Case: Trustees of the Port of Madras, by its Chairman Vs. K.P.V. Sheik Mohamed Rowther &amp; Company &amp; Others

2. The respondents, who are either partnership firms or limited companies, carry on the business of steamer agents at Madras. The Board, with the sanction of the Central Government, made amendments to the Madras Port Trust Scale of Rates in 1958. By the amendment, scale E was added under Chapter V. It was to come into force from March 1, 1958. The scale laid down charges to be paid by masters, owners or agents of vessels in respect of Port Trust labour requisitioned and supplied but not fully or properly utilised. The charges, for the sake of brevity, may be said to be on account of the labour of the Port Trust, Madras, rendered idle on account of some lapse on the part of the ship. owners or on account of extra payment to labour for the simultaneous working of more than one work at the vessels hatch. The labour requisition Form to be submitted by the steamer-agents was also modified and the new form contained an undertaking on the part of the steamer-agents for the payment of the charges laid down in the Boards scale of rates from time to time in respect of labour rendered idle or not properly utilised and also for working more than one hook simultaneously at the hatch. These amendments in the scale of rates were made by the Board in the exercise of its power under s. 42 of the Madras Port Trust Act, 1905 (Mad. Act 11 of 1905), hereinafter called the Act. This section empowers the Board to frame a scale of rates at which and a statement of the conditions under which any of the services specified in the various clauses of the section shall be performed by the Board or by a person to whom any service has been relinquished under s. 41-A of the Act. Thereafter, the respondents, viz., the steamer-agents, filed petitions under Art. 226 of the Constitution, in the High Court of Madras, and prayed for the issue of a writ of mandamus directing the Board not to enforce these rates and not to require the filling in of the new form. They contended that (1) the ship-owners and the steamer-agents cannot be made liable for charges for shore labour employed in the receiving or removal of cargo and such charges must be borne by the consignee (II) s. 39 of the Act provided for -the performance of services by the Board and the other sections provided for the imposition and recovery of rates for the services performed for the vessel and services performed for the goods. Services in the former category are to be paid for on behalf of the carrier i. e., by the master, ship- owner or the steamer-agent, and the services in the latter category constitute a liability on the consignee ; (iii) the Board has power to impose and recover rates only for services rendered and that they have no right to impose charges by way of compensation for default or to collect charges from masters, owners or agents of vessels in respect of operations not properly falling under the head of discharge of cargo from the vessel ; (iv) prior to 1914, the steamer-agents acted as landing-agents for removing cargo from ship to pier and collected for these services from the consignees a separate charge known as landing charge in addition to the freight. When the quays were constructed and cargo came to be landed there, the Board took over the landing of goods and collected quay dues instead of landing charges which were wholly paid by I he consignees. These quay dues later on merged in the harbour dues collected by the Board from the consignees; (v) usually, the steamer agent informs the Traffic Manager the probable date of arrival of the vessel under his agency, tonnage hatch-wise of cagro to be landed at Madras and the number of hatches proposed to be worked. Under the revised procedure adopted by the Board on August 1, 1957, before a ship has reached its berth, the steamer agent is required to make an application and a deposit in his current account to cover charges for the working of the vessel in respect of overtime, supply of cranes, water and appliances and from March 1, 1958, to meet the scale E contingencies also ; (vi) the operation which goes on at the quay is described thus : After the Port Trust pilot brings the vessel to the berth alloted to her : "The stevedore labour supplied by the Madras Dock Labour Board, a statutory body, board the vessel, prepare the slings in the holds or hatches, work the ships winches and the cargo is hoisted on the quayside. When the sling rests on the shore or in the barge in the case of discharge at moorings, the shore labour unsling the cargo and the Trusts Tally Clerk notes the items in a tally sheet. As each sheet is closed a duplicate copy of the import tally sheet is given to the steamer agents representative on the spot. This duplicate copy is the receipt prescribed under section 39 (3) of the Madras Port Trust Act...... The shore labour remove the cargo from the point of landing to the shed or open for stacking and subsequent delivery of the goods from the Trust to the consignee. The consignee obtains delivery order from the Steamer agent and then files Harbour Import Application with the Trust for payment of Harbour dues and Bill of Entry with the Customs for the duty payable by him. On payment of the duty and the harbour dues by the. consignee the cargo is delivered to him by the Trust."