THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST versus M/S AREBEE STAR MARITIME AGENCIES PVT. LTD. & ORS.
[2020] 11 S.C.R. 706, Supreme Court of India, 2020
Outcome: Reference answered
Segment: Ratio
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THE CHAIRMAN, BOARD OF TRUSTEES,
COCHIN PORT TRUST
v.
M/S AREBEE STAR MARITIME AGENCIES
PVT. LTD. & ORS.
(Civil Appeal No. 2525 of 2018)
AUGUST 05, 2020
[R. F. NARIMAN, NAVIN SINHA AND
INDIRA BANERJEE, JJ.]
Major Port Trusts Act, 1963 – Scheme of the Act – ss.2, 42,
43, 48, 59-65, 123, 131  – Goods not cleared by consignee –
Payment of storage/demurrage charges – Liability of – High Court
while deciding on limited question as to extent of liability of shipping
agents beyond 75 days mentioned in relevant TAMP (Tariff Authority
for Major Ports) Orders inter alia held that Port Trust can demand
Ground Rent only to a maximum period of 75 days –Liability for
payment of charges to Port Trust – Inconsistency in judgments
(Rowther-II, Sriyanesh Knitters, Forbes-II and Rasiklal) delivered after
Constitution Bench judgment in Rowther-I – Reference to larger
bench – Held: Point of time at which title to the goods passes to the
consignee is not relevant to determine the liability of the consignee
or steamer agent in respect of charges to be paid to the Port Trust –
Bill of lading endorsed by the steamer agent is different from the
bill of lading endorsed by the owner of the goods – Both stages are
irrelevant in determining who is to pay storage charges –Upto the
point that the Port Trust takes charge of the goods, and gives receipt
therefor, the steamer agent may be held liable for Port Trust dues
w.r.t services rendered qua
unloading of goods, but thereafter, the
importer, owner, consignee or their agent is liable to pay demurrage
charges for storage of goods – Until the stage of landing and
removal to a place of storage, the steamer’s agent or the vessel
itself may be made liable for rates payable by the vessel – When the
Port Trust takes charge of the goods from the vessel, or from any
other person who can be said to be owner as defined u/s.2(o), it is
only the owner of the goods or other persons entitled to the goods
(who may be beneficially entitled as well) that the Port Trust has to
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look to for payment of storage or demurrage charges – Further, it
would be the duty of Port Trust to destuff every container entrusted
to it, and return destuffed containers to any such person within as
short a period as feasible where the owner/person entitled to the
goods does not come forward to take delivery of the goods and
destuff such containers – On facts, steamer agents themselves did
not dispute liability to pay ground rent upto 75 days and paid the
same – They even paid it beyond 75 days – Further, expression
“may” in ss.61, 62 cannot be read as “shall”, subject to the caveat
that as the “State” u/Art.12, a Port Trust must act reasonably, and
attempt to sell the goods within a reasonable period from the date
on which it assumed custody of them – Impugned judgment set aside
only on aforesaid question of law – Customs Act, 1962 – ss.2(23),
(26); 29, 30, 33, 45(1), 46(1), (2), 48, 49, 150 – Maxims – noscitur
a sociis – Bill of Entry (Forms) Regulations, 1976 – Customs
Valuation (Determination of Value of Imported Goods) Rules, 2007
– rr.2(1)(d), (f), 4, 5, 10(1)(a)(ii) – Customs Tariff Act, 1975 – s.2 –
Indian Bills of Lading Act, 1856 – s.1 – Contract Act, 1872 – s.148,
151, 152, 158, 161 – Constitution of India – Arts.12, 14.
Major Port Trusts Act, 1963 – s.2(o) – “owner” – Held: When
s.2(o) defines “owner”, it defines owner in relation to goods
separately from owner in relation to any vessel – In s.2(o)(i), when
owner is defined in relation to
“goods”, the definition is an inclusive
one – Secondly, it includes persons who are owners of the goods,
or persons beneficially entitled to the goods, such as the consignor,
consignee and the shipper and then also includes agents for sale,
custody, loading or unloading of such goods.
Maxims – noscitur a sociis – When not applicable– Held: As
the definition of “owner” is inclusive, the non-mention of the ship-
owner in the first part of the definition makes no difference – It
would be incongruous that the shipowner’s agent is included in the
latter part of the definition, but not the ship-owner itself, which
would indicate that the maxim noscitur a sociis cannot apply – Major
Port Trusts Act, 1963 – s.2(o).
Major Port Trusts Act, 1963 – ss.42(3), (5), (6) – Held:
ss.42(5) and (6) have no application to the Board, as they apply
only to the “person” authorised u/s.42(3) by the Board to perform
services mentioned in sub-section (1).
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
AREBEE STAR MARITIME AGENCIES PVT. LTD.
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Contract Act, 1872 – Bailor-bailee relationship – Held:
Observations made in paragraphs 23 and 25 of Port of Bombay v.
Sriyanesh Knitters (1999) 7 SCC 228 that the consignee is the bailor
of the goods, with the Port Trust being the bailee thereof, are not
correct law and are overruled – Major Port Trusts Act, 1963.
Answering the reference, the Court
HELD: 1. Questions framed in the reference order are-
(1) Whether in the interpretation of the provision of Section
2(o) of the MPT Act, the question of title of goods, and the point
of time at which title passes to the consignee is relevant to
determine the liability of the consignee or steamer agent in respect
of charges to be paid to the Port Trust;
(2) Whether a consignor or a steamer agent is absolved of
the responsibility to pay charges due to a Port Trust, for its
services in respect of goods which are not cleared by the
consignee, once the bill of lading is endorsed or the delivery
order is issued;
(3) Whether a steamer agent can be made liable for payment
of storage charges/demurrage, etc. in respect of goods which are
not cleared by the consignee, where the steamer agent has not
issued a delivery order; if so, to what extent;
(4) What are the principles which determine whether a Port
Trust is entitled to recover its dues, from the steamer agent or
the consignee; and
(5) While the Port Trust does have certain statutory
obligations with regard to the goods
entrusted to it, whether there
is any obligation, either statutory or contractual, that obliges the
Port Trust to destuff every container that is entrusted to it and
return the empty containers to the shipping agent. [Para 2]726-
F-H; 727-A-C]
2.1 A perusal of the relevant provisions of the MPT Act
would show that when section 2(o) defines “owner”, it defines
owner in relation to goods separately from owner in relation to
any vessel. In sub-clause (i) of section 2(o), when owner is defined
in relation to “goods”, the definition is an inclusive one. Secondly,
it includes persons who are owners of the goods, or persons
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beneficially entitled to the goods, such as the consignor, consignee
and the shipper and then also includes agents for sale, custody,
loading or unloading of such goods. Ordinarily, agents for the
sale or custody of goods would relate only to agents of the owner
or persons beneficially entitled to such goods, which would
certainly exclude the ship-owner and the ship-owner’s agent.
However, considering the fact that the definition is an inclusive
definition, and that loading or unloading of goods can take place
by the steamer’s agent, as was held in Rowther-I (supra), it is
difficult to accept the contention on behalf of the steamer’s agent
that such persons would not be included within the definition of
“owner” under the MPT Act. the definition of “owner” under
the MPT Act. In the present case, there is no lack of clarity in
the expression “agent for the…loading or unloading of such
goods”, as including persons who may be the vessel’s agent
involved in unloading goods. As the definition of “owner” is
inclusive, the non-mention of the ship-owner in the first part of
the definition makes no difference, as it would be incongruous to
hold that the ship owner’s agent is included in the latter part of
the definition, but not the ship-owner itself, which would indicate
that the maxim noscitur a sociis cannot apply. This becomes even
clearer when section 42 is perused. Under section 42(1), a Board
shall have power to undertake services insofar as landing,
shipping
or transhipping goods between vessels in the port and the
wharves, piers, quays or docks belonging to or in the possession
of the Board, referring clearly, therefore, to services rendered
to the vessel (see section 42(1)(a)). Insofar as receiving, removing,
shifting, or transporting goods is concerned, these could be
services to both the vessel as well as the owner/person entitled
to the goods. The moot question is, when it comes to “storing”
goods brought within the Board’s premises, whether such service
could be said to be a service rendered to the vessel or its agent
(see section 42(1)(b)). Some of the pivotal provisions of the MPT
Act, insofar as the present questions are involved, are contained
in sections 42(2), 42(7) and 43 of the Act. Under section 42(2), a
Board may, if so requested by the “owner”, take charge of the
goods for the purpose of performing services, and shall give a
receipt in such form as the Board may specify. It is obvious that
if the ship-owner or its agent are not “owners”, the Board cannot
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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take the charge of the goods from the ship-owner or its agent for
the purpose of performing services, a result which would lead to
startling consequences. Secondly, under sub-section (7), once
goods have been taken charge of and a receipt given for them,
no liability for any loss or damage which may occur to them shall
attach to any person to whom a receipt has been given (this would
include any of the persons mentioned in section 2(o)(i), including
the vessel’s agents), or to the master or owner of the vessel
from which the goods have been landed or transhipped. This would
again make it clear that the master or owner of the vessel and
their agents, from this point on, have been absolved from liability
for loss or damage to the goods, as the Board has now taken
over the custody of the goods from such master or owner of the
vessel. From this point on, therefore, the master or owner of the
vessel and their agents cease to have any liability qua the goods,
inasmuch as the Port Trust has now taken them over.
Concomitantly, under section 43(1)(ii), the responsibility of the
Port Trust for loss, destruction or deterioration of goods of which
it has taken charge from this point of time onwards now becomes
that of a bailee under sections 151, 152 and 161 of the Indian
Contract Act, 1872, omitting the words “in the absence of any
special contract” in section 152 of the Contract Act. This
responsibility attaches only after a
receipt is given by the Board,
and notice of loss or damage has been given, after expiry of such
period (as may be prescribed) from the crucial date on which the
Port Trust takes charge of the goods. [Paras 14, 16 and 17][748-
C-E; 749-G; 750-A-H]
2.2 At this juncture, it is important to state that arguments
have been made based on observations contained in various
judgments in which sections 42 (5) and (6) of the MPT Act have
been referred. Sections 42(5) and (6) have no application to the
Board, as they apply only to the “person” authorised under
section 42(3) by the Board to perform services mentioned in sub-
section (1). Again, under section 48, a distinction is made between
landing of goods from a vessel, and storage or demurrage charges
in respect of goods – see section 48(1)(b), as contrasted with
section 48(1)(d). When it comes to services performed on vessels,
sections 49A, 49B, 50, 50A and 50B make it clear that the services
rendered to vessels for which dues have to be paid by vessels
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are entirely separate and distinct from services rendered insofar
as goods that are landed are concerned. Coming to section 59, it
becomes clear that for all rates leviable under the MPT Act, which
includes rates leviable for storage of goods, the Board shall have
a lien on such goods, and may, after custody of such goods is
taken by the Port Trust, then seize and detain the same until
such rates are fully paid. [Paras 18- 20][751-A-D]
2.3 Section 60 is also important, in that the ship-owner’s
lien for freight and other charges is recognised if, at or before
the time of landing of any goods from such vessel, such freight or
other charges have not been paid. Under section 60(2), the goods
shall be retained in the custody of the Board at the risk and
expense of the owners of the goods until such lien is discharged.
Most importantly, godown or storage rent shall be payable by
“the party entitled to such goods” for the time during which they
may be so retained. This section is of crucial importance, as it
makes it clear that godown or storage rent is payable only by the
party entitled to such goods, which can never be the ship-owner
or the ship-owner’s agent after the goods have been landed, and
the vessel has sailed away from the port. Further, under section
61, after two months from the time goods have passed into the
Board’s custody, the Board may, if it thinks fit, sell – by the
modalities laid down – such goods or so much thereof as may be
necessary to
recover the rates payable to the Board which remain
unpaid. Sub-section (3) of section 61 is very important, in that
before making such sale, if the address of the “owner of the
goods” which has been stated on the manifest, or in other
documents that have come into the hands of the Board, or is
otherwise known, notice of such sale must be given to such owner.
Section 62 speaks of the disposal of goods that have not
been removed from the premises of the Board within time, and
speaks of their removal by the “owner or other person entitled
thereto”. Under sub-section (2) of section 62, where such goods
are proposed to be removed or sold, a notice may also be served
on the “agents of the vessel by which such goods were landed”.
This is for the reason that the vessel’s agents may have indicated
that the ship-owner has a lien for freight and other charges, which
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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must be satisfied out of the sale of such goods. The important
point to be noted is that a clear distinction is made between an
“owner or other person entitled” to goods, and agents of the
vessel. Further, under sub-section (3) of section 62, it is only if
the owner or person entitled to goods does not comply with the
requisition in the notice, that the Board may, at any time after the
expiration of two months from the date on which such goods were
placed in its custody, then sell the goods in the manner indicated.
The scheme of section 62, therefore, is that when it comes to
sale of goods which are lying stored in the premises of the Board,
notice is to be given only to the owner, or other persons who are
beneficially entitled to the goods, who must then comply with the
requisition given and remove the goods. At this juncture, the
ship-owner or its agents are not persons who have to comply
with such requisition, as they are neither persons who are the
owner, or other persons entitled to the goods. The notice issued
to the agent of the vessel is only for the limited purpose as
aforesaid. This again indicates that goods that are stored on the
premises of the Board have a nexus only with the owner or other
persons entitled to those goods, and not with the agent of the
vessel or the vessel itself. Section 63 is again very important.
When goods have been sold and a surplus exists, the surplus
shall be paid to only three
persons or their agents, namely, the
“importer”, “owner” or “consignee” of the goods.  In this sub-
section, namely, 63(2), as in the case of “owner’ under section
61(3), the owner of the goods is obviously not the “owner” as
defined under section 2(o), as the context of section 63(2)
indicates otherwise. There would have been no need to add
“importer” or “consignee” in this sub-section, as they are already
subsumed within the wider definition of “owner” in relation to
goods under section 2(o). Secondly, what is conspicuous by its
absence is mention of the vessel or any agent for loading or
unloading goods. As a matter of fact, when it comes to recovery
of rates and charges against the vessel, a separate remedy is
provided for in sections 64 and 65 of the MPT Act. [Paras 21-
23][751-D-H; 752-A-H]
2.4 The statutory scheme of the MPT Act now becomes
crystal clear. Until the stage of landing and removal to a place of
storage, the steamer’s agent or the vessel itself may be made
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liable for rates payable by the vessel for services performed to
the vessel. Post landing and removal to a place of storage,
detention charges for goods that are stored, and demurrage
payable thereon from this point on, i.e. when the Port Trust takes
charge of the goods from the vessel, or from any other person
who can be said to be owner as defined under section 2(o), it is
only the owner of the goods or other persons entitled to the goods
(who may be beneficially entitled as well) that the Port Trust has
to look to for payment of storage or demurrage charges.
