustees of the Port of i) The Board of Trustees of the Port of Bombay v/s. Laldee P. Ltd. & Others reported in Bombay v/s. Laldee P. Ltd. & Others reported in Bombay v/s. Laldee P. Ltd. & Others reported in 2005(5) Bom.C.R.535. 2005(5) Bom.C.R.535. 2005(5) Bom.C.R.535. ii) The Board of Trustees of the Port of ii) The Board of Trustees of the Port of ii) The Board of Trustees of the Port of Madras v/s. M/s.Southern Shipping Corporation Madras v/s. M/s.Southern Shipping Corporation Madras v/s. M/s.Southern Shipping Corporation Private Ltd., Madras & Anr. reported in AIR 2001 Private Ltd., Madras & Anr. reported in AIR 2001 Private Ltd., Madras & Anr. reported in AIR 2001 MADRAS 413. MADRAS 413. MADRAS 413. iii) The Board of Trustees of the Port of iii) The Board of Trustees of the Port of iii) The Board of Trustees of the Port of Bombay & Ors. v/s. M/s.Sriyanesh Knitters Bombay & Ors. v/s. M/s.Sriyanesh Knitters Bombay & Ors. v/s. M/s.Sriyanesh Knitters reported in AIR 1999 S.C. 2947. reported in AIR 1999 S.C. 2947. reported in AIR 1999 S.C. 2947. 13. I have perused the two judgements which are cited by the learned Advocate Mr.Makhija for the plaintiffs and the three judgements which are relied upon by the learned Advocate Mr.Sivaraman for defendant No.2. 14. A reading of the aforesaid judgements will clearly go to show that the liability of the agent of the vessel comes to an end once the bill of lading has been duly endorsed in favour of the consignee or delivery order has been issued in favour of the consignee. Hence, in a suit which is filed against an agent of the vessel for recovery of the port trust charges, it will be the duty of the port : 12 : trust to call such an agent of the vessel as the owner of the cargo. Defendant No.2 have not placed before the court any material to show that the bill of lading duly endorsed in favour of the consignee or the delivery order has been issued in favour of the consignee. Once a bill of lading is endorsed in favour of the consignee or the delivery order is issued in favour of the consignee, the agent of the vessel will be absolved from his liabilities which arise in his capacity as owner of the cargo as understood in Section 2(o) of the said Act. It is required to be mentioned that no evidence is placed before the court by defendant No.2 to show that the bill of lading was duly endorsed in favour of the consignee or the delivery order was issued in favour of the consignee. If this is the position sofar as this suit is concerned, defendant No.2 who is admittedly an agent of the vessel will have to be styled as the "owner" of the vessel as understood in Section 2(o) of the said Act and no fault can be found in plaintiffs’ instituting the suit for recovery of the port trust charges. 15. In view of the aforesaid discussion, defendant No.2 are liable to pay the port trust charges and hence Issue No.1 is answered in the negative. Issue No.3 is : 13 : answered in the affirmative and Issue No.4 is also answered in the affirmative. Issue No.5 :- Issue No.5 :- Issue No.5 :- ============= ============= ============= 16. By this Issue, the question is sought to be raised by defendant No.2 whether they were bound and liable to take the delivery order, clear the suit consignment within seven days from the date of landing. Sofar as this aspect is concerned, defendant No.2 are being treated as the owners of the cargo and it is immaterial whether they had a right to take delivery of the cargo or not. The liability of defendant No.2 springs out of their status as an agent of the vessel read with Section 2(o) of said Act and because any of the two conditions is not fulfilled, namely, bill of lading is not endorsed in favour of the consignee up to the date of the filing of the suit or the delivery order is not issued in the name of the consignee. The liability of defendant No.2 arises not on the question as to whether they were to take the delivery of the goods or not but the said liability arose because defendant No.2 are being called as the owners of the goods in the limited sense as understood in the definition of the term 2(o) of the said Act and on the basis of judgements mentioned above. : 14 : 17. In view of the aforesaid discussion, Issue No.5 does not arise. Hence, I answer Issue No.5 as "does not arise". Issue No.9 :- Issue No.9 :- Issue No.9 :- ============= ============= ============= 18. This Issue arises on account of a stand taken by defendants that plaintiffs ought to have disposed off the cargo promptly on the expiry of 2 months after the goods were discharged on the port. A perusal of the relevant dates would go to show that the cargo landed on the port on 12.7.1985 and, thereafter, the plaintiffs took steps to sell the goods by publication of the gazette notification in the month of August, 1986 and, ultimately, the cargo were sold on 26.8.1986. If one looks to the relevant dates, it is clear that the cargo was put up for sale after about one year and one month from 12.7.1985. In order to substantiate the stand taken by the defendants that there has been a delay on the part of the plaintiffs in the matter of disposal of the cargo, there ought to have been material coming forth during the cross examination of the defendant No.2 as to what were the facts which led to selling the goods in August, 1986 though the period of two months came to an end in : 15 : September, 1985, keeping in view the last free date as 12.7.1985. In my view, defendant No.2 ought to have cross-examined the plaintiffs as to bring on record facts which prevented the plaintiffs from taking steps from selling the cargo soon after the statutory period of 2 months was over. 19. I have gone through the evidence of Mr.Dighe P.W.No.1. He has narrated as to how events took place towards the sale of the said cargo. There is no cross-examination whatsoever of Mr.Dighe P.W.No.1 on behalf of defendant No.2 and if that is the position, defendant No.2 cannot make a grievance about the delay in disposal of the cargo. Apart from this, there is no other material coming forth to show that if the cargo would have been sold prior to 26.8.1986, the plaintiffs would have fetched a better price at the time of the sale. In the cross-examination, some efforts were made to ascertain whether the valuation report was obtained before the cargo was put up for sale and P.W.No.1 has answered that the Port Trust i.e. the plaintiffs assess the market value of the goods that are to be sold in auction. He further states that the valuer’s report was obtained which showed the valuation as Rs.5,88,221/- and to that extent, light : 16 : is thrown by Mr.Dighe P.W.No.1 as to how the plaintiffs conducted themselves in the matter of recovery of the port trust charges and customs duty. To that extent, defendants have not been able to place before the court any material in support of their stand that there was a delay on the part of the plaintiffs and that there would have been no deficit on the sale of the suit consignment if the cargo would have been disposed of promptly. In my view, above Issue No.9 is answered in the negative. Issue Nos.6,7,8 and 10 :- Issue Nos.6,7,8 and 10 :- Issue Nos.6,7,8 and 10 :- ========================= ========================= ========================= 20. All these issues are inter connected. For the purposes of claiming the port trust charges, the plaintiffs have relied upon the working sheet which is not marked. However, the sheet containing the calculations of various charges including the port trust charges is marked as Exhibit-P-8. Exhibit-P-8. Exhibit-P-8. 21. The plaintiffs have by demand notice at Exhibit-P-6 Exhibit-P-6 Exhibit-P-6 demanded from defendants, a sum of Rs.4,40,996.80 by giving details as regards port trust charges, the custom duty payable and the expenses for sale etc. It is required to be mentioned that the plaintiffs have claimed port trust charges of Rs.3,78,894.88. The : 17 : plaintiffs have claimed these charges from the last free date i.e. 12.7.1985 upto the date of sale i.e. 26.8.1986. Evidence of Mr.Dighe P.W.No.1 states that the port trust charges are calculated on the basis of Docks Scale of Rates. A perusal of the cross-examination of this witness would clearly go to show that there is