(vii)The Board adopted the piece-rate scheme for the Dock workers in pursuance of the report of the jeejeebhoy Committee and the new scale `E rates are a part of such a scheme. (viii), Prior to March 1, 1958 the cost of shore- labour was met entirely by the Port Trust. No distinction was made between the charges for shore labour in ordinary cases and charges for shore- labour in respect of idle, time or additional work. (ix) Under the scheme which was brought into force on March 1, 1958, charges for shore labour in the contingencies covered by the scale E have been excluded from Harbour dues. These charges are now treated as charges for which the steamer-agent is made responsible. (x) The compulsion imposed on steamer agents in the matter of payment of the scale E rates and in respect of the signing of the requisition for shore labour is outside the authority conferred by law on the trustees of the Port of Madras and is illegal. Such an imposition whether as charges for services or as compensation for default of steamer agents is illegal and an unreasonable restriction on the fundamental right of the petitioners to carry on business as steamer agents and is inoperative in law. (xi) the Port Trust authorities receiving goods on the quay or in the barge at moorings, do so on behalf -of the consignee3. The Board, by the common counter-affidavit filed on its behalf by the Deputy Traffic Manager of the Madras Port Trust, admitted the direct arrangements between the ship-owner, master, or agent with the stevedores but did not accept the allegations about the nature of the various rates and duties levied and the legal position as stated in the petitions. According to the Board, (i) the Harbour dues on the import cargo under scale A, Chapter II of the Scale of Rates, are payable on tonnage and include, beside overhead, a nominal rent for storage for a specified period etc., and the item of charges for porterage involved in moving the goods from the landing point to the storage or stacking point. (ii) It is not correct that the ship-owner has nothing to do with the import cargo after it has been landed by the stevedores at the landing point on the quay, as the ship-owner in each case by the bill of lading has to deliver the goods to the consignee named in the bill of lading or his nominee and he remains liable under his contract until he has delivered the goods to the person who is entitled to take delivery of the goods. (iii) Under s. 39 of the Act the Port Trust gives facilities and undertakes certain services. One of such services is the moving of the goods from the landing point to the storage or stacking point and thereafter delivering the goods to the persons entitled under the bill of lading. The Board does not undertake the unloading of the goods from the ship to the quay. The ship-owner makes his own arrangements through the stevedores, though the Board is authorised to undertake such services on behalf of the ship-owner. It is a service to the ship-owner by the Board to give the ship-owner a receipt for the goods to keep them in custody and deliver to the consignee. The services undertaken in respect of the import cargo till they have been moved to the storage or stacking point are services to the ship-owner for which the ship-owner or master or steamer agent is primarily liable and the charges may properly and legally be levied from them. (iv) The Board collects the harbour dues from the consignee at the time of giving delivery, but in fact makes that collection as agent of the ship-owner, master, steamer agent who are primarily the persons liable for the dues. (v) The Board is entitled to collect the harbour dues from the ship-owner, master or steamer agent. (vi) The issuance of a receipt to the master at the landing point is a mere matter of convenience for betokening the fact that the goods have been handed over to the Port Trust for removal, storage and delivery and does not in any way detract from the fact that the subsequent services are facilities and services rendered to the ship-owner in respect of the goods which are the subject of contract of carriage by the ship-owner. (vii) The past practice had been for the agents to inform the Board about the shore labour which would be necessary for moving the goods in respect of each steamer. Prior to 1956, this was done orally and then the Form was intro- duced which contains the same particulars except the undertaking to pay the scale E charges as the impugned Form now contains. Since the enforce- ment of the new piece-rate scheme, the payment to labour was not based on tonnage but a daily wage was fixed along with a provision for payment for idle time and hook allowance for working