[Para 24][753-A-C]
3. At this juncture, the Customs Act, 1962 also becomes
relevant. Under section 2(26), “importer” is defined as including
any owner, beneficial owner or any person holding himself out to
be the importer. Though this definition does not ipso facto apply
to the MPT Act, it is important that the two Acts be read together,
as both Acts deal with goods that are imported into the country
from abroad, and their storage and disposal thereafter. In any
event, the expression “importer” that occurs in section 63(2) of
the MPT Act would certainly include a beneficial owner of the
goods. Under section 29 of the Customs Act, the person-in-charge
of a vessel when it carries cargo can land only at a “customs
port” (as defined), unless otherwise permitted by the Central
Board of Excise. Under section 30, the person-in-charge of a
vessel carrying imported goods shall deliver to the “proper
officer”, i.e. a customs officer, an import manifest of the vessel
within the time prescribed, which would indicate the nature of
the goods carried by the vessel, and the consignee or other owner
of the goods. Under section 33, no such imported goods can be
unloaded at any place other than the place approved for unloading
of such goods in the customs port, customs airport or coastal
port. Under section 45(1), all imported goods unloaded in a
customs area shall remain in the custody of such person as
approved by the Principal Commissioner of Customs or
Commissioner of Customs until they are cleared for home
consumption or are warehoused or transhipped. Section 46(1) is
extremely important in that it speaks of a bill of entry for home
consumption or warehousing in such form and manner as may be
prescribed. Section 46(2) then states that a bill of entry shall
include all the goods mentioned in the bill of lading or other receipt
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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given by the carrier to the consignor. Under section 48, if any
goods brought into India from a place outside India are not cleared
for home consumption or warehoused or transhipped within 30
days from the date of the unloading, such goods may, after notice
to the “importer” and with permission of the proper officer, be
sold by the person having the custody thereof. Under section 49,
imported goods may, pending clearance or removal, be permitted
to be stored in a public warehouse for a period not exceeding 30
days, or such other extended period that the Principal
Commissioner or Commissioner of Customs may permit. The
Customs Act, therefore, also contains parallel provisions for
authorities under that Act to take charge of, store, and sell
imported goods, in the circumstances mentioned therein. Under
the Customs Act, 1962, customs duties are levied on goods
imported into India. “Import” has been defined in section 2(23)
of the Customs Act as the “bringing into India from a place outside
India”. Thus, import of goods can only be said to be complete
after they cross into the territorial waters of India, and become
part of the mass of goods within India. A container, being a
receptacle in which goods are imported, cannot be said to be
“goods” that are imported as it does not become part of the mass
of goods within the country on the facts of these cases. Thus,
once destuffing takes place, the container has to be
returned
either to the ship-owner’s agent, or to the person who owns such
container. [Paras 25-27, 29 and 39][753-C-H; 754-A-C; 754-E-
F; 760-D-E]
Garden Silk Mills Ltd. and Anr v. Union of India and
Ors. (1999) 8 SCC 744 : [1999] 3 Suppl. SCR 295 –
relied on.
4. In fact, the Bill of Entry (Forms) Regulations, 1976 (as
amended up to date) contain forms in which a Bill of Entry is to
be presented by an importer of goods for home consumption, or
for warehousing, or for ex-bond clearance for home consumption.
Form I, which speaks of a Bill of Entry for home consumption,
contains a declaration to be signed by an importer, clause 6(b) of
which is important. The same declaration is contained in Forms
II and III. A perusal of the aforesaid Forms prescribed under the
said Regulations would show the difference between “goods”
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that are imported, which have reference to the bill of lading/invoice
presented by the importer which contains the number and value
of the goods imported, and payments by way of costs and services
other than those declared in the invoice, which includes costs of
containers under Rule 10(1)(a)(ii) of the Customs Valuation
(Determination of Value of Imported Goods) Rules, 2007, and
packing costs under Rule 10(1)(a)(iii) of these Rules. Rules 2(1)(d)
and (f) of these Rules are relevant. Rule 4 deals with the
transaction value of “identical goods”, and Rule 5 deals with the
transaction value of “similar goods”. A perusal of these Rules
would show that the value of imported goods shall be the
transaction value of identical goods, as defined, or similar goods,
as defined – whichever rule applies to the facts of each particular
case. It is clear that whether identical goods or similar goods are
taken into account, the price of the container never enters, as
the only “goods” that are to be looked at are the goods that are
“imported”, i.e. goods that are stuffed in the containers. Likewise,
when it comes to “computed value”.Rule 10 deals with “costs
and services. A reading of Rule 10(1)(a)(ii) would lead to the same
result, as “imported goods” are differentiated from “containers”.
Further, for the purposes of customs valuation, addition to the
transaction value of the imported goods is made only when the
cost of containers is treated as being one with the goods in
question. Even in such a situation, what is then imported is the
“goods” and the container – the container not having to be
destuffed, and therefore being cleared along with the goods
contained therein for home consumption. In such a case, where
containers do not have to be returned, but are imported along
with the goods contained within it, after the Board takes custody
of such container and the goods within it, the vessel or steamer
agent is no longer liable – even containers that do not need to be
destuffed will then incur demurrage along with the goods
contained within it, which are then payable by the importer, owner,
consignor or agent thereof. Further, to make matters clear beyond
doubt, General Exemption No. 170, speaks of ‘Exemption to
containers of durable nature. A clarification by the Central Board
of Indirect Taxes and Customs dated 25th October, 2002, clarified
as to what is meant by “containers of durable nature”. A reading
of the aforesaid also goes to buttress the conclusion reached in
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the previous paragraph of this judgment. The Customs Tariff Act,
1975 also throws considerable light on containers fit for repetitive
use. The First Schedule deals with general rules for interpretation
of “this Schedule”. This again clearly differentiates between
containers which go along with the goods contained therein
“suitable for long-term use”, from containers “suitable for
repetitive use”, thus making it clear that the containers of the
latter type cannot be classified with the goods contained therein
for payment of customs duty. [Paras 40-51][760-E-F, G-H; 761-
D-F; 762-F-G; 764-A-B, G-H; 765-A-C; 766-D; 767-B-C]
5.1 Rowther-II has made it clear that Rowther-I concerned
itself with Port Trust dues at the time of landing of the goods, and
their removal thereafter to custody of the Port Trust. These were
charges wholly distinct from demurrage charges, which are
incurred only after the goods have been landed and have been
taken charge of by the Board. To the extent that the High Court
lays this down as a proposition of law, there can be no exception.
However, it goes on to state that when the steamer agent endorses
the bill of lading or issues a delivery order for effecting delivery
to the consignee, it is at this stage that the property in the goods
passes to the consignee. This part of Rowther-II is clearly contrary
to Rowther-I. Rowther-I clearly lays down that the endorsement
of the bill of lading by a
steamer agent is for the purpose of delivery
of the goods, and, accordingly, cannot be for the transfer of title
to the goods. Rowther-II cannot, therefore, be said to be good in
law when it speaks of endorsement on the bill of lading and issuance
of delivery order by the steamer agent passing title of the goods
to the consignee. Once this is made clear, the ratio of Rowther-II
is to be understood thus: since charges for storage or demurrage
are after goods are removed and placed in the custody of the
Board, the steamer agent cannot be made to pay the same, as it
would impose “a too onerous and unexpected responsibility on
the steamer”, which is only a carrier, and not owner, of the goods.
Section 1 of the Indian Bills of Lading Act, 1856 is also important.
Under this section, the “endorsement” referred to is the
endorsement made by the consignor or owner of the goods in
favour of such endorsee on the bill of lading, so that title to
property is then transferred to the endorsee. This endorsement
is very far removed, as has been correctly stated in Rowther-I,
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from the endorsement on the bill of lading by a steamer agent
indicating that the goods have been delivered. Therefore, shorn
of the confusion that has arisen as a result of mixing-up the two
types of endorsement, the ratio of Rowther-II that, after goods
are taken charge of by the Port Trust and stored in its premises
incurring demurrage charges thereon, the vessel or its agent
cannot be made responsible, is unexceptionable. [Paras 58, 59,
61, 62][772-E-G; 773-C-F; 774-E-F, G-H; 775-A-B]
Port of Madras v. K.P.V. Sheik Mohamed Rowther &
Co. [Rowther-I] [1963] 2 Suppl. SCR 915 – followed.
Port of Madras v. K.P.V. Sheik Mohd. Rowther & Co. P.
Ltd. [Rowther-II] (1997) 10 SCC 285 – explained.
5.2 The judgment in Sriyanesh Knitters goes on to make
certain observations, in particular in paragraph 23, stating that a
relationship of bailor and bailee comes into existence, when the
Board is required to store goods that have been imported,
between the Board and the consignee of those goods. Apart from
the fact that this is directly contrary to Rowther-I, the consignee
cannot be considered to be a bailor if the definition of bailor under
the Indian Contract Act, 1872 is read. Under section 148 of the
Contract Act, a bailor is defined as a person who delivers the
goods to the bailee. In this case, the person who delivers the
goods to the bailee is the vessel and not the consignee, as has
been correctly stated in Rowther-I. Therefore, the observations
that the
consignee is the bailor of the goods, with the Port Trust
being the bailee thereof, made in paragraphs 23 and 25 of
Sriyanesh Knitters cannot be said to state the law correctly, and
are accordingly overruled. However, since this Court is not going
into the point of sub-bailment, the question is left open as to
whether the Port Trust, as sub-bailee, is entitled to recover its
dues from the original bailor – the consignor, and persons claiming
through it, given the statutory scheme of the MPT Act. [Para
66][776-A-D]
Port of Bombay v. Sriyanesh Knitters (1999) 7 SCC
228 – partly overruled.
5.3 However, Rowther-I was correctly distinguished by the
Court in Sriyanesh Knitters in paragraph 24 thereof, and its ratio
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qua the MPT Act not being an exhaustive code has this Court’s
concurrence. [Para 67][776-E]
Port of Bombay v. Sriyanesh Knitters (1999) 7 SCC
228 – partly concurred.
5.4 Paragraph 10 of the judgment in Forbes II does hold
that the language of section 2(o) read with other provisions of
the MPT Act, especially section 42, would include a ship-owner
or his agent. This Court has already pointed out that the principle
of noscitur a sociis cannot be applied to this definition clause,
both on its plain language, as also the fact that it is an inclusive
definition clause, which shows that this statement of the law is
correct. However, the statement in this paragraph that even de
hors the above question, the liability to pay demurrage charges
and port rent would accrue to the account of the steamer agent
because of the statutory bailment that comes into existence under
section 42(2) read with section 43(1)(ii), is plainly incorrect, in
view of this Court’s finding that after the Port Trust takes charge
of the goods and issues a receipt therefor (at which point of time
the statutory bailment comes into force), the vessel or the steamer
agent cannot be held liable. Insofar as paragraph 11 is concerned,
this Court has already made it clear that Sriyanesh Knitters cannot
be said to reflect the correct position in law, insofar as a bailment
between the consignee and the Port Trust is concerned, and thus
Sriyanesh Knitters has been
overruled to this extent. Paragraph
12 of the said judgment contains the same confusion that is
contained in Rowther-II, and cannot therefore be said to lay down
the law correctly. The correct position in law is, as has been stated,
that after the Port Trust takes charge of the goods, and issues a
receipt therefor, and thereafter stores the goods in a place
belonging to it, such storage charge cannot be to the account of
the vessel or an agent of the vessel. Paragraph 13 refers to one
other aspect of the case that has been argued. The impugned
judgment of the Kerala High Court in the present case had held
that the word “may” occurring in sections 61 and 62 of the MPT
Act must be read as “shall”. This is not the correct position in
law, as a discretion is vested in the Board to sell the goods in the
circumstances mentioned in sections 61 and 62. However, such
discretion cannot be exercised arbitrarily, as the Board is “State”
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within the meaning of Article 12 of the Constitution, and is
therefore bound by the constraints of Article 14 of the Constitution
of India. Therefore while it may not be correct to say that “may”
has to be read as “shall” in sections 61 and 62 of the MPT Act,
yet in all future cases the Board is under a constitutional duty to
sell the goods in its custody within a reasonable time from which
it takes custody of those goods. Ordinarily, the time of four months
from the date of landing of the goods mentioned in section 63(1)(c)
of the MPT Act should be the outer-limit within which such goods
should be put up for sale. If not put up for sale within such time,
the Board must explain as to why, in its opinion, this could not be
done, which explanation can then be tested by the Courts. If the
explanation is found to be reasonable, and the owner or person
entitled to the goods does not remove the goods thereafter, penal
demurrage may then be levied and collected by the Board. To
this extent, therefore, while overruling the impugned judgment
of the Kerala High Court on the aspect of “may” being read as
“shall” in sections 61 and 62 of the MPT Act, yet the hovering
omnipresence of Article 14 over the Board must always be given
effect to, and there must be a very good reason to continue
detention of goods beyond the period of four months before they
are sold. [Paras71-74][779-E-H; 780-A-H]
Forbes Forbes Campbell & Co. v. Port of Bombay
(Forbes-II) (2015) 1 SCC 228 :
[2014] 12 SCR 337 –
held not correct law.
Dwarkadas Marfatia and Sons v. Board of Trustees of
the Port of Bombay (1989) 3 SCC 293 : [1989] 2 SCR
751 – relied on.
5.5 Rowther-I did hold that the Port Trust is a sub-bailee of
goods bailed by the consignor to the ship-owner, but so held in
order to distinguish an English judgment – as has been pointed
out – which would then lead to the proposition that once the goods
are placed in the charge of the Board, it would amount to delivery
to the consignee, which proposition was turned down by the Court.
The question whether section 158 of the Contract Act can apply
to a statutory bailment under the MPT Act is left open, given
that the Port Trust is not limited only to recovering “necessary
expenses” to be payable by the bailor, but is statutorily is entitled
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to recover, by way of levy of rates and expenses incurred for
storage of the goods, together with something more – the
something more being rates of storage higher than warehousing
rates as a deterrent against keeping these goods in the Port Trust
premises. The importer, the consignee and the consignor, or their
agents, can all be held liable to pay demurrage charges. However,
since Rasiklal does not involve either the owner of the vessel or
its agent, the question is left open as to whether the Port Trust,
as sub-bailee, is entitled to recover its dues from the original
bailor – the consignor, and persons claiming through it, given
the statutory scheme of the MPT Act, as has already been
indicated in paragraph 66. [Paras 79, 81][782-D-F; 783-E-G]
Rasiklal Kantilal & Co. v. Port of Bombay (2017) 11
SCC 1 : [2017] 4 SCR 591 – held inapplicable.
Board of Trustees of the Port of Bombay v. Jai Hind Oil
Mills Co. and Ors. (1987) 1 SCC 648 : [1987] 1 SCR
932 – referred to.
6. Anwers  to the questions framed in the reference order
are:
1. The point of time at which title to the goods passes to
the consignee is not relevant to determine the liability of the
consignee or steamer agent in respect of charges to be paid to
the Port Trust;
2. and 3. The bill of lading being endorsed by the steamer
agent is different from the bill of lading being endorsed by the
owner of the goods. In the first case, the endorsement leads to
delivery; in the second case, the endorsement leads to passing
of title. For the reasons mentioned in the judgment, both stages
are irrelevant in determining who is to pay storage charges – it is
held that upto the point that the Port Trust takes charge of the
goods, and gives receipt therefor, the steamer agent may be held
liable for Port Trust dues in connection with services rendered
qua unloading of goods, but that thereafter, the importer, owner,
consignee or their agent is liable to pay demurrage charges for
storage of goods;
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4. As per paragraph 24 of this judgment;
5. The answer to question number 5 is really in two parts:
first, as to whether carrying goods in a container would make any
difference to the position that only the owner of the goods or
person entitled to the goods is liable to pay for demurrage; and
second, as to whether the Port Trust is obliged to destuff
containers that are entrusted to it and return empty containers
to the shipping agent. The answer to the first question is contained
in paragraphs 45 to 51 of this judgment. The answer to the second
question is that a container which has to be returned is only a
receptacle by which goods that are imported into India are
transported. Considering that the container may belong either
to the consignor, shipping agent, ship-owner, or to some person
who has leased out the same, it would be the duty of the Port
Trust to destuff every container that is entrusted to it, and return
destuffed containers to any such person within as short a period
as is feasible in cases where the owner/person entitled to the
goods does not come forward to take delivery of the goods and
destuff such containers. What should be this period is to be
determined on the facts of each case, given the activities of the
port, the number of vessels which berth at it, together with the
volume of goods that are imported. While it does not lie in the
mouth of the Port Trust to state that it has no place in which to
keep goods after they are destuffed
– as in the facts in the present
case – yet a court may, in the facts of an individual case, look into
practical difficulties faced by the Port Trust. This may lead to the
“short period” in the facts of a particular case being slightly longer
than in a case where a port is less frequented, and goods that are
stored are lesser in number, given the amount of space in which
the goods can be stored. [Para 82][783-G-H; 784-A-H]
7. This Court, does not, on the facts of this case, think that
the justice of the case demands that the impugned High Court
judgment should be interfered with. The steamer agents
themselves did not dispute liability to pay ground rent upto 75
days before the High Court, and have admittedly paid the said
charges long ago. As a matter of fact, the steamer agents paid
ground rent even beyond the period of 75 days – the High Court
having ordered the Appellant Port Trust to recompute the liability
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of the steamer agents, and return the balance to the parties
concerned within two months from the date of receipt of a copy of
the impugned judgment. The impugned judgment is set aside on
one question of law, namely, that the expression “may” in sections
61 and 62 of the MPT Act cannot be read as “shall”, subject to
the caveat that as the “State” under Article 12 of the Constitution,
a Port Trust must act reasonably, and attempt to sell the goods
within a reasonable period from the date on which it has assumed
custody of them. [Paras 83, 84][785-A-D]
J.V. Gokal and Co. (Pvt.) Ltd. v. Asst. Collector of Sales-
Tax (Inspection) and Ors. [1960] 2 SCR 852 – followed.
Forbes Forbes Campbell & Co. Ltd. v. Board of Trustees,
Port of Bombay [Forbes-I] (2008) 4 SCC 87; Brindavan
Bangle Stores and Ors. v. Asst. Commissioner of
Commercial Taxes and Anr. (2000) 1 SCC 674 : [2000]
1 SCR  97; Mangalore Refinery & Petrochemicals Ltd.v.
Commissioner of Customs (2016) 14 SCC 709 : [2015]
9 SCR 620; State of Bombay and Anr. v. F.N. Balsara
[1951] SCR 682; Central India Spinning and Weaving
and Manufacturing Company, Ltd. v. The Municipal
Committee, Wardha [1958] SCR 1102; Gramophone
Company of India Ltd. v. Birendra Bahadur Pandey &
Ors. [1984] 2 SCR 664; State of Kerala & Ors. v. Fr.
William Fernandez Etc. (2017) SCC OnLine SC 1291;
International Airport Authority of India v. Grand Slam
International (1995) 3 SCC 151 : [1995] 2 SCR
149 –
referred to.
The K.H. Enterprise [1994] 1 Lloyd’s Law Reports 593;
Brown v. State of Maryland 25 U.S. 419 (1827);
Province of Madras v. Boddu Paidanna & sons, A.I.R.
(29) 1942; Peterson v. Freebody & Co. [1895] 2 Q.B.D.
294 – referred to.
Case Law Reference
[1963] 2 Suppl. SCR 915
followed
Para 2
(1997) 10 SCC 285
explained
Para 2
(2008) 4 SCC 87
referred to
Para 5
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[2000] 1 SCR 97
referred to
Para 15
[1999] 3 Suppl. SCR 295
relied on
Para 29
[2015] 9 SCR 620
referred to
Para 30
[1951] SCR 682
referred to
Para 32
[1958] SCR 1102
referred to
Para 33
[1984] 2 SCR 664
referred to
Para 34
[1960] 2 SCR 852
followed
Para 60
[1995] 2 SCR 149
referred to
Para 63
(1999) 7 SCC 228
partly overruled
Para 66
(1999) 7 SCC 228
partly concurred
Para 67
[2014] 12 SCR 337
held not correct law
Para 73
[1989] 2 SCR 751
relied on
Para 74
[2017] 4 SCR 591 
held inapplicable
Para 76
[1987] 1 SCR 932
referred to
Para 79
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2525
of 2018.
From the Judgment and Order dated 27.09.2011 of the Division
Bench of High Court of Kerala at Ernakulam in Original Petition No.
21041 of 1999(E).
With
C.A. Nos. 2526, 2527, 2528, 2529, 2530, 2531, 2532, 2533, 2534,
2535 of 2018.
Ritin Rai, Rahul Narichania, Prashant S. Pratap, Kavin Gulati,
Siddhartha Dave, Sr. Advs, Ms. Kritika Bhardwaj, V. K. Monga,
S. Priya, Ms. Anushree Menon, Vikas Mehta, M. T. George, Arvind
Kumar Sharma, M. P. Vinod, Anish Agarwal, Yogesh Adhia, Pratik
Kothari, Ms. Vanshika Gupta, Prathamesh Kamat, Ankur Kashyap, Shiv
Iyer, Ms. Ankita Sen, Rohit Rajershi, Ms. Shirin Khajuria, Ms. Sunita
Rani Singh, Ms. Anandita Barman, B. Krishna Prasad, O. P. Gaggar,
Aditya Gaggar, Jemtiben Ao, Senthil Jagadeesan, Advs. for the appearing
parties.
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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The Judgment of the Court was delivered by
R. F. NARIMAN, J.
1. This batch of appeals arises out of a reference order made by
a Division Bench of this Court dated 07.03.2018 reported as (2018) 4
SCC 592.The learned Division Bench stated as to how these proceedings
arose before it as follows:
“1. These proceedings have arisen from a judgment dated
27-9-2011 [Arebee Star Maritime Agencies (P) Ltd. v. Cochin
Port Trust, Original Petition No. 21041 of 1999, decided on
27-9-2011 (Ker)] of a Division Bench of the Kerala High Court in
a batch of writ appeals and original petitions, preferred by various
shipping agents.
2. The question before the High Court was whether the liability
to pay “ground rent” on containers unloaded at Cochin Port, but
not cleared by the consignees/importers and refused to be destuffed
by the Port, on the ground of inadequate storage space, can be
imposed on the owners of the vessel/steamer agents beyond the
period of 75 days, fixed by the Tariff Authority of Major Ports
[TAMP], a statutory body constituted under Section 47-A of the
Major Port Trusts Act [MPT Act], 1963.
3. The facts of the case are summarised in the following extract
of the judgment of the High Court:
“The sequence of events that led to the stalemate refers to the
incidents which happened in 1998 when there (sic) imports
synthetic woollen rags (in containers) in the Cochin Port Trust
premises. The said containers were destuffed to
facilitate Customs
examination and to return the empty containers to the steamer
agents. The destuffed cargo occupied much larger space and was
not promptly cleared by the consignees in view of the hurdles
placed by the Customs stating that the cargo actually did not
constitute old woollen rags as declared, but mostly were brand
new clothes which could not have been cleared. The “modus
operandi” of the consignees/importers attracted wide attention of
all concerned and taking note of the probable extent of liability to
be imposed by the Customs Department, and the liability to be
satisfied to the Port and others concerned, the consignees did not
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turn up to clear the goods and they were lying idle in the Port
premises for quite long.”
The Port Trust charged “ground rent” from the steamer agents/
owners of the containers.”
2. After then setting out the relevant provisions of the Major Port
Trusts Act, 1963 [“MPT Act”] and the relevant portions of five decisions
of this Court, namely,Port of Madras v. K.P.V. Sheik Mohamed
Rowther & Co. 1963 Supp. (2) SCR 915 [“Rowther-I”]; Port of
Madras v. K.P.V. Sheik Mohd. Rowther & Co. P. Ltd. (1997) 10
SCC 285 [“Rowther-II”]; Port of Bombay v. Sriyanesh Knitters
(1999) 7 SCC 228; Forbes Forbes Campbell & Co. v. Port of
Bombay (2015) 1 SCC 228 [“Forbes-II”] and Rasiklal Kantilal &
Co. v. Port of Bombay (2017) 11 SCC 1,the Division Bench then stated:
“23. Analysing the above judgments, the following position
emerges:
23.1. The decisions in Rowther-I, Rowther-II, Sriyanesh
Knitters, Forbes-II and Rasiklal do not seem to follow a
consistent line about whom the Port Trust has to fasten the liability
for payment of its charges;
23.2. The Constitution Bench judgment in Rowther-I holds that
when Port Trust takes charge of the goods from the shipowner,
the shipowner is the bailor and the Port Trust is the bailee. While
the Bench of two Judges in Sriyanesh Knitters holds that there
comes into existence the relationship of bailor and bailee between
the consignee and the Port Trust, the decision in Forbes-
II disagrees with this view of Sriyanesh Knitters. Rasiklal opines
that enquiry into such relationship is irrelevant in determining the
right of a Port Trust to recover its dues;
23.3. While the decision in Sriyanesh Knitters was based on the
interpretation of the term “owner” under Section 2(o) of the MPT
Act, the judgments in Forbes-II and Rasiklal do not find the
question of interpretation of the term “owner” to be relevant;
23.4. While Forbes-II reliesupon the Constitution Bench decision
in Rowther-I to come to its conclusions, Rasiklal does not
find Rowther-I to be an authority for the proposition that until the
title in goods is passed to the consignee, the liability to pay various
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charges payable to a Port Trust, for its services in respect of
goods, falls exclusively on the steamer agent;
23.5. In Rowther-II, it was held that once the goods are handed
over to the Port Trust by the steamer and the steamer agents
have duly endorsed the bill of lading or issued the delivery order,
their obligation to deliver the goods personally to the owner or the
endorsee comes to an end. The decision in Rasiklal, which has
been delivered after the reference of Forbes-I was disposed of,
takes a contrary view that in cases where the consignee does not
come to take delivery of goods, the position of law laid down
by Rowther-II would result in a situation that the Port Trust would
incur expenses without any legal right to recover such amount
from the consignor, with whom there was no contractual obligation;
and
23.6. The Bench of two Judges in Rasiklal opined that it agrees
with the conclusions recorded in Rowther-II and Forbes-II that
a Port Trust could recover the rates due, either from the steamer
agent or the consignee. However, the holding in Rowther-II finds
only the consignee to be liable.
24. Taking note of the above inconsistencies in the judgments
which have been delivered after the pronouncement by the
Constitution Bench in Rowther-I, we are inclined to the view that
the following issues need to be resolved by a larger Bench:
24.1. Whether in the interpretation of the provision of Section
2(o) of the
MPT Act, the question of title of goods, and the point
of time at which title passes to the consignee is relevant to
determine the liability of the consignee or steamer agent in respect
of charges to be paid to the Port Trust;
24.2. Whether a consignor or a steamer agent is absolved of the
responsibility to pay charges due to a Port Trust, for its services in
respect of goods which are not cleared by the consignee, once
the bill of lading is endorsed or the delivery order is issued;
24.3. Whether a steamer agent can be made liable for payment
of storage charges/demurrage, etc. in respect of goods which are
not cleared by the consignee, where the steamer agent has not
issued a delivery order; if so, to what extent;
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24.4. What are the principles which determine whether a Port
Trust is entitled to recover its dues, from the steamer agent or the
consignee; and
24.5. While the Port Trust does have certain statutory obligations
with regard to the goods entrusted to it, whether there is any
obligation, either statutory or contractual, that obliges the Port
Trust to destuff every container that is entrusted to it and return
the empty containers to the shipping agent.
25. The larger Bench may deal with any additional issues relevant
to the context, as it deems necessary.”
3. The impugned judgment dated 27.09.2011 of a Division Bench
of the Kerala High Court decided a limited question that was argued
before it, namely:
“Whether liability to pay ‘Ground Rent’ in respect of the containers
unloaded in the Cochin Port, lying uncleared by the Consignees/
Importers and refused to be destuffed by the port, for inadequate
storage space, can be mulcted on the owners of the Vessel/Steamer
Agents beyond 75 days, in view of the Scheme of the Statute
(Major Port Trusts Act 1963 – in short ‘MPT Act’) and the
contents of the TAMP (Tariff Authority for Major Ports) Orders
dated 10.11.1999, 19.07.2000, and 13.09.2005, is the point.”
4. The impugned judgment came to be passed as a number of
writ appeals had been preferred by shipping agents, the Port Trust, and
one consignee against the judgment dated 16.09.2002 of a single Judge
of the Kerala High Court. A writ petition, namely, W.P. (C) No.
32191 of
2004, was also disposed of by the impugned judgment, as it raised a
similar question of law. The facts involved in these appeals and writ
petition were briefly stated in paragraphs 4 and 5 of the impugned High
Court judgment as follows:
“4. Goods involved in all the cases, imported as ‘FCL’ (Full
Container Loads) mainly consist of ‘synthetic woollen rags’, except
in W.P. (C) No. 32191 of 2004, where it is VCD players. The
period of import is during August 1998 to March 1999. All the
Containers now stand returned after destuffing, pursuant to
common judgment in the Original Petitions and the interim orders
passed in the Appeals.
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
AREBEE STAR MARITIME AGENCIES PVT. LTD. [R. F. NARIMAN, J.]
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5. Some of the goods imported earlier in the Cochin Port, titled as
“woollen rags” were actually found to be “brand new clothes” on
inspection by the Customs Department, which attracted heavy
duty, penalty and such other charges. The dispute between the
Consignees and the Customs went on for an indefinite period and
in the said circumstances, the consignees did not turn up to clear
the goods in respect of the subsequent transactions as well,
presumably knowing the probable outcome and the huge liability
to be satisfied under different heads including the Port charges
and other dues because of the delay. So also, no action was taken
by the Port Trust to destuff the goods and they retained the
containers for their own reasons.”
5. The learned Senior Advocate who led the arguments on behalf
of the shipping agents before the High Court made one important
concession, namely, that the shipping agents do not propose to press the
contention as to their liability in satisfying ground rent, except that they
ought not to be mulcted with any such liability beyond the period of 75
days, which was set out in the relevant Tariff Authority for Major Ports
(“TAMP”) Orders. At the point of time that the Division Bench delivered
its judgment, a Division Bench of this Hon’ble Court in Forbes Forbes
Campbell & Co. Ltd. v Board of Trustees, Port of Bombay (2008)
4 SCC 87 [“Forbes-I”], had referred the following three questions to a
larger
Bench:
“9. The questions of law of public importance in this appeal are
as follows:
1. Whether a steamer agent can be construed as owner of the
goods carried in his principal’s vessel within the definition of
“owner” in relation to goods under Section 2(o) of the Major Port
Trusts Act, 1963?
2. Whether a steamer agent at all can be made liable for payment
of storage charges/demurrage, which are uncleared by the
consignee, even where steamer agent has not issued delivery
order?
3. In the event a steamer agent is held liable, to what extent he is
liable and whether it absolves the respondent from acting promptly
under Sections 61 or 62 of the Act?
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6. Since this reference had not yet been answered by the larger
Bench at the time the impugned proceedings were ongoing, the learned
Senior Advocate representing the shipping agents before the High Court
clarified that the High Court may go on to decide only the question as to
the extent of liability of the shipping agents,i.e. whether liability could
extend beyond the 75 days mentioned in the relevant TAMP Orders.
7. In answering the question raised before it, the impugned
judgment referred to the fact that the shipping agents repeatedly requested
the Port Trust to destuff the containers which were lying at the port, but
that the Port Trust stated that they cannot do so for inadequacy of
space.The impugned judgment therefore held that because of the lapse
on the part of the consignee on the one hand in not lifting the goods, and
the Port Trust on the other in not destuffing containers, the shipping
agents were caught in between, and were being made “to pay through
their nose”. This being the case, the impugned judgment went on to
construe sections 61 and 62 of the MPT Act, by which aBoard “may”,
after the expiry of two months from the time when any goods passed
into its custody, sell such goods under certain circumstances. The
impugned judgment went on to hold that the expression “may” in the
said provisions must be read as “shall”, as a duty is cast on the Port
Trust to get rid of the goods as soon as possible in a fact situation where
the consignee
does not lift such goods.Ultimately, the impugned judgment
concluded:
“44. In the above facts and circumstances, this Court finds that,
there is no rationale on the part of the Port Trust in contending
that they are entitled to collect ‘Ground Rent’ charges in respect
of containers indefinitely. The course pursued by them without
causing the goods to be destuffed, despite the specific request, on
the failure of the Consignee/Importer to have it cleared and by
proceeding against such goods for causing the same to be sold in
the public auction, realising the funds, to be apportioned in the
manner specified under Section 63, cannot but be deprecated.
This Court holds that the respondent Port Trust can demand
‘Ground Rent’ only to a maximum period of ‘75 days’ as specified
by the Tariff Authority for Major Ports as per the relevant TAMP
Orders discussed above.”
8. Shri Ritin Rai, learned Senior Advocate appearingon behalf of
the Appellant Port Trust, referred to various provisions of the Customs
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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Act, 1962 and the MPT Act, and argued that once responsibility for the
goods is taken over by the Port Trust, the Port Trust becomes a bailee of
the goods delivered to it by the ship-owner, who in turn is relieved of its
liability for loss or damage to the goods during the period when the goods
are in the custody of the Port Trust. Thus, the Port Trust is entitled to
recover, from the shipping agents, demurrage and other dues for the
period until a delivery order is issued by the shipping agent to the
consignee, and for this purpose is entitled to exercise a lien over the
goods for realisation of such demurrage. He added that where a delivery
order is withheld or withdrawn, disabling the consignee from getting
delivery of the goods, the position remains as if no delivery order was
issued at all.In such a case, the liability for payment of demurrage and
other dues of the Port Trust will continue to be with the shipping agent.