two or three hooks simultaneously at a vessels hatch. (viii) The proper utilisation of the time of the labour depends upon the steamer agents first giving a proper anticipation and shift at which they were to be put on the job being the time when the cargo will be ready for removal and, secondly, there giving a continuous supply of cargo for removal so that there is no gap in the work. (ix) The levy of multiple hook allowance against the steamer agents is a facility to the ship to discharge fast and sail quicker. When two or more hooks work in a ships hatch, the gangs handling cargo will not be in a position to handle more cargo and therefore the approval of Board was obtained for payment of an allowance to compensate such loss in their earnings. As working of additional hooks in a vessels hatch benefits the ship, the recovery of hook allowance from the steamer agents under scale E is legitimate. (x) The additional charge made under scale E is a charge in respect of facilities afforded to and services undertaken on behalf of the ship- owner, master, agent by the Board in relation to the cargo which is under contract of carriage by them, in the same way as harbour dues.To understand the exact nature of the impugned charges, it is necessary to quote the scale E charges to which objection is taken : SCALE E-Charges Against Masters, Owners, or Agents of Vessels in respect of Port Trust Labour requisitioned and supplied but not fully or properly utilized Item Classification for purposes no. of this Scale 1. Port Trust Mazdoors rendered idle on account of the breakdown of ships winches, wrigging of ships derricks, shifting of cranes at the request of the steamer agents or stevedores, cargo not being ready for shipment, completion of loading and/or unloading before the end of the shift, late arrival of vessel at the berth or for any other reason which is attributable to the vessel and is beyond the control of the workmen4. Note : Idle time will be calculated as followsCharges Payable 64 nP. per mazdoor per hour in the case of 8 hr. shifts and at 80 nP. per hour in the case of 6-1/2 hr. shifts. item Classification for purposes no. of this Scale Any continuous stoppage of work of 15 minutes or under shall be ignored and any continuous stoppage in excess of 15 minutes and up to 30 minutes shall be counted as 30 minutes. If the said continuous stoppage continues in excess of 30 minutes the actual excess rounded off to the next quarter will be calculated as idle time. For example, if there is continuous stoppage for 35 minutes, the idle time will be calculated as 45 minutesPort Trust Mazdoors sentaway or not required after shore work shall have thereof or Rs. commenced at the start of 2.50 per half shift each shift. or part thereof. 3. Allowances for working Rs. 1.25 for each of two hooks simultane- mazdoor (Madras ously at a vessels hatch. Port Trust Shore Mazdoor) employ- ed at the hooks. 4. Allowances for working of Rs. 1.66 for each more than two hooks Madras Port Trust simultaneously at a vessels Shore Mazdoor hatch. employed at the hooks.N. B.-One hours clear notice in writing must be given of cancellation of labour requisitioned Charges Payable Rs. 5 per mazdoor per shift or part for work at hooks. If cancellation orders are not received in time, charges will be levied for the full period requisitionedNote : The above amendment will take effect from the date of Introduction of the Piece-Rate Scheme, viz., March 1, 1958. Sd/-etc. A circular Exhibit-B was issued by the Board to all the steamer agents on February 25, 1958, explaining the features of the Piece-Rate Scheme for Dock and Stevedore works for the Port of Madras. The Board emphasized that the Piece- Rate Scheme was formulated to increase the out-turn of vessels and sought the cooperation of the steamer agents and the stevedores in the implementation of the scheme and making it a success5. The salient features of the scheme in respect of payment of wages to the workers show that, under the scheme, the worker is assured of a minimum daily wage and that, the actual earnings for a day really depend on his output per shift, they being linked with productivity. A gang of workers consists of one maistri and 14 workers. They handle the goods at a particular point, say a hook. Datum lines have been fixed for different kinds of cargo per hook per shift. Datum lines means the standard output of the work to be performed by a gang in a particular hook during a shift. The output is calculated in deadweight tons. Thus a daily wage rate as well as a wage rate for standard output have been fixed for all categories of workers who have been classified in five categories, one of which is the Port Trust Shore Labour. If the workers produce more than the datum lines, they are entitled to the increased wage rate. There is steady increase in the earnings if the output exceeds the 100% of the datum tonnage and at 150% the worker gets twice his daily wage rate and at 200% the piece rate wage is thrice the daily wage rate.These features