According to the learned Senior Advocate, the different strands of the
judgments of this Court can all be reconciled to reach the conclusion
canvassed for by the learned Senior Advocate. He argued that the
submission that upon landing and discharge of the goods from the vessel,
the Port Trust becomes a sub-bailee of the shippers/consignors, and that
the Port Trust can therefore recover its dues only from the consignors,
or the consignee who steps into the consignor’s shoes upon endorsement
of the
bill of lading pursuant to section 1 of the Indian Bills of Lading
Act, 1856, is wholly incorrect. He dealt with the decision of the Privy
Council in “The K.H. Enterprise” [1994] 1 Lloyd’s Law Reports 593,
and distinguished the said decision from the present case, stating that
the decision nowhere relates to the obligations of the bailee to the sub-
bailee for services undertaken by it at the bailee’s request. He went on
to argue that in any case, the sub-bailee in K.H. Enterprise (supra)
was entitled to payment for its services from the bailee pursuant to the
agreement between them, and not from the bailor/shipper. Analogously,
therefore, the Port Trust (sub-bailee) would be entitled to payment for
its services from the shipping agent (bailee). He was at pains to argue
that the passing of title to the goods is immaterial when it comes to the
Port Trust collecting its dues, as the Port Trust has no means of
ascertaining when such title has passed. In any event, Shri Rai contended
that the correct reading of the MPT Act leads to the conclusion that the
passing of title is in any case wholly irrelevant. He stressed the fact that
containers belonging to the shipping agents are required to be returned
to them upon destuffing, as a result of which they are liable for ground
rent. He strongly supported the decision in Rasiklal (supra) which laid
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this proposition down as a matter of law. He also strongly deprecated
the impugned judgment of the Kerala High Court, stating that the
discretion that has been given under sections 61 and 62 of the MPT Act
to the Port Trust cannot be converted into a mandatory obligation, and
that “may” must be read as “may”, and not “shall”.
9. Shri Prashant S. Pratap, learned Senior Advocate appearing on
behalf of Respondent No.1, a shipping/steamer agent, was at pains to
point out that endorsement on the bill of lading by the shipping agent, and
a delivery order being given by the shipping agent, does not pass title to
the goods. The endorsement on the bill of lading by the consignor in
favour of a notified party or a consignee, when read with section 1 of
the Indian Bills of Lading Act, 1856, is the endorsement that passes title
to goods, and must not be confused with his client’s endorsement on the
bill of lading. He relied heavily on the Privy Council judgment in K.H.
Enterprise (supra), stating that the decision applied on all fours to the
present case, and that therefore the Port Trust as a sub-bailee of the
goods steps into the shoes of the bailee,i.e. the ship-owner/ship-owner’s
agent, and must therefore sue the bailor i.e. the consignor/shipper, and
not the original bailee. This was also because implied consent has been
given by the consignor to handover the goods to the Port Trust at the
port of despatch for delivery to the consignee, the Port Trust being
fully
aware that the goods are not the property of the carrier, namely the
vessel, who is the bailee. He argued that on a conjoint reading of the
provisions of the MPT Act, and on a reading of section 158 of the Indian
Contract Act, 1872, the bailor must repay to the bailee “necessary
expenses” incurred by it for the purposes of the bailment. This would,
therefore, enable the Port Trust to recover storage charges from the
bailor who is always the owner of the goods, whether consignor or
consignee, but never from the ship-owner, who is never the bailor. Shri
Pratap argued that the MPT Act itself makes a clear distinction between
the steamer agent, who is the agent of the vessel, and other agents,
namely those of the consignor/consignee, under section 62 of the MPT
Act. Further, upon sale of goods under section 63, the excess must be
returned only to the owner.Such excess can never be paid to the ship-
owner or the steamer’s agent. He further went on to argue that a clear
distinction is made in section 2(o) of the MPT Act between “owner” in
relation to the goods, and “owner” in relation to  the vessel, and that the
steamer agent – who is the agent of the vessel – can never be said to be
the ‘‘owner” of goods. He relied strongly on the judgment in Sriyanesh
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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Knitters (supra), stating that the Port Trust is a bailee on behalf of the
consignee who is the bailor, on a consideration of section 1 of the Indian
Bills of Lading Act, 1856, and submitted that Forbes-II (supra) is wholly
incorrect and deserves to be overruled. He dealt with the judgment in
Rowther-I (supra) in great detail, and distinguished it from the present
case, stating that the judgment does not concern demurrage or storage
charges post landing of the goods, and after the Port Trust takes custody
of the goods and issues the receipt, and is thus not applicable to the facts
of the present case. Further, according to him, Rasiklal (supra), insofar
as it agrees with Forbes-II (supra) is incorrect. Insofar as Rasiklal
(supra) notes the legal position that the Port Trust is a sub-bailee of the
goods bailed by the consignor (bailor) to the ship-owner (bailee), it is
absolutely correct and must be followed. So far as Rowther-II (supra)
is concerned, the learned Senior Advocate stated that the portion of
Rowther-II (supra), which mixes up endorsement by the steamer agent
with the endorsement by the consignor, cannot be said to be good law.
He also contended that the issuance of a delivery order to the consignee
is irrelevant, and has no bearing on the liability to pay storage charges.He
further argued that to the extent that the judgment states that the vessel
and its agent cannot be mulcted with the charges, the
judgment is
absolutely correct and must be followed. Insofar as goods carried by
containers is concerned, Shri Pratap contends that the Port Trust itself
states that the charges claimed by the Port Trustare in respect of goods,
and not in respect of the container in which the goods are stuffed.Thus,
the container cannot be said to be “goods” as defined which would incur
storage charges. He also relied upon the counter affidavit filed by the
Port Trust before the High Court, in which the Port Trust admitted that
if the goods were imported as bulk cargo, the liability to satisfy demurrage
would not be on the steamer agent but on the consignee. The mere fact
that they are carried in a container can therefore make no difference.
He argued that since all questions were now open before this Court, he
was not constrained by the predecessor counsel (including himself) in
the High Court, stating that as a reference was then pending to a larger
Bench of this Court, they did not argue the larger question as to whether
the steamer agent is at all liable. There is no estoppel in any case in law,
and the correct position has to be determined by this Court.
10. Shri Rahul Narichania, learned Senior Advocate appearing on
behalf of Respondent No.6 (The Container Shipping Lines Association),
who is an Intervenor in these proceedings, argued that the definition of
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‘‘owner” in section 2(o) of the MPT Act differentiates between owner
of the “vessel”, and owner of the “goods”, and that a steamer agent
does not come within the first part of section 2(o) if the doctrine of
noscitur a sociis is applied. He argued that a steamer agent is an agent
of a disclosed principal, i.e. the ship-owner, and therefore cannot be
made liable for demurrage charges.It is only an agent for loading and
unloading of cargo, i.e. an agent of the consignor or consignee who can
be made so liable. He went on to argue that a steamer agent must be
distinguished from a stevedoring agent, and is not involved in loading and
unloading cargo. He referred to various provisions of the MPT Act, and
argued that section 48(1)(d) therein does not contemplate any liability on
a steamer agent. This section has to be contrasted with section 49(1)(c),
which expressly contemplates  liability on a steamer agent, but only with
respect to land that is taken on lease from the Port Trust by the steamer
agent. He relied heavily upon sections 61 to 63 of the MPT Act to argue
that when the goods are sold by the public auction, a steamer agent has
to be notified only because the vessel owner may have a lien on such
goods, which can be enforced in its favour under section 60 of the MPT
Act. Further, he argued that it is made clear that if there is a surplus
from the sale proceeds, such surplus shall be paid only to the importer,
owner or consignee of the goods or their
agent, from which list of persons
the ship-owner and its agent are conspicuously absent, making it clear
that it is the owner of the goods alone, or persons entitled to the goods,
that the Port Trust must chase for demurrage charges incurred after
landing. He then argued that the passing of title under section 1 of the
Indian Bills of Lading Act, 1856 makes it clear that it is either the
consignor (before title passes) or the consignee (after title passes) that
can alone be made liable for payment of such charges. He also argued
that the obligation to clear goods imported which have been stored in a
warehouse are that of the importer, and for this he relied heavily on
section 49 of the Customs Act, 1962. He argued that this would also
make it clear that the steamer agent therefore does not come into the
picture. He further argued that the steamer agent has no bailor-bailee
relationship with the Port Trust, and joined Shri Pratap in relying upon
Sriyanesh Knitters (supra) and overruling of Forbes-II (supra).To
the extent that Rasiklal (supra) has made observations against steamer
agents, it is incorrect in law and should be overruled to this extent.
11. Shri Kavin Gulati, learned Senior Advocate appearing on behalf
of  Hapag-Lloyd India Pvt. Ltd., a shipping agent and also an Intervenor
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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in these proceedings, reiterated the submissions made by the predecessor
counsel, and further stressed on sections 29, 30, 33, 45, 48 and 150 of
the Customs Act. He also argued that once goods have been landed, a
ship-owner’s agent can never be made liable for demurrage charges,
which should be to the account of the owner or the beneficial owner of
the goods.
12. Having heard the learned Senior Counsel on behalf of all parties,
it is necessary to first set out the relevant provisions of the MPT Act.
“Section 2. Definitions.-In this Act, unless the context otherwise
requires,-
(f) “dock” includes all basins, locks, cuts, entrances, graving docks,
graving blocks, inclined planes, slipways, gridirons, moorings,
transit-sheds, warehouses, tramways, railways and other works
and things appertaining to any dock, and also the portion of the
sea enclosed or protected by the arms or groynes of a harbour;
xxx xxxxxx
(h) “goods” includes livestock and every kind of movable property;
xxx xxxxxx
(n) “master”, in relation to any vessel or any aircraft making use
of any port, means any person having for the time being the charge
or control of such vessel or such aircraft, as the case may be,
except a pilot, harbour master, assistant harbour master, dock
master or berthing master of the port;
(o) “owner”,
(i) in relation to goods, includes any consignor, consignee, shipper
or agent for the sale, custody, loading or unloading of such
goods;
and
(ii) in relation to any vessel or any aircraft making use of any port,
includes any part-owner, charterer, consignee, or mortgagee in
possession thereof;
xxx xxxxxx
(v) “rate” includes any toll, due, rent, rate, fee, or charge leviable
under this Act;
xxx xxxxxx
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(z) “vessel” includes anything made for the conveyance, mainly
by water, of human beings or of goods and a caisson;”
“42. Performance of services by Board or other person.—
(1) A Board shall have power to undertake the following
services:—
(a) landing, shipping or transhipping passengers and goods between
vessels in the port and the wharves, piers, quays or docks belonging
to or in the possession of the Board;
(b) receiving, removing, shifting, transporting, storing or delivering
goods brought within the Board’s premises;
(c) carrying passengers by rail or by other means within the limits
of the port or port approaches, subject to such restrictions and
conditions as the Central Government may think fit to impose;
(d) receiving and delivering, transporting and booking and
despatching goods originating in the vessels in the port and intended
for carriage by the neighbouring railways, or vice versa, as a
railway administration under the Indian Railways Act, 1890 ( 9 of
1890);
(e) piloting, hauling, mooring, remooring, hooking, or measuring of
vessels or any other service in respect of vessels; and
(f) developing and providing, subject to the previous approval of
the Central Government, infrastructure facilities for ports.
(2) A Board may, if so requested by the owner, take charge of the
goods for the purpose of performing the service or services and
shall give a receipt in such form as the Board may specify.
(3) Notwithstanding anything contained in this
section, the Board
may, with the previous sanction of the Central Government,
authorise any person to perform any of the services mentioned in
sub-section (1) on such terms and conditions as may be agreed
upon.
(3A) Without prejudice to the provisions of sub-section (3), a Board
may, with the previous approval of the Central Government, enter
into any agreement or other arrangement (whether by way of
partnership, joint venture or in any other manner) with, any body
corporate or any other person to perform any of the services and
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functions assigned to the Board under this Act on such terms and
conditions as may be agreed upon.
(4) No person authorised under sub-section (3) shall charge or
recover for such service any sum in excess of the amount specified
by the Authority, by notification in the Official Gazette.
(5) Any such person shall, if so required by the owner, perform in
respect of goods any of the said services and for that purpose
take charge of the goods and give a receipt in such form as the
Board may specify.
(6) The responsibility of any such person for the loss, destruction
or deterioration of goods of which he has taken charge shall,
subject to the other provisions of this Act, be that of a bailee
under sections 151, 152 and 161 of the Indian Contract Act, 1872
(9 of 1872).
(7) After any goods have been taken charge of and a receipt
given for them under this section, no liability for any loss or damage
which may occur to them shall attach to any person to whom a
receipt has been given or to the master or owner of the vessel
from which the goods have been landed or transhipped.
43. Responsibility of Board for loss, etc., of goods.—(1)
Subject to the provisions of this Act, the responsibility of any Board
for the loss, destruction or deterioration of goods of which it has
taken charge shall,—
(i) in the case of goods received for carriage by railway, be
governed by the provisions of the Indian Railways Act, 1890 (9 of
1890); and
(ii) in other cases, be that of a bailee under sections 151, 152 and
161 of the Indian Contract Act, 1872 (9 of 1872), omitting the
words “in the absence of any special contract” in section 152 of
that Act:
Provided that no responsibility under this section shall attach to
the Board—
(a) until a receipt mentioned in sub-section (2) of section 42 is
given by the Board; and
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(b) after the expiry of such period as may be prescribed by
regulations from the date of taking charge of such goods by the
Board.
(2) A Board shall not be in any way responsible for the loss,
destruction or deterioration of, or damage to, goods of which it
has taken charge, unless notice of such loss or damage has been
given within such period as may be prescribed by regulations made
in this behalf from the date of taking charge of such goods by the
Board under sub-section (2) of section 42.”
“48. Scales of rates for services performed by Board or
other person.—(1) The Authority shall from time to time, by
notification in the Official Gazette, frame a scale of rates at which,
and a statement of conditions under which, any of the services
specified hereunder shall be performed by a Board or any other
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 or 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;
(e) any other service in respect of vessels, passengers or goods.
(2) Different scales and
conditions may be framed for different
classes of goods and vessels.”
“59. Board’s lien for rates.—(1) For the amount of all rates
leviable under this Act in respect of any goods, and for the rent
due to the Board for any buildings, plinths, stacking areas, or other
premises on or in which any goods may have been placed, the
Board shall have a lien on such goods, and may seize and detain
the same until such rates and rents are fully paid.
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(2) Such lien shall have priority over all other liens and claims,
except for general average and for the ship-owner’s lien upon the
said goods for freight and other charges where such lien exists
and has been preserved in the manner provided in sub-section (1)
of section 60, and for money payable to the Central Government
under any law for the time being in force relating to customs,
other than by way of penalty or fine.
60. Ship-owner’s lien for freight and other charges.—(1) If
the master or owner of any vessel or his agent, at or before the
time of landing from such vessel any goods at any dock, wharf,
quay, stage, jetty, berth, mooring or pier belonging to or in the
occupation of a Board, gives to the Board a notice in writing that
such goods are to remain subject to a lien for freight or other
charges payable to the ship-owner, to an amount to be mentioned
in such notice, such goods shall continue to be liable to such lien to
such amount.
(2) The goods shall be retained in the custody of the Board at the
risk and expense of the owners of the goods until such lien is
discharged as hereinafter mentioned; and godown or storage rent
shall be payable by the party entitled to such goods for the time
during which they may be so retained.
(3) Upon the production before any officer appointed by the Board
in that behalf of a document purporting to be a receipt for, or
release from, the amount of such lien, executed by
the person by
whom or on whose behalf such notice has been given, the Board
may permit such goods to be removed without regard to such lien,
provided that the Board shall have used reasonable care in respect
to the authenticity of such document.
61. Sale of goods after two months if rates or rent are not
paid or lien for freight is not discharged.—(1) A Board may,
after the expiry of two months from the time when any goods
have passed into its custody, or in the case of animals and
perishable or hazardous goods after the expiry of such shorter
period not being less than twenty-four hours after the landing of
the animals or goods as the Board may think fit, sell by public
auction or in such cases as the Board considers it necessary so to
do, for reasons to be recorded in writing, sell by tender, private
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agreement or in any other manner such goods or so much thereof
as, in the opinion of the Board, may be necessary—
(a) if any rates payable to the Board in respect of such goods
have not been paid, or
(b) if any rent payable to the Board in respect of any place on or
in which such goods have been stored has not been paid, or
(c) if any lien of any ship-owner for freight or other charge of
which notice has been given has not been discharged and if the
person claiming such lien for freight or other Charges has made
to the Board an application for such sale.