of the scheme sufficiently indicate the significance of idle time for the workers. If, during a shift, the workers are not actually employed on the job for which they are engaged and have to remain idle, their output of work during that shift, on the basis of tonnage, is bound to be less and, consequently, their earnings would be less than what they could be if they had been continuously employed during the shift. To compensate such loss in earnings due to the time of the workers remaining unemployed idle allowance is granted for such time during which the workers are rendered idle for reasons beyond their control for periods in excess of 15 minutes. The circular shows that idle allowance is paid at the daily wage rate for the following reasons : (i) breakdown of cranes or winches. (ii) shifting of quay cranes or rigging of ships derricks. (iii) cargo not ready for shipment (iv) late arrival of vessels at the berth (v) completion of loading and/or unloading before the end of the shift (vi) actual rain-time during shift working hours, and (vii) any other reason beyond the control of the workmen except slow work on the part of the workmen covered by this scheme6. Item No. I of scale E charges makes the idle a1lowances, for reasons nos. (ii) to (v) and for breakdown of ships winches mentioned in reason (i), chargeable against masters, owners or agents of vessels who control matters giving rise to those reasons7. The workers are also paid multiple hook allowance. They are entitled to "hook allowance at the rate of 1/4th of the daily wage if two hooks work simultaneously at a hatch and 1/3rd of the -daily wage, if more than 2 hooks work at a hatch. One gang of workers handle goods at one point, i.e., at one hook.. If several hooks are simultaneously worked at the vessels hatch, an equal number of gangs of workers will be employed to handle the goods. The result is that the output per gang is proportionately reduced and consequently its earnings are reduced. There may be further reduction in earnings if the cargo is discharged during half-shift. It is to compensate such losses that under the piece-rate scheme, the workers are paid hook allowance.The simultaneous working of more than one hook at the hatch of a ship helps the ship to discharge cargo fast and sail away quicker. The hook allowance is charged against the master, and steamer. agents of the ship as the working of additional hooks benefits the ship8. The writ petitions were disposed of by a learned Single judge of the High Court. He dismissed them holding that the liability to pay the charges.- being for services rendered, the charges could be imposed only on the person to whom that service is rendered, that the entrustment of the goods to the Board is by the shipping agent though the entrustment is for ultimate delivery of the goods to the consignees and that the service is rendered to the shipping agent even though the consignee also benefits by that service and it Was not necessary for imposing the liability that the shipping agent must exclusively benefit from the service rendered9. On appeal, the appellate Bench reversed the order, allowed the petitions and issued a writ of mandamus as prayed. It held that the Board had no authority to introduce the new scale E rates payable by the master, owner or agent of the vessel, -that the ship-owners liability ends when the goods had been put over the rail of the ship and from the moment the goods are put within the reach of the Board employees to take charge of them and tally clerk passes the receipt on behalf of the Board. The services in respect of which the new charges are sought to be levied cannot be deemed to be services rendered to the master, owner or agent of the vessel. They must be deemed to be services rendered to the consignee. The purpose of the requisition by the steamer agent was really to avoid delay and consequent congestion and, generally, for the convenience of the Board. The requisition must be treated as one on behalf of the consignees because it is not part of the duty of the steamer agents to take delivery.The contentions raised before us for the parties are the same as were urged in the Courts below and will be mentioned when dealt with later.

Reasoning: It is therefore clear that the performance of any of the services mentioned in sub-s. (1) of s. 39 and the taking of charge of the goods are consequent on the Board being required to do so by the owner, which is a general term including consignor, consignee, shipper or agent. If the owner does not require the Board to undertake such services and to take charge of the goods for these purposes, the Board is not to undertake those services.It is the steamer-agent, who is in a position to require the Board to undertake these services in respect of the cargo the ship is to unload. He alone is respected to have full knowledge about the time when the ship is to arrive, about the suitability of the berth for that ship, about the quantity and nature of the consignment and about the time the ship would