(2) Before making such sale, the Board shall give ten days’ notice
of the same by publication thereof in the Port Gazette, or where
there is no Port Gazette, in the Official Gazette and also in at least
one of the principal local daily newspapers:
Provided that in the case of animals and perishable or hazardous
goods, the Board may give such shorter notice and in such manner
as, in the opinion of the Board, the urgency of the case admits of.
(3) If the address of the owner of the goods has been stated on
the manifest of the goods or in any of the documents which have
come into the hands of the Board, or is otherwise known notice
shall also be given to him by letter delivered at such address, or
sent by post, but the title of a bona fide purchaser of such goods
shall not be invalidated by a reason of the omission to send such
notice, nor shall any such purchaser be bound to inquire whether
such notice has
been sent.
(4) Notwithstanding anything contained in this section, arms and
ammunition and controlled goods may be sold at such time and in
such manner as the Central Government may direct.
Explanation.—In this section and section 62—
(a) “arms and ammunition” have the meanings respectively
assigned to them in the Arms Act, 1959 (54 of 1959);
(b) “controlled goods” means goods the price or disposal of which
is regulated under any law for the time being in force.
62. Disposal of goods not removed from premises of Board
within time limit.—(1) Notwithstanding anything contained in
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this Act, where any goods placed in the custody of the Board
upon the landing thereof are not removed by the owner or other
person entitled thereto from the premises of the Board within one
month from the date on which such goods were placed in their
custody, the Board may, if the address of such owner or person is
known, cause a notice to be served upon him by letter delivered
at such address or sent by post, or if the notice cannot be so
served upon him or his address is not known, cause a notice to be
published in the Port Gazette or where there is no Port Gazette, in
the Official Gazette and also in at least one of the principal local
daily newspapers, requiring him to remove the goods forthwith
and stating that in default of compliance therewith the goods are
liable to be sold by public auction or by tender, private agreement
or in any other manner:
Provided that where all the rates and charges payable under this
Act in respect of any such goods have been paid, no notice of
removal shall be so served or published under this sub-section
unless two months have expired from the date on which the goods
were placed in the custody of the Board.
(2) The notice referred to in sub-section (1) may also be served
on the agents of the vessel by which such goods were landed.
(3) If such owner or person does not comply with the requisition
in the notice served upon him or published under sub-section (1),
the Board may, at any
time after the expiration of two months
from the date on which such goods were placed in its custody, sell
the goods by public auction or in such cases as the Board considers
it necessary so to do, for reason to be recorded in writing sell by
tender, private agreement or in any other manner after giving notice
of the sale in the manner specified in sub-sections (2) and (3) of
section 61.
(4) Notwithstanding anything contained in sub-section (1) or sub-
section (3)—
(a) the Board may, in the case of animals and perishable or
hazardous goods, give notice of removal of such goods although
the period of one month or, as the case may be, of two months
specified in sub-section (1) has not expired or give such shorter
notice of sale and in such manner as, in the opinion of the Board,
the urgency of the case requires;
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(b) arms and ammunition and controlled goods may be sold in
accordance with the provisions of sub-section (4) of section 61.
(5) The Central Government may, if it deems necessary so to do
in the public interest, by notification in the Official Gazette, exempt
any goods or classes of goods from the operation of this section.
63. Application of sale proceeds.—(1) The proceeds of every
sale under section 61 or section 62 shall be applied in the following
order—
(a) in payment of the expenses of the sale;
(b) in payment, according to their respective priorities, of the liens
and claims excepted in sub-section (2) of section 59 from the
priority of the lien of the Board;
(c) in payment of the rates and expenses of landing, removing,
storing or warehousing the same, and of all other charges due to
the Board in respect thereof, including demurrage (other than penal
demurrage) payable in respect of such goods for a period of four
months from the date of landing;
(d) in payment of any penalty or fine due to the Central
Government under any law for the time being in force relating to
customs;
(e) in payment of any other sum due to the Board.
(2) The surplus, if any, shall be paid to the importer, owner or
consignee of the goods or to his agent, on an application made by
him in this behalf within six months from the date of the sale of
the goods.
(3) Where no application has been made under sub-section (2),
the surplus shall be applied by the Board for the purposes
of this
Act.
64. Recovery of rates and charges by distraint of vessel.—
(1) If the master of any vessel in respect of which any rates or
penalties are payable under this Act, or under any regulations or
orders made in pursuance thereof, refuses or neglects to pay the
same or any part thereof on demand, the Board may distrain or
arrest such vessel and the tackle, apparel and furniture belonging
thereto, or any part thereof, and detain the same until the amount
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so due to the Board, together with such further amount as may
accrue for any period during which the vessel is under distraint or
arrest, is paid.
(2) In case any part of the said rates or penalties, or of the cost of
the distress or arrest, or of the keeping of the same, remains unpaid
for the space of five days next after any such distress or arrest
has been so made, the Board may cause the vessel or other things
so distrained or arrested to be sold, and, with the proceeds of
such sale, shall satisfy such rates or penalties and costs, including
the costs of sale remaining unpaid, rendering the surplus (if any)
to the master of such vessel on demand.
65. Grant of port-clearance after payment of rates and
realisation of damages, etc.—If a Board gives to the officer of
the Central Government whose duty it is to grant the port-clearance
to any vessel at the port, a notice stating,—
(i) that an amount specified therein is due in respect of rates,
fines, penalties or expenses chargeable under this Act or under
any regulations or orders made in pursuance thereof, against such
vessel, or by the owner or master of such vessel in respect thereof,
or against or in respect of any goods on board such vessel; or
(ii) that an amount specified therein is due in respect of any damage
referred to in section 116 and such amount together with the cost
of the proceedings for the recovery thereof before a Magistrate
under that section
has not been realised, such officer shall not
grant such port-clearance until the amount so chargeable or due
has been paid or, as the case may be, the damage and cost have
been realised.”
“123. General power of Board to make regulations.—Without
prejudice to any power to make regulations contained elsewhere
in this Act, a Board may make regulations consistent with this Act
for all or any of the following purposes, namely:—
xxx xxxxxx
(c) for the form of receipt to be given under sub-section (2) of
section 42;
(d) for the period within which notice may be given under sub-
section (2) of section 43;
xxx xxxxxx
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(i) for the mode of payment of rates leviable by the Board under
this Act;”
“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.”
13. Since certain provisions of the Customs Act, 1962 were relied
upon during the course of arguments, they are also set out as follows:
“2. Definitions.—In this Act, unless the context otherwise
requires,—
xxx xxxxxx
(26) ‘‘importer”, in relation to any goods at any time between
their importation and the time when they are cleared for home
consumption, includes any owner, beneficial owner or any person
holding himself out to be the importer;”
“29. Arrival of vessels and aircrafts in India.—(1) The person-
in-charge of a vessel or an aircraft entering India from any place
outside India shall not cause or permit the vessel or aircraft to call
or land—
(a) for the first time after arrival in India; or
(b) at any time while it is carrying passengers or cargo brought in
that vessel or aircraft,
at any place other than a customs port or a customs airport, as the
case may be unless permitted by the Board.
30. Delivery of arrival manifest or import manifest or import
report.—(1) The person-in-charge of —
(i) a
vessel; or
(ii) an aircraft; or
(iii) a vehicle,
carrying imported goods or export goods or any other person as
may be specified by the Central Government, by notification in
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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the Official Gazette, in this behalf shall, in the case of a vessel or
an aircraft, deliver to the proper officer an arrival manifest or
import manifest by presenting electronically prior to the arrival of
the vessel or the aircraft, as the case may be, and in the case of a
vehicle, an import report within twelve hours after its arrival in
the customs station, in such form and manner as may be prescribed
and if the arrival manifest or import manifest or the import report
or any part thereof, is not delivered to the proper officer within
the time specified in this sub-section and if the proper officer is
satisfied that there was no sufficient cause for such delay, the
person-in-charge or any other person referred to in this sub-section,
who caused such delay, shall be liable to a penalty not exceeding
fifty thousand rupees:
Provided that the Principal Commissioner of Customs or
Commissioner of Customs may, in cases where it is not feasible
to deliver arrival manifest or import manifest by presenting
electronically, allow the same to be delivered in any other manner.
(2) The person delivering the arrival manifest or import manifest
or import report shall at the foot thereof make and subscribe to a
declaration as to the truth of its contents.
(3) If the proper officer is satisfied that the arrival manifest or
import manifest or import report is in any way incorrect or
incomplete, and that there was no fraudulent
intention, he may
permit it to be amended or supplemented.”
“33. Unloading and loading of goods at approved places
only.—Except with the permission of the proper officer, no
imported goods shall be unloaded, and no export goods shall be
loaded, at any place other than a place approved under clause (a)
of section 8 for the unloading or loading of such goods.”
“45. Restrictions on custody and removal of imported
goods.—(1) Save as otherwise provided in any law for the time
being in force, all imported goods unloaded in a customs area
shall remain in the custody of such person as may be approved by
the Principal Commissioner of Customs or Commissioner of
Customs until they are cleared for home consumption or are
warehoused or are transhipped in accordance with the provisions
of Chapter VIII.
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46. Entry of goods on importation.—(1) The importer of any
goods, other than goods intended for transit or transhipment, shall
make entry thereof by presenting electronicallyon the customs
automated system to the proper officer a bill of entry for home
consumption or warehousing in such form and manner as may be
prescribed:
Provided that the Principal Commissioner of Customs or
Commissioner of Customs may, in cases where it is not feasible
to make entry by presenting electronically on the customs
automated system, allow an entry to be presented in any other
manner:
Provided further that if the importer makes and subscribes to a
declaration before the proper officer, to the effect that he is unable
for want of full information to furnish all the particulars of the
goods required under this sub-section, the proper officer may,
pending the production of such information, permit him, previous
to the entry thereof (a) to examine the goods in the presence of
an officer of customs, or (b) to deposit the goods in a public
warehouse appointed under section 57 without warehousing the
same.
(2) Save as otherwise permitted by the proper officer, a bill of
entry shall include all the goods mentioned in the bill of lading or
other receipt given by the carrier to the consignor.
(3) The importer shall present the bill of entry under sub-section
(1) before the end of the next day following the day (excluding
holidays) on which the aircraft or vessel or vehicle carrying
the
goods arrives at a customs station at which such goods are to be
cleared for home consumption or warehousing:
Provided that a bill of entry may be presented at any time not
exceeding thirty days prior to the expected arrival of the aircraft
or vessel or vehicle by which the goods have been shipped for
importation into India:
Provided further that where the bill of entry is not presented within
the time so specified and the proper officer is satisfied that there
was no sufficient cause for such delay, the importer shall pay
such charges for late presentation of the bill of entry as may be
prescribed.
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(4) The importer while presenting a bill of entry shall make and
subscribe to a declaration as to the truth of the contents of such
bill of entry and shall, in support of such declaration, produce to
the proper officer the invoice, if any, and such other documents
relating to the imported goods as may be prescribed.
(4A) The importer who presents a bill of entry shall ensure the
following, namely:—
(a) the accuracy and completeness of the information given therein;
(b) the authenticity and validity of any document supporting it;
and
(c) compliance with the restriction or prohibition, if any, relating to
the goods under this Act or under any other law for the time being
in force.
(5) If the proper officer is satisfied that the interests of revenue
are not prejudicially affected and that there was no fraudulent
intention, he may permit substitution of a bill of entry for home
consumption for a bill of entry for warehousing or vice versa.”
“48. Procedure in case of goods not cleared, warehoused,
or transhipped within thirty days after unloading.—If any
goods brought into India from a place outside India are not cleared
for home consumption or warehoused or transhipped within thirty
days from the date of the unloading thereof at a customs station
or within such further time as the proper officer may allow or if
the title to any imported goods is relinquished, such goods may,
after notice to the importer and with the
permission of the proper
officer be sold by the person having the custody thereof: Provided
that —
(a) animals, perishable goods and hazardous goods, may, with the
permission of the proper officer, be sold at any time;
(b) arms and ammunition may be sold at such time and place and
in such manner as the Central Government may direct.
Explanation.— In this section, ¯ “arms” and “ammunition” have
the meanings respectively assigned to them in the Arms Act, 1959
(54 of 1959).
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49. Storage of imported goods in warehouse pending
clearance or removal.—Where,––
(a) in the case of any imported goods, whether dutiable or not,
entered for home consumption, the Assistant Commissioner of
Customs or Deputy Commissioner of Customs is satisfied on the
application of the importer that the goods cannot be cleared within
a reasonable time;
(b) in the case of any imported dutiable goods, entered for
warehousing, the Assistant Commissioner of Customs or Deputy
Commissioner of Customs is satisfied on the application of the
importer that the goods cannot be removed for deposit in a
warehouse within a reasonable time,
the goods may pending clearance or removal, as the case may be,
be permitted to be stored in a public warehouse for a period not
exceeding thirty days:
Provided that the provisions of Chapter IX shall not apply to goods
permitted to be stored in a public warehouse under this section:
Provided further that the Principal Commissioner of Customs or
Commissioner of Customs may extend the period of storage for a
further period not exceeding thirty days at a time.”
“150. Procedure for sale of goods and application of sale
proceeds.—(1) Where any goods not being confiscated goods
are to be sold under any provisions of this Act, they shall, after
notice to the owner thereof, be sold by public auction or by tender
or with the consent of the owner in any other manner.
(2) The proceeds of any such sale shall be applied—
(a) firstly to the
payment of the expenses of the sale,
(b) next to the payment of the freight and other charges, if any,
payable in respect of the goods sold, to the carrier, if notice of
such charges has been given to the person having custody of the
goods,
(c) next to the payment of the duty, if any, on the goods sold,
(d) next to the payment of the charges in respect of the goods
sold due to the person having the custody of the goods,
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(e) next to the payment of any amount due from the owner of the
goods to the Central Government under the provisions of this Act
or any other law relating to customs, and the balance, if any, shall
be paid to the ownerof the goods.
Provided that where it is not possible to pay the balance of sale
proceeds, if any, to the owner of the goods within a period of six
months from the date of sale of such goods or such further period
as the Commissioner of Customs may allow, such balance of sale
proceeds shall be paid to the Central Government.”
14. A perusal of the relevant provisions of the MPT Act would
show that when section 2(o) defines “owner”, it defines owner in relation
to goods separately from owner in relation to any vessel. In sub-clause
(i) of section 2(o), when owner is defined in relation to “goods”, the
definition is an inclusive one. Secondly, it includes persons who are owners
of the goods, or persons beneficially entitled to the goods, such as the
consignor, consignee and the shipper and then also includes agents for
sale, custody, loading or unloading of such goods. Ordinarily, agents for
the sale or custody of goods would relate only to agents of the owner or
persons beneficially entitled to such goods, which would certainly exclude
the ship-owner and the ship-owner’s agent. However, considering the
fact that the definition is an inclusive definition, and that loading or
unloading of goods can take
place by the steamer’s agent, as was held
in Rowther-I (supra), it is difficult to accept the contention on behalf of
the steamer’s agent that such persons would not be included within the
definition of “owner” under the MPT Act.
15. For these reasons, it is not possible to apply the doctrine of
noscitur a sociis to the definition of “owner” under section 2(o), as was
contended by the learned Senior Advocates appearing on behalf of the
steamer agents. In Brindavan Bangle Stores and Ors. v. Asst.
Commissioner of Commercial Taxes and Anr. (2000) 1 SCC 674,
this Court held:
“7. The second contention raised on behalf of the appellants
related to the clarity and ambiguity of Entry 30 and Entry 54 and
application of such construction of noscitur à sociis. In our opinion
the learned Division Bench of the Karnataka High Court has rightly
held that the said rule of construction has no application to the
facts and circumstances of the case. This Court in State of
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Bombay v. Hospital Mazdoor Sabha [AIR 1960 SC 610] has
considered in detail the rule of construction noscitur à sociis and
in para 9, it is observed thus:
“We are not impressed by this argument. It must be borne in mind
that noscitur à sociis is merely a rule of construction and it cannot
prevail in cases where it is clear that the wider words have been
deliberately used in order to make the scope of the defined word
correspondingly wider. It is only where the intention of the
legislature in associating wider words with words of narrower
significance is doubtful, or otherwise not clear that the present
rule of construction can be usefully applied. It can also be applied
where the meaning of the words of wider import is doubtful; but,
where the object of the legislature in using wider words is clear
and free of ambiguity, the rule of construction in question cannot
be pressed into service.”
8. As stated earlier on reading Entry 30 and Entry 54, we have no
manner of doubt that there is neither any ambiguity nor do they
lack any clarity. The legislature intended to levy and collect entry
tax on the articles mentioned in both these entries. The words
used therein are of wider import and clearly indicate that all articles
made of glass or made from all kinds of all forms of plastic including
articles made of polypropylene, polystyrene and like materials are
subjected to payment of entry tax. It cannot be disputed that the
articles in question, namely, bangles
are made of glass and/or made
of plastic etc. The impugned judgment has very succinctly dealt
with the contentions raised on behalf of both the parties and also
dealt with the various reported decisions of this Court and other
High Courts in great length. We are in complete agreement with
the view taken by the Division Bench.”
16. In the present case, we find no lack of clarity in the expression
“agent for the…loading or unloading of such goods”, as including persons
who may be the vessel’s agent involved in unloading goods. As the
definition of “owner” is inclusive, as stated hereinabove, the non-mention
of the ship-owner in the first part of the definition makes no difference,
as it would be incongruous to hold that the shipowner’s agent is included
in the latter part of the definition, but not the ship-owner itself, which
would indicate that the maxim noscitur a sociis cannot apply.
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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17. This becomes even clearer when section 42 is perused. Under
section 42(1), a Board shall have power to undertake services insofar as
landing, shipping or transhipping goods between vessels in the port and
the wharves, piers, quays or docks belonging to or in the possession of
the Board, referring clearly, therefore, to services rendered to the vessel
(see section 42(1)(a)). Insofar as receiving, removing, shifting, or
transporting goods is concerned, these could be services to both the
vessel as well as the owner/person entitled to the goods. The moot
question is, when it comes to “storing” goods brought within the Board’s
premises, whether such service could be said to be a service rendered
to the vessel or its agent (see section 42(1)(b)).  Some of the pivotal
provisions of the MPT Act, insofar as the present questions are involved,
are contained in sections 42(2), 42(7) and 43 of the Act. Under section
42(2), a Board may, if so requested by the “owner”, take charge of the
goods for the purpose of performing services, and shall give a receipt in
such form as the Board may specify. It is obvious that if the ship-owner
or its agent are not “owners”, the Board cannot take the charge of the
goods from the ship-owner or its agent for the purpose of performing
services, a result which would lead to startling consequences. Secondly,
under sub-section (7), once goods have been taken charge of and a
receipt given for
them, no liability for any loss or damage which may
occur to them shall attach to any person to whom a receipt has been
given (this would include any of the persons mentioned in section 2(o)(i),
including the vessel’s agents), or to the master or owner of the vessel
from which the goods have been landed or transhipped. This would again
make it clear that the master or owner of the vessel and their agents,
from this point on, have been absolved from liability for loss or damage
to the goods, as the Board has now taken over the custody of the goods
from such master or owner of the vessel. From this point on, therefore,
the master or owner of the vessel and their agents cease to have any
liability qua the goods, inasmuch as the Port Trust has now taken them
over. Concomitantly, under section 43(1)(ii), the responsibility of the Port
Trust for loss, destruction or deterioration of goods of which it has taken
charge from this point of time onwards now becomes that of a bailee
under sections 151, 152 and 161 of the Indian Contract Act, 1872, omitting
the words “in the absence of any special contract” in section 152 of the
Contract Act. This responsibility attaches only after a receipt is given by
the Board, and notice of loss or damage has been given,after expiry of
such period (as may be prescribed) from the crucial date on which the
Port Trust takes charge of the goods.
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18. At this juncture, it is important to state that arguments have
been made based on observations contained in various judgments in which
sections 42 (5) and (6) of the MPT Act have been referred. Sections
42(5) and (6) have no application to the Board, as they apply only to the
“person” authorised under section 42(3) by the Board to perform services
mentioned in sub-section (1).
19. Again, under section 48, a distinction is made between landing
of goods from a vessel, and storage or demurrage charges in respect of
goods – see section 48(1)(b), as contrasted with section 48(1)(d).When
it comes to services performed on vessels, sections 49A, 49B, 50, 50A
and 50B make it clear that the services rendered to vessels for which
dues have to be paid by vessels are entirely separate and distinct from
services rendered insofar as goods that are landed are concerned.
20. Coming to section 59, it becomes clear that for all rates leviable
under the MPT Act, which includes rates leviable for storage of goods,
the Board shall have a lien on such goods, and may, after custody of
such goods is taken by the Port Trust, then seize and detain the same
until such rates are fully paid.
21. Section 60 is also important, in that the ship-owner’s lien for
freight and other charges is recognised if, at or before the time of landing
of any goods from such vessel, such freight or other charges have not
been paid.Under section 60(2), the goods shall be retained in the custody
of
the Board at the risk and expense of the owners of the goods until
such lien is discharged. Most importantly, godown or storage rent shall
be payable by “the party entitled to such goods” for the time during
which they may be so retained.This section is of crucial importance, as
it makes it clear that godown or storage rent is payable only by the party
entitled to such goods, which can never be the ship-owner or the ship-
owner’s agent after the goods have been landed, and the vessel has
sailed away from the port.Further, under section 61, after two months
from the time goods have passed into the Board’s custody, the Board
may, if it thinks fit, sell – by the modalities laid down – such goods or so
much thereof as may be necessary to recover the rates payable to the
Board which remain unpaid. Sub-section (3) of section 61 is very
important, in that before making such sale, if the address of the “owner
of the goods” which has been stated on the manifest, or in other documents
that have come into the hands of the Board, or is otherwise known,
notice of such sale must be given to such owner.
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22. Section 62 speaks of the disposal of goods that have not been
removed from the premises of the Board within time, and speaks of
their removal by the “owner or other person entitled thereto”. Under
sub-section (2) of section 62, where such goods are proposed to be
removed or sold, a notice may also be served on the “agents of the
vessel by which such goods were landed”. This is for the reason that the
vessel’s agents may have indicated that the ship-owner has a lien for
freight and other charges, which must be satisfied out of the sale of such
goods. The important point to be noted is that a clear distinction is made
between an “owner or other person entitled” to goods, and agents of the
vessel. Further, under sub-section (3) of section 62, it is only if the owner
or person entitled to goods does not comply with the requisition in the
notice, that the Board may, at any time after the expiration of two months
from the date on which such goods were placed in its custody, then sell
the goods in the manner indicated.The scheme of section 62, therefore,
is that when it comes to sale of goods which are lying stored in the
premises of the Board, notice is to be given only to the owner, or other
persons who are beneficially entitled to the goods, who must then comply
with the requisition given and remove the goods. At this juncture, the
ship-owner or its agents are not persons who have to comply with such
requisition, as
they are neither persons who are the owner, or other
persons entitled to the goods. The notice issued to the agent of the vessel
is only for the limited purpose as aforesaid.This again indicates that goods
that are stored on the premises of the Board have a nexus only with the
owner or other persons entitled to those goods, and not with the agent of
the vessel or the vessel itself.
23. Section 63 is again very important. When goods have been
sold and a surplus exists, the surplus shall be paid to only three persons
or their agents, namely, the “importer”, “owner” or “consignee” of the
goods. In this sub-section, namely, 63(2), as in the case of “owner’ under
section 61(3), the owner of the goods is obviously not the “owner” as
defined under section 2(o), as the context of section 63(2) indicates
otherwise. There would have been no need to add “importer” or
“consignee” in this sub-section, as they are already subsumed within the
wider definition of “owner” in relation to goods under section 2(o).
Secondly, what is conspicuous by its absence is mention of the vessel or
any agent for loading or unloading goods.As a matter of fact, when it
comes to recovery of rates and charges against the vessel, a separate
remedy is provided for in sections 64 and 65 of the MPT Act.
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24. The statutory scheme of the MPT Act now becomes crystal
clear.Until the stage of landing and removal to a place of storage, the
steamer’s agent or the vessel itself may be made liable for rates payable
by the vessel for services performed to the vessel. Post landing and
removal to a place of storage, detention charges for goods that are stored,
and demurrage payable thereon from this point on,i.e. when the Port
Trust takes charge of the goods from the vessel, or from any other
person who can be said to be owner as defined under section 2(o), it is
only the owner of the goods or other persons entitled to the goods (who
may be beneficially entitled as well) that the Port Trust has to look to for
payment of storage or demurrage charges.
25. At this juncture, the Customs Act, 1962 also becomes relevant.
Under section 2(26), ‘‘importer” is defined as including any owner,
beneficial owner or any person holding himself out to be the importer.
Though this definition does not ipso facto apply to the MPT Act, it is
important that the two Acts be read together, as both Acts deal with
goods that are imported into the country from abroad, and their storage
and disposal thereafter. In any event, the expression “importer” that
occurs in section 63(2) of the MPT Act would certainly include a
beneficial owner of the goods.
26. Under section 29 of the Customs Act, the person-in-charge of
a vessel when it carries cargo can land only at a “customs port”(as
defined),
unless otherwise permitted by the Central Board of Excise.
Under section 30, the person-in-charge of a vessel carrying imported
goods shall deliver to the “proper officer”, i.e. a customs officer, an
import manifest of the vessel within the time prescribed, which would
indicate the nature of the goods carried by the vessel, and the consignee
or other owner of the goods.Under section 33, no such imported goods
can be unloaded at any place other than the place approved for unloading
of such goods in the customs port, customs airport or coastal port.Under
section 45(1), all imported goods unloaded in a customs area shall remain
in the custody of such person as approved by the Principal Commissioner
of Customs or Commissioner of Customs until they are cleared for home
consumption or are warehoused or transhipped.Section 46(1) is extremely
important in that it speaks of a bill of entry for home consumption or
warehousing in such form and manner as may be prescribed. Section
46(2) then states that a bill of entry shall include all the goods mentioned
in the bill of lading or other receipt given by the carrier to the
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
AREBEE STAR MARITIME AGENCIES PVT. LTD. [R. F. NARIMAN, J.]
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consignor.Under section 48, if any goods brought into India from a place
outside India are not cleared for home consumption or warehoused or
transhipped within 30 days from the date of the unloading, such goods
may, after notice to the “importer” and with permission of the proper
officer, be sold by the person having the custody thereof.
27. Under section 49, imported goods may, pending clearance or
removal, be permitted to be stored in a public warehouse for a period not
exceeding 30 days, or such other extended period that the Principal
Commissioner or Commissioner of Customs may permit. The Customs
Act, therefore, also contains parallel provisions for authorities under that
Act to take charge of, store, and sell imported goods, in the circumstances
mentioned therein.
28. It was argued that carrying goods in a container would, in any
case, make a difference to the position that only the owner of the goods
or person entitled to the goods is liable to pay for demurrage. According
to the Port Trust, when goods are imported in a container, and the
container is then landed without the goods being destuffed, and the
container belongs to the ship-owner’s agent and has to be returned to
the ship-owner’s agent, for the duration that the container takes up storage
space, storage charges will have to be paid by the ship-owner’s agent.
Let us examine whether this argument is sound in law.
29. Under the Customs Act, 1962,
customs duties are levied on
goods imported into India. “Import” has been defined in section 2(23) of
the Customs Act as the “bringing into India from a place outside India”.
Thus, import of goods can only be said to be complete after they cross
into the territorial waters of India, and become part of the mass of goods
within India. This is the law laid down by this Court in Garden Silk
Mills Ltd. and Anr v. Union of India and Ors. (1999) 8 SCC 744, as
follows:
“17. It was further submitted that in the case of Apar (P)
Ltd. [(1999) 6 SCC 117] this Court was concerned with Sections
14 and 15 but here we have to construe the word “imported”
occurring in Section 12 and this can only mean that the moment
goods have entered the territorial waters the import is complete.
We do not agree with the submission. This Court in its opinion
in Bill to Amend Section 20 of the Sea Customs Act, 1878 and
Section 3 of the Central Excises and Salt Act, 1944, Re observed
as follows:
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“Truly speaking, the imposition of an import duty, by and large,
results in a condition which must be fulfilled before the goods can
be brought inside the customs barriers, i.e., before they form part
of the mass of goods within the country.”
18. It would appear to us that the import of goods into India would
commence when the same cross into the territorial waters but
continues and is completed when the goods become part of the
mass of goods within the country; the taxable event being reached
at the time when the goods reach the customs barriers and the bill
of entry for home consumption is filed.”
30. Likewise, in Mangalore Refinery & Petrochemicals Ltd.v.
Commissioner of Customs (2016) 14 SCC 709, this Court dealt with
when an import could be said to be complete under the Customs Act.
After referring to various provisions of the Customs Act, this Court held:
“9. On a reading of the aforesaid provisions, it is clear that the
levy of customs duty under Section 12 is only on goods imported
into India. Goods are said to be imported into India when they are
brought into India from a place outside India. Unless such goods
are brought into India, the act of importation which triggers the
levy does not take place. If the goods are pilfered after they are
unloaded or lost or destroyed at any time before clearance for
home consumption or deposit in a warehouse, the importer is not
liable to pay the duty leviable on such goods. This is for the reason
that the
import of goods does not take place until they become
part of the land mass of India and until the act of importation is
complete which under Sections 13 and 23 happens only after an
order for clearance for home consumption is made and/or an order
permitting the deposit of goods in a warehouse is made. Under
Section 23(2) the owner of the imported goods may also at any
time before such orders have been made relinquish his title to the
goods and shall not be liable to pay any duty thereon. In short, he
may abandon the said goods even after they have physically landed
at any port in India but before any of the aforesaid orders have
been made. This again is for the good reason that the act of
importation is only complete when goods are in the hands of the
importer after they have been cleared either for home consumption
or for deposit in a warehouse. Further, as per Section 47 of the
Customs Act, the importer has to pay import duty only on goods
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that are entered for home consumption. Obviously, the quantity of
goods imported will be the quantity of goods at the time they are
entered for home consumption.
xxx xxxxxx
14. We are afraid that each one of the reasons given by the Tribunal
is incorrect in law. The Tribunal has lost sight of the following first
principles when it arrived at the aforesaid conclusion. First, it has
lost sight of the fact that a levy in the context of import duty can
only be on imported goods, that is, on goods brought into India
from a place outside of India. Till that is done, there is no charge
to tax. This Court in Garden Silk Mills Ltd. v. Union of
India,stated that this takes place, as follows:
“17. It was further submitted that in Apar (P) Ltd. [Union of
India v. Apar (P) Ltd., (1999) 6 SCC 117] this Court was
concerned with Sections 14 and 15 but here we have to
construe the word “imported” occurring in Section 12 and
this can only mean that the moment goods have entered the
territorial waters the import is complete. We do not agree with
the submission. This Court in its opinion in Sea Customs Act,
1878, S. 20(2), In re [Sea Customs Act, 1878, S. 20(2), In re,
AIR 1963 SC 1760] SCR at p. 823 observed as follows:
‘26. … Truly speaking, the imposition of an import duty, by
and large, results in a condition which must be fulfilled before
the goods can be brought inside the customs barriers i.e.
before they form part of the mass of
goods within the country.’
18. It would appear to us that the import of goods into India
would commence when the same cross into the territorial waters
but continues and is completed when the goods become part
of the mass of goods within the country; the taxable event
being reached at the time when the goods reach the customs
barriers and the bill of entry for home consumption is filed.”
31. However, another line of judgments deals with what was called
the “original package”doctrine laid down by Chief Justice Marshall of
the US Supreme Court in Brown v. State of Maryland 25 U.S. 419
(1827). This judgment laid down that while the goods imported remained
the property of the importer in the original form of packaging in which it
was imported, a tax upon it would be “imposts or duties on imports”
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without the consent of the Congress, violating section 10(2) of Article I
of the US Constitution.In addition, any such “impost or duty” would also
violate the Commerce clause under section 8(3) of Article I of the said
Constitution,which grants power to the Congress to regulate commerce
with foreign nations. Thus, a State legislature has no power to impose an
“impost or duty” upon the first sale of the commodity so long as it remained
in the importer’s hands1.