like to be in the dock and consequently about the amount of shore-labour required in connection with the goods to be landed. It is for this reason that it is the steamer-agent who informs the staff of the Board about the arrival of the ship who has to furnish the manifest giving details of the goods to be land- ed and who has to submit a requisition about the shore labour required and the period of time during which it would be required. It is admitted for the parties that the steamer-agent used to convey the information about the necessary shorelabour and about the period when it was required. The new Form of requisition introduced from March 1, 1958, contained an undertaking by the steamer-agent for the payment of the labour dues on account of labour remaining idle or on account of labour working more than one hook simultaneously. This was introduced in the Form because such payments were newly introduced and added to the charges which used to be collected by them on the basis of tonnage handled by the shore-labour and possibly also on account of the anticipated objection on the part of the steamer-agents to their liability to pay these charges. The liability to pay these charges, however, does not arise on account of the undertaking but on account of the sanctioned scale of rates at which and the conditions under which the Board would perform those services. Section 44 of the Act provides that such sanctioned rates and conditions shall have the force of law20. There is no doubt that the ship-owner is the bailee of the shipper, the consignor, and that he is responsible for the delivery of the goods to the consignee or a transferee according to the terms of the bill of lading. This duty the ship-owner discharges only when he has delivered the goods to the consignee or such person who be entitled to take delivery in accordance with the endorsements on the bill of lading. Delivery to the Board is not delivery to the consignee or such person, both because the delivery is to be on the presentation of the bill of lading and because the Act contains no provision which would constitute the Board an agent of the consignee for the purpose of taking delivery of the goods21. We, do not agree with the contention for the respondents that the expression receiving in cl. (b) of sub-s. (1) of s. 39 of the Act means receiving the goods on behalf of the consignee. The reception of the goods can be on behalf of the ship-owner also. The steamer-agent cannot ask the Board to receive the goods on behalf of the consignee21. We, do not agree with the contention for the respondents that the expression receiving in cl. (b) of sub-s. (1) of s. 39 of the Act means receiving the goods on behalf of the consignee. The reception of the goods can be on behalf of the ship-owner also. The steamer-agent cannot ask the Board to receive the goods on behalf of the consignee22. Sub-section (3) of s. 39 of the Act empowers the Board to take charge of the goods for the purpose of performing certain services which do not include the taking delivery of the goods from the ship-owner. It is true that on the Boards taking charge of the goods and giving a receipt about it to the ship-owner, the master or the owner of the vessel is absolved from liability for any loss or dam age which may occur to the goods which had been landed, but this provision by itself does not suffice to convert the receiving of the goods by the Board after they had been landed by the ship-owner to the Boards taking delivery of those goods on behalf of the consignee. The Board simply takes charge of the goods on being required by the steamer-agent to take charge of it.Section 40 speaks of the responsibility of the Board for the loss, destruction or deterioration of the goods of which it has taken charge as a bailee under ss. 151, 152 and 161 of the Indian Contract Act. Section 148 of the Contract Act states that a bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the bailor and the person to whom they are delivered is called the bailee. It is clear therefore that when the Board takes charge of the goods from the ship-owner, the ship-owner is the bailor and the Board is the bailee, and the Boards responsibility for the goods thereafter is that of a bailee. The Board does not get the goods from the consignee. It cannot be the bailee of the consignee. It can be the agent of the consignee only if so appointed, which is not alleged to be the case, and even if the Board be an agent, then its liability would be as an agent and not as a bailee. The provisions of ss. 39 and 40, therefore, further support the contention that the Board takes charge of the goods on behalf of the ship-owner and not on behalf of the consignee, and whatever services it performs at the time of the landing of the goods or on their removal thereafter, are services rendered to the ship25. The charges for labour rendered idle and for labour working more hooks simultaneously, are not charges for services rendered subsequent to the landing of the goods. These are charges