32. This doctrine has been the subject-matter of comment in a
variety of different situations. Thus, in the Province of Madras v. Boddu
Paidanna & sons, A.I.R. (29) 1942 Federal Court 33 (at page 37), in
the context of sales tax legislation by the States, the Federal Court referred
to Chief Justice Marshall’s judgment, and distinguished the same, saying
that it would apply to the Commerce clause in the US Constitution,and
would not apply by analogy to the legislative entries under the
SeventhSchedule of the Government of India Act (1935). Likewise, in
State of Bombay and Anr. v. F.N. Balsara 1951 SCR 682, in the
context of a law passed by the Legislature of the Province of Bombay
relating to prohibition of intoxicating liquors, an argument based on Chief
Justice Marshall’s dictum in Brown (supra) was made, stating that in
pith and substance such law would relate to import and export of
intoxicating liquors, and therefore be void.This was turned down, referring
to Boddu Paidanna (supra), stating that
in the American judgment the
widest meaning could be given to the Commerce clause as there was no
question of reconciling that clause with another clause containing the
legislative power of the State –see pages 696 to 700.
33. In Central India Spinning and Weaving and
Manufacturing Company, Ltd. v. The Municipal Committee,
Wardha 1958 SCR 1102, this Court, in the context of a terminal tax,
relied upon the dictum of Chief Justice Marshall in Brown (supra) in
order to answer the question before it, namely, whether a terminal tax
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
AREBEE STAR MARITIME AGENCIES PVT. LTD. [R. F. NARIMAN, J.]
1 In two later judgments of the US Supreme Court, Michelin Tire Corporation v.
Wages 423 U.S. 276 (1976) and Limbach v. Hoover & Allison Company 466 U.S.
353 (1984), judgments following Brown (supra) enunciating the “original package”
doctrine were reversed, stating that non-discriminatory taxes which did not fall on
imports as such, or interfere with the free flow of imported goods amongst the States,
could not be said to be contrary to the Commerce clause or contrary to Section 10(2) of
Article I of the US Constitution. A different approach was adopted to Section 10(2) of
Article I, ignoring the question whether the goods were imported, and instead analysing
the nature of the tax to determine whether it was an “impost or duty”.
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can be levied on goods which are in transit.The question was answered
in the negative – see pages 1114 and 1121.
34. In Gramophone Company of India Ltd. v. Birendra
Bahadur Pandey & Ors. (1984) 2 SCR 664, Central India Spinning
and Weaving (supra) was distinguished, and Boddu Paidanna (supra)
and F.N. Balsara (supra) were relied upon, to interpret the word “import”
as found in the Copyright Act, 1957. Cases under the Customs Act were
expressly distinguished by this judgment as follows:
“The learned counsel for the appellant invited our attention
to Radhakishan v. Union of India [1965 2 SCR 213];
Shawhney v. Sylvania and Laxman [77 Bom LR 380];
Bernado v. Collector of Customs [AIR 1960 Ker 170], to urge
that importation was complete so soon as the customs barrier
was crossed. They are cases under the Customs Act and it is
needless for us to seek aid from there when there is enough direct
light under the Copyright Act and the various conventions and
treaties which have with the subject “copyright” from different
angles. We do not also desire to crow our judgment with reference
to the history of the copyright and the customs legislations in the
United Kingdom and India as we do not think it necessary to do
so in this case.”2
35. A recent judgment of this Court in State of Kerala & Ors. v.
Fr. William Fernandez Etc. 2017 SCC OnLine SC 1291, was concerned
with the validity of various State legislations relating to entry
tax. As
many as eight issues were raised by this Court, in which issue (iv) reads
as follows:
“44(iv). Whether the importation of goods, imported from a
territory outside the India continues till the goods reach in the
premises/factory of the importer, during which period State at no
point of time is legislative competence to impose any tax.”
36. The discussion in answering this question raised in paragraph
44(iv) begins in paragraph 86.After referring to various definitions of
the term “import” in different legal situations, this Court noticed various
judgments relating to customs in paragraphs 97 to 103. As a matter of
fact in paragraph 103, the law laid down in Garden Silk Mills Ltd.
(supra) was extracted with approval as follows:
2 Page 691.
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103. Similar view was expressed in the case of Garden Silk Mills
Ltd. v. Union of India, (1999) 8 SCC 744, in paragraph 18, which
is to the following effect:—
“18. It would appear to us that the import of goods into India
would commence when the same cross into the territorial waters
but continues and is completed when the goods become part
of the mass of goods within the country; the taxable event
being reached at the time when the goods reach the customs
barriers and the bill of entry for home consumption is filed.”
37. These judgments were then distinguished by the Court as
follows:
“104. The law relating to customs has been consolidated by the
Customs Act, 1962. The definitions of “import”, “imported goods”
and “importer” have already been noticed above. The definition
of imported goods as given in Section 2(25) is-any goods brought
into India from the place outside India but does not include goods,
which have been cleared for home consumption. The provision
clearly contemplates that once the goods are released for home
consumption, the character of imported goods is lost and thereafter
no longer the goods could be called as imported goods. The import
transit is only till the goods are released for home consumption.
The taxing event for entry tax under Entry 52 List II is entirely
different and has nothing to do with the customs duty. The State
by imposing entry tax in any manner is not entrenching in the
power of the Parliament to impose customs
duty. The goods are
released for home consumption only after payment of the customs
duty due to the Central Government. The goodswhich are imported
cannot be held to be insulated so as to not subject to any State tax,
any such insulation of the imported goods shall be a protectionist
measure which will be discriminatory and invalid. When all normal
goods are subjected to State tax no exemption can be claimed by
goods, which have been imported from payment of entry tax. To
take a common example, all goods, which pass through a toll bridge
are liable to pay toll tax, can it be said that the imported goods
which after having been released from customs barriers and are
passing through a toll bridge, are not liable to pay the toll tax, the
answer has to be in No. Thus, the event for levy of customs duty,
which is in the domain of the Parliament, is entirely different from
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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that of event of entry tax. The liability to pay State entry tax
arises only when goods enter into a local area for consumption,
use and sale, which event is entirely different and separate from
the levy of a customs duty, which is on import.”
(emphasis in original)
38. The judgment went on to discuss the “original package”
doctrine of Chief Justice Marshall in paragraphs 108 to 120, finding that
recent US Supreme Court judgments had abandoned this doctrine, and
that therefore, the Federal Court in Boddu Paidanna (supra) and the
two judgments of this Court in F.N. Balsara (supra) and Gramophone
Company of India Ltd. (supra) were correct in not relying on this
doctrine in the context of the cases before them. This doctrine has no
place in the customs law of India, the judgments of this Court
concentrating on when an import can be said to be complete on an analysis
of the Customs Act.
39. Given the aforesaid judgments under the Customs Act, a
container, being a receptacle in which goods are imported, cannot be
said to be “goods” that are imported as itdoes not become part of the
mass of goods within the countryon the facts of these cases. Thus, once
destuffing takes place, the container has to be returned either to the
ship-owner’s agent, or to the person who owns such container.
40. In fact, the Bill of Entry (Forms)Regulations, 1976 (as amended
upto date) contain forms in which a Bill of Entry is to be presented by
an
importer of goods for home consumption, or for warehousing, or forex-
bond clearance for home consumption. Regulation 3 of the aforesaid
Regulations reads as follows:
“3. Form of Bill of Entry.- The Bill of Entry to be presented by
an importer of any goods for home consumption or for warehousing
or for ex-bond clearance for home consumption shall be in Form
I or Form II or Form III as the case may be.
Explanation - In this regulation, “goods” does not include those
goods which are intended for transit or transshipment.”
41. Form I, which speaks of a Bill of Entry for home consumption,
contains a declaration to be signed by an importer, clause 6(b) of which
is important and is set out hereunder:

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“6(b) I/We declare that there are the following payments actually
paid or payable for the imported goods by way of cost and services
other than those declared in the invoice^
[^please refer to Rule 10 (1) (a) & (b) of the Customs Valuation
Rules, 2007]
Sl. 
No. 
Particulars
Amount or expressed as 
% of the unit price 
i.

Brokerage and Commissions, 
except 
buying 
commission 
[Rule 
10(1)(a)(i) 
of 
the 
Customs 
Valuation 
Rules, 
2007]: 
ii.

Cost 
of 
containers 
[Rule 
10(1)(a)(ii)]:
iii.

Packing 
cost 
[Rule 
10(1)(a)(iii)]:
iv.
Cost of goods and services 
supplied by the buyer [Rule 
10(1)(b)]: 
42. The same declaration is contained in Forms II and III. A perusal
of the aforesaid Forms prescribed under the said Regulations would
show the difference between “goods” that are imported, which have
reference to the bill of lading/invoice presented by the importer which
contains the number and value of the goods imported,and payments by
way of costs and services other than those declared in the invoice, which
includescosts of containers under Rule 10(1)(a)(ii) of the Customs
Valuation (Determination of Value of Imported Goods) Rules, 2007, and
packing costs under Rule 10(1)(a)(iii) of these Rules. This leads to an
examination of the aforesaid Rules.
43. Rules 2(1)(d) and (f) of these Rules are relevant, and are set
out hereinbelow:
“2. Definitions.-
(1) In these rules, unless the context otherwise requires,-
xxx xxxxxx
(d) “identical goods” means imported goods-
(i) which are same in all respects, including physical
characteristics, quality and reputation as the goods being
valued except for minor differences in appearance that do
not affect the value of the goods;
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
AREBEE STAR MARITIME AGENCIES PVT. LTD. [R. F. NARIMAN, J.]
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(ii) produced in the country in which the goods being valued
were produced; and
(iii) produced by the same person who produced the goods,
or where no such goods are available, goods produced by a
different person, but shall not include imported goods where
engineering, development work, art work, design work, plan
or sketch undertaken in India were completed directly or
indirectly by the buyer on these imported goods free of charge
or at a reduced cost for use in connection with the production
and sale for export of these imported goods;
xxx xxxxxx
(f) “similar goods” means imported goods –
(i) which although not alike in all respects, have like
characteristics and like component materials which enable
them to perform the same functions and to be commercially
interchangeable with the goods being valued having regard
to the quality, reputation and the existence of trade mark;
(ii) produced in the country in which the goods being valued
were produced; and
(iii) produced by the same person who produced the goods
being valued, or where no such goods are available, goods
produced by a different person, but shall not include imported
goods where engineering, development work, art work, design
work, plan or sketch undertaken in India were completed
directly or indirectly by the buyer on these imported goods
free of charge or at a reduced cost for use in connection with
the production and sale for export of these imported
goods;”
44. Rule 4 deals with the transaction value of “identical goods”,
and Rule 5 deals with the transaction value of “similar goods”, and are
set out hereinbelow:
“4. Transaction value of identical goods.–
(1)(a) Subject to the provisions of rule 3, the value of imported
goods shall be the transaction value of identical goods sold for
export to India and imported at or about the same time as the
goods being valued;
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Provided that such transaction value shall not be the value of the
goods provisionally assessed under section 18 of the Customs
Act, 1962.
(b) In applying this rule, the transaction value of identical goods in
a sale at the same commercial level and in substantially the same
quantity as the goods being valued shall be used to determine the
value of imported goods.
(c) Where no sale referred to in clause (b) of sub-rule (1), is
found, the transaction value of identical goods sold at a different
commercial level or in different quantities or both, adjusted to
take account of the difference attributable to commercial level or
to the quantity or both, shall be used, provided that such adjustments
shall be made on the basis of demonstrated evidence which clearly
establishes the reasonableness and accuracy of the adjustments,
whether such adjustment leads to an increase or decrease in the
value.
(2) Where the costs and charges referred to in sub-rule (2) of
rule 10 of these rules are included in the transaction value of
identical goods, an adjustment shall be made, if there are significant
differences in such costs and charges between the goods being
valued and the identical goods in question arising from differences
in distances and means of transport.
(3) In applying this rule, if more than one transaction value of
identical goods is found, the lowest such value shall be used to
determine the value of imported goods.
5. Transaction value of similar goods.-
(1) Subject to the provisions of rule 3, the value of imported goods
shall be the transaction value of similar goods sold for export to
India and imported at or about the same time as the goods being
valued:
Provided that such transaction value shall not be the value of the
goods provisionally assessed under section 18 of the Customs
Act, 1962.
(2) The provisions of clauses (b) and (c) of sub-rule (1), sub-rule
(2) and sub-rule (3), of rule 4 shall, mutatis mutandis, also apply
in respect of similar goods.”
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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45. A perusal of these Rules would show that the value of imported
goods shall be the transaction value of identical goods, as defined, or
similar goods, as defined – whichever rule applies to the facts of each
particular case. It is clear that whether identical goods or similar goods
are taken into account, the price of the container never enters, as the
only “goods” that are to be looked at are the goods that are “imported”,
i.e. goods that are stuffed in the containers. Likewise, when it comes to
“computed value”, Rule 8 states as follows:
“8. Computed value.- Subject to the provisions of rule 3, the
value of imported goods shall be based on a computed value, which
shall consist of the sum of:-
(a) the cost or value of materials and fabrication or other processing
employed in producing the imported goods;
(b) an amount for profit and general expenses equal to that usually
reflected in sales of goods of the same class or kind as the goods
being valued which are made by producers in the country of
exportation for export to India;
(c) the cost or value of all other expenses under sub-rule (2) of
rule 10.”
46. Rule 10, which deals with “costs and services” then states:
“10. Costs and services.-
(1) In determining the transaction value, there shall be added to
the price actually paid or payable for the imported goods, -
(a) the following to the extent they are incurred by the buyer but
are not included in the price
actually paid or payable for the imported
goods, namely:-
xxx xxxxxx
(ii) the cost of containers which are treated as being one for
customs purposes with the goods in question;”
47. A reading of Rule 10(1)(a)(ii) would lead to the same result,
as “imported goods” are differentiated from “containers”. Further, for
the purposes of customs valuation, addition to the transaction value of
the imported goods is made only when the cost of containers is treated
as being one with the goods in question. Even in such a situation, what is
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then imported is the “goods” and the container – the container not having
to be destuffed, and therefore being cleared along with the goods
contained therein for home consumption. In such a case, where
containers do not have to be returned, but are imported along with the
goods contained within it, after the Board takes custody of such container
and the goods within it, the vessel or steamer agent is no longer liable –
even containers that do not need to be destuffed will then incur demurrage
along with the goods contained within it, which are then payable by the
importer, owner, consignor or agent thereof.
48. Further, to make matters clear beyond doubt, General
Exemption No. 170, which speaks of ‘Exemption to containers of durable
nature’3, states as follows:
“In exercise of the powers conferred by sub-section (1) of Section
25 of the Customs Act, 1962 (52 of 1962), the Central Government,
being satisfied that it is necessary in the public interest so to do,
hereby exempts containers which are of durable nature, falling
within the First Schedule to the Customs Tariff Act, 1975 (51 of
1975), when imported into India, from, -
(a) the whole of the duty of customs leviable thereon under the
said First Schedule; and
(b) the whole of the integrated tax leviable thereon under sub-
section (7) of section 3 of the said Customs Tariff Act:
Provided that the importer, by execution of a bond in such form
and for such sum as may be specified by the Assistant
Commissioner of Customs or Dy. Commissioner of Customs binds
himself to re-export the said containers within six months from
the date of their importation and to furnish documentary evidence
thereof of the satisfaction of the said Assistant Commissioner
and to pay the duty leviable thereon in the event of the importer’s
failure to do so:
Provided further that in any particular case, the aforesaid period
of six months may, on sufficient cause being shown, be extended
by the said Assistant Commissioner for such further period, as he
may deem fit.”
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
AREBEE STAR MARITIME AGENCIES PVT. LTD. [R. F. NARIMAN, J.]
3 Notification No. 104/94 dated 16.03.1994 as amended by Notification No. 101/95
and 43/17.