which are incurred at the last stage of the process of landing of the goods and therefore prior to the actual landing of the goods. They are, even under the general law, for services rendered to the master of the ship whose liability for loss or of damage to the goods continues up to the placing of the goods on the quay and their receipt by the Board29. These observations apply when the goods are to be delivered to the consignee alongside the ship and not when they are -handed over to the Statutory body, like the Board, as a sub-bailee. How the delivery is to be made depends on the terms of the bill of lading and the custom of the Port. The case is no authority for the proposition that in all circumstances the master of the vessel is not responsible for the performance of the acts subsequent to his placing the goods in such a position that the consignee can get them, as contended for the respondents. The delivery contemplated in these observations, is not, in our opinion, equivalent to the landing of the goods at the quay as contemplated by the various provisions of the Act.We have already discussed that the landing of the goods by the ship-owner on the quay and placing them in charge of the Board does not amount to delivering them to the consignee, even though it absolves the master of the ship from further responsibility for the loss or damage to the goods34. In the present case, it was further contended that as between the master of the ship and the consignee, the Act made it obligatory that the consignee gets his goods from the Board and not direct from the master of the ship, and that therefore the Board acts as the agent of the consignee. We have not been referred to any provision in the Act which supports this contention. Assuming, however, that the consignee cannot take delivery of the goods at the quay from the ship direct, it does not follow that the Board receives the goods as the agent of the consignee. The only reasonable conclusion in the circumstances can be that the place of delivery is shifted from the side of the ship to the warehouses where the Board stores the goods till the consignee appears to take delivery on the basis of the delivery order by the steamer-agent which is usually an endorsement on the bill of lading, and the quay be con- sidered a part of the ship. In Hamburg, it is so considered, as would appear from the following note at p. 37 of the German Law of Carriage of Goods by Sea, by Sieve King: "Where goods are shipped from or discharged on to a quay, the question arises whose agent the owner of the quay is. This of course depends upon the wording of the rules and bye laws regulating the passing of goods over the quay. As a rule (in Hamburg for instance) the qua is considered as forming part of the ship the owner of the quay is the agent of the master. The fact of the shipper having handed the goods over to the owner of the quay is tantamount to a receipt for the same on the part of the master; the goods discharged upon the quay are considered as still being in the possession of the master until the consignee has received them from the quay." .If the Board was an agent of the consignee, it was bound to deliver the goods to the consignee and should not have any rights of retaining the goods till the payment of the rates and other dues for which it had a lien on the goods. The provision of there being a lien on the goods for the payment of the dues of the Board or the freight, make it clear that the Board did not have the custody of the goods as an agent of the consignee35. It is further contended that s. 42 draws a distinction between services performed in respect of the vessel and those performed in respect of the goods; that the former services are rendered to the master of the ship and the latter to the consignee, the owner of the goods and that service rendered by receiving the goods from the ship at the quay is therefore service to the consignee. We do not construe the expression " any other service in respect of vessel, passengers or goods in cl. (e) of s. 42 of the Act in this manner36. If it is interpreted as suggested, the Board must charge the passenger to whom services are rendered. This is not done. Any charges so incurred must be realised from steamer- agents who may, in their turn, charge the passengers for the same30. The case reported as British Ship-owners Co. (Limited) v. Grimond ((1876) III Ses. Oases IV Series 968.), is again, not of help, as it simply held that delivery to the porters., whom the consignee was obliged by the Harbour Regulation to employ and pay for the purpose of receiving, was delivery to the consignee. In the present case there is nothing to show that the consignees are obliged by the Board to engage the shore-labour. Further, in the above case, Lord justice Clerk said at p. 972 "The question of delivery is as much one of common-sense as of technical rules. The general rule is that goods are delivered when they are so completely in the custody of the consignee that he may do as he pleases with them."