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A clarification by the Central Board of Indirect Taxes and Customs
dated 25th October, 20024, clarified as to what is meant by “containers
of durable nature” as follows:
“Notification No.104/94-Cus., exempts containers which are of
durable nature from the whole of the duty of customs and additional
duty subject to the condition that such containers are re-exported
within 6 months from the date of importation and documentary
evidence is furnished to the satisfaction of the Assistant
Commissioner. As per the meanings assigned to the words
“durable” and “container” in various Dictionaries, it would appear
that any goods (containers) used for packaging or transporting
other goods, and capable of being used several times, would fall
in the category of “containers of durable nature”.
A reading of the aforesaid also goes to buttress the conclusion
reached in the previous paragraph of this judgment.
49. The Customs Tariff Act, 1975 also throws considerable light
on containers fit for repetitive use. Section 2 of the said Act states as
follows:
“2. Duties specified in the Schedules to be levied.—The
rates at which duties of customs shall be levied under the Customs
Act, 1962 (52 of 1962), are specified in the First and Second
Schedules.”
50. The First Schedule deals with general rules for interpretation
of “this Schedule”, and states:
“5. In addition to the foregoing provisions, the following rules shall
apply in respect of
the goods referred to therein:
(a) camera cases, musical instrument cases, gun cases, drawing
instrument cases, necklace cases and similar containers, specially
shaped or fitted to contain a specific article or set of articles,
suitable for long-term use and presented with the articles for which
they are intended, shall be classified with such articles when of a
kind normally sold therewith. This rule does not, however, apply
to containers which give the whole its essential character;
4 Circular No.69/2002-Customs.
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(b) subject to the provisions of (a) above, packing materials and
packing containers presented with the goods therein shall be
classified with the goods if they are of a kind normally used for
packing such goods. However, this provision does not apply when
such packing materials or packing containers are clearly suitable
for repetitive use.”
51. This paragraph again clearly differentiates between containers
which go along with the goods contained therein “suitable for long-term
use”, from containers “suitable for repetitive use”, thus making it clear
that the containers of the latter type cannot be classified with the goods
contained therein for payment of customs duty.
52. At this juncture, it is important to examine the judgments of
this Court. In Rowther-I (supra), the question before fivehonourable
Judges of this Court arose out of the enforcement of the Scale ‘E’ rate
that was added to the Madras Port Trust Scale of Rates in 1958. The
question arose under the pari materia provisions of the Madras Port
Trust Act, 1905 (“Madras Act”), which has since been repealed by the
MPT Act by section 133(2C) thereof. The respondents in this case were
steamer agents. Scale ‘E’ 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, for unloading goods from
the vessel. These rates are set out at pages 923 and 924 of the Supreme
Court Report, and indicate
that a certain amount has to be paid to labour
which is rendered idle either on account of the vessel’s fault, or on account
of force majeure conditions such as rain. This is further fleshed out by
a Circular dated 25.02.1958, referred to at pages 925 and 926. After
setting out the relevant sections of the Madras Act, the by-laws, and the
Manual of Instructions framed and issued by the Board, the first
proposition of law laid down in the said judgment is that it is not obligatory
on behalf of the Board to undertake the various services mentioned in
section 39 of the Madras Act (which is pari materia with section 42 of
the MPT Act). It is only if such services are required by the “owner” as
defined that such services are undertaken by the Board. It was then
held that it was the steamer agent who was in a position to require the
Board to undertake such services in respect of the cargo that the ship is
to unload (see pages 935 to 936).The question for determination was
then set out as follows:
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“The question for determination, in the case, then is whether the
law making the steamer-agent liable to pay these charges is good
law.”5
53. “These charges”, as has been stated earlier, were on account
of payment of labour dues for labour remaining idle, such labour being of
the Port Trust which was used in the unloading of goods from the vessel.
It was then mentioned that these charges were for the benefit of the
vessel so that it completes its task of landing the goods as soon as
possible.It was also pointed out that the steamer agent, and not the
consignee, was liable to pay these charges as the goods are not unloaded
“consignee-wise” (see page 938-939). It was then laid down that the
ship-owner is the bailee of the consignor, and that he is responsible for
delivery of goods to the consignee or transferee according to the terms
of the bill of lading. However, the Court held that delivery of goods by
the ship-owner to the Board cannot be said to be delivery to the consignee,
as the Board cannot be said to be an agent of the consignee for the
purpose of taking delivery of goods (see page 939). Also, the Court
observed that the provision of lien which the Board can exercise on the
goods for non-payment of dues of the Board makes it clear that it does
not act as an agent of the consignee (see page 947). The Court also held
that when section 39(3) of the Madras Act speaks of taking of charge of
the goods by the Board
and giving a receipt to a ship-owner, and the
master or owner of the vessel being absolved from liability for any loss
or damage which may occur to the goods which had been landed, also
does not lead to the conclusion that the Board takes delivery of those
goods on behalf of the consignee. The Court then held:
“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 Board’s 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
5 Page 937.
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at the time of the landing of the goods or on their removal thereafter,
are services rendered to the ship.”6
54. This passage clearly states that since the Board does not get
the goods directly from the consignee, but only from the ship-owners, it
cannot possibly be said to be the bailee of the consignee.The observation
that whatever services the Board performs at the time of landing of the
goods, or “on their removal thereafter” are services rendered to the
ship, must be understood in the context of the facts of that case. A
perusal of the Board’s counter affidavit, which is reflected at page no.921,
would show that the Harbour dues on the import of cargo speaks, inter
alia, of charges involved in moving the goods from the landing point to
the storage point.The expression “on their removal thereafter”, on the
facts of this case, would therefore only mean services performed by the
Board from landing point to storage point, and not thereafter. This is in
fact made even clearer by the following passage in the said judgment:
“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 Board.”7
55. While dealing with the case of Peterson v. Freebody &
Co. [1895] 2 Q.B.D. 294, which related to a suit between the ship-
owner and the consignee, the observations of Lord Esher that the ship-
owner must do something more than merely put his goods over the rail
of his ship, namely, that he must put the goods in such position that the
consignee can take delivery of them, were limited only to goods which
are to be delivered to the consignee alongside the ship, and not when
they are handed over to a statutory body like theBoard, as a sub-bailee.
The delivery therefore contemplated by these observations was held to
be not equivalent to landing of the goods at the quay and placing them in
charge of the Board. The observations as to the Board being a sub-
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bailee were therefore made to counter an argument based on an English
judgment, that delivery of the goods to the Board amounts to delivery to
the consignee, which would therefore make the consignee liable to pay
the aforesaid unloading charges.
56. The second judgment with which we are concerned is
Rowther-II (supra). The question that arose before a three-Judge Bench
of this Court was whether demurrage charges payable to the Port Trust
of Madras were to be recovered from the consignee of the goods, or
from the steamer agent. The judgment of this Court, in essence, extracted
the judgment of the High Court that was impugned therein, and then
agreed with the same. The High Court had held:
“It cannot be disputed that neither the shipowner or the steamer
agent whose duty it is to deliver the cargo to the consignee as per
the contract with the shipper, cannot lay any claim of ownership
to the goods. The obligation to deliver the goods to the consignee
has been taken over by the Port Trust under the provisions of the
statute and the shipowner is relieved of the liability for loss or
damage to the goods from the moment the goods are taken charge
of by the Port Trust as per Section 39 of the Act. Once the goods
are handed over to the Port Trust by the steamer and the steamer
agents have duly endorsed the bill of lading or issued the delivery
order, their obligation to deliver the goods personally to the owner
or the
endorsee comes to an end. The subsequent detention of
the goods by the Port Trust as a result of the intervention by the
Customs authorities cannot be said to be on behalf of or for the
benefit of the steamer agents. Generally, if there is a delay in
taking delivery of the goods by the consignee within a reasonable
time, the steamer or its agent can warehouse the goods. In such
an event the warehouseman has an independent claim against the
consignee or endorsee for the demurrage charges. The position
cannot be different merely because the Customs authorities have
intervened. The position of the Port Trust is the same as that of a
warehouseman whose responsibility to the goods is also said to
be a bailee. It cannot be said that the steamer or its agents have
undertaken any responsibility for the custody of the goods after
the transit has come to an end and after the bill of lading has been
duly endorsed or a delivery order issued. By the endorsement of
the bill of lading or the issue of a delivery order by the steamer
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agents, the property in the goods vests on such consignee or
endorsee, and thus it appears to be clear that the steamer or the
steamer agents are not responsible for the custody of the goods
after the property in the goods passes to the consignee or endorsee
till the Customs authorities actually give a clearance. It should
also be remembered that the steamer which had entered into a
contract of carriage of goods for a reward cannot be said to have
undertaken the responsibility of safeguarding the goods or keeping
them at their risk till the goods are actually cleared from the
Customs and taken delivery of by the consignee. That will be
imposing a too onerous and unexpected responsibility on the
steamer which is only a carrier. If they are submitted to such a
responsibility, in most cases where the goods are detained without
delivery in the hands of the Port Trust at the instance of the Customs
the steamer or steamer agents have to pay towards a storage or
demurrage charges amounts quite disproportionate to the freight
they collect for the carriage of the goods. No carrier will undertake
such a risk and responsibility. We are of the view that the provisions
of the Port Trust Act cannot be so construed as imposing an
additional liability or obligation on the carrier which was not
contemplated by the contract it had entered with the shipper. It is
only the customs of or the statutory provisions applicable to the
port of discharge that can be taken to be an
implied condition of
the contract between the shipper and the shipowner. Therefore,
the provisions of the Port Trust Act cannot add to the liability of
the steamer or its agents which was not contemplated by the
shipper or the shipowner at the time of entering into the contract.
Having regard to the functions and the obligations which a steamer
has undertaken with the shipper under the contract, we cannot
say that the steamer has undertaken the responsibility for the safety
of the goods till the goods are cleared by the Customs and taken
delivery of by the consignee. As earlier referred to, the duty of
the steamer is normally to deliver the goods to the consignee on
the quay side but that place of delivery has been shifted by the
provisions of the Port Trust Act to the warehouse where the Port
Trust had stored the goods.”8
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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57. The High Court then distinguished Rowther-I (supra) as
follows:
“But as already stated, the charges in that case related to the
services rendered by the Port Trust at the time of the landing of
the goods and their removal thereafter to its custody, and those
charges were taken to be for the benefit of the steamer. It is for
this reason that the Court took the view that the Port Trust is
entitled to collect the service charges from the steamer or its
agent. We are, however, satisfied that the above decision cannot
be taken to lay down that the Port Trust can at no time proceed
against the consignee for demurrage charges and can only look to
the steamer agent. We are, here, concerned with the demurrage
charges after the goods have been landed and taken charge of by
the Board and after the steamer agent had endorsed the bill of
lading or issued a delivery order for effecting delivery to the
consignee that is after the property in the goods had passed to
him. As already stated, the goods have remained in the custody of
the Port Trust on the default of the consignee to satisfy the Customs
authorities that the import was authorised. “Even though the
consignee is not a party to the contract of carriage once the
property in the goods had passed to him, he becomes liable to pay
the storage or demurrage charges as owner of the goods to the
shipowner.”9
58. Rowther-II (supra) has made it clear that Rowther-I (supra)
concerned itself with Port Trust dues at the time of landing of the goods,
and their removal thereafterto custody of the Port Trust. These were
charges wholly distinct from demurrage charges, which are incurred
only after the goods have been landed and have been taken charge of by
the Board. To the extent that the High Court lays this down as a proposition
of law, there can be no exception. However,it goes on to state that when
the steamer agent endorses the bill of lading or issues a delivery order
for effecting delivery to the consignee, it is at this stage that the property
in the goods passes to the consignee. This part of Rowther-II (supra) is
clearly contrary to Rowther-I (supra), which had stated:
“In the present case, it was further contended that as between
the master of the ship and the consignee, the Act made it obligatory
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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 considered a part of the ship.”10
59. Rowther-I (supra) clearly lays down that the endorsement of
the bill of lading by a steamer agent is for the purpose of delivery of the
goods, and, accordingly, cannot be for the transfer of title to the goods.
Rowther-II (supra) cannot, therefore, be said to be good in law when it
speaks of endorsement on the bill of lading and issuance of delivery
order by the steamer agent passing title of the goods to the consignee.
Once this is made clear, the ratio of Rowther-II (supra) is to be
understood thus: since charges for storage or demurrage are after goods
are removed and placed in the custody of the Board, the steamer agent
cannot be made to pay the
same, as it would impose “a too onerous and
unexpected responsibility on the steamer”, which is only a carrier, and
not owner, of the goods.
60. At this juncture, it is important to understand the legal effect
of a bill of lading. This has been set out by a five Judge Bench of this
Court in J.V. Gokal and Co. (Pvt.) Ltd. v. Asst. Collector of Sales-
Tax (Inspection) and Ors. (1960) 2 SCR 852, as follows:
“A bill of lading is “a writing, signed on behalf of the owner of the
ship in which goods are embarked, acknowledging the receipt of
the goods, and undertaking to deliver them at the end of the voyage
subject to such conditions as may be mentioned in the bill of lading”.
It is well-settled in commercial world that a bill of lading represents
the goods and the transfer of it operates as a transfer of the goods.
The legal effect of the transfer of a bill of lading has been
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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enunciated by Bowen, L.J., in Sanders Brothers v. Maclean &
Co. [(1883) II QBD 327] thus at p. 341:
“The law as to the indorsement of bills of lading is as clear as in
my opinion the practice of all European merchants is thoroughly
understood. A cargo at sea while in the hands of the carrier is
necessarily incapable of physical delivery. During this period of
transit and voyage, the bill of lading by the law merchant is
universally recognised as its symbol, and the indorsement and
delivery of the bill of lading operates as a symbolical delivery of
cargo. Property in the goods passes by such indorsement and
delivery of the bill of lading, whenever it is the intention of the
parties that the property should pass just as under similar
circumstances the property would pass by an actual delivery of
the goods. And for the purpose of passing such property in the
goods and completing the title of the indorsee to full possession
thereof, the bill of lading, until complete delivery of the cargo has
been made on shore to someone rightfully claiming under it, remains
in force as a symbol, and carries with it not only the full ownership
of the goods, but also all rights created by the contract of carriage
between the shipper and the shipowner. It is a key which in the
hands of a rightful owner is intended to unlock the door of the
warehouse, floating or fixed, in which the goods may chance to
be.”11
61. Section 1 of the
IndianBills of Lading Act, 1856 is also
important, which states:
“Rights under bills of lading to vest in consignee or
endorsee.—Every consignee of goods named in a bill of lading,
and every endorsee of a bill of lading to whom the property in the
goods therein mentioned shall pass, upon or by reason of such
consignment or endorsement shall have transferred to and vested
in him all rights of suit, and be subject to the same liabilities in
respect of such goods as if the contract contained in the bill of
lading had been made with himself.”
62. Under this section, the “endorsement” referred to is the
endorsement made by the consignor or owner of the goods in favour of
such endorsee on the bill of lading, so that title to property is then
11 Page 861-862.
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transferred to the endorsee. This endorsement is very far removed, as
has been correctly stated in Rowther-I (supra), from the endorsement
on the bill of lading by a steamer agent indicating that the goods have
been delivered. Therefore, shorn of the confusion that has arisen as a
result of mixing-up the two types of endorsement, the ratio of Rowther-
II (supra) that, after goods are taken charge of by the Port Trust and
stored in its premises incurring demurrage charges thereon, the vessel
or its agent cannot be made responsible, is unexceptionable.
63. After extracting passages of the judgment of the High Court,
this Court in Rowther-II (supra) then went on to extract a passage
from International Airport Authority of India v. Grand Slam
International (1995) 3 SCC 151, by which it was made clear that
demurrage charges are to be paid by the importer or consignee liable for
the same (and not the vessel or the steamer agent thereof).
64. Sriyanesh Knitters (supra) is the next judgment that has to
be dealt with in chronological sequence. This was a judgment of two
learned judges of this Court, in which the question that arose before the
Court was stated thus:
“1.The common question involved in these appeals is whether the
appellant Board of Trustees of the Port Trust constituted under
the Major Port Trusts Act, 1963 (for short “the MPT Act”) have
a general lien for their dues over the present or future consignments
imported by the importers at the Bombay
Port when the said dues
are in respect of the past imports made by the said importers.”
65. The Court first found that a reading of sections 59 and 61(1)
of the MPT Actmade it clear that the lien spoken of is a lien qua the
particular goods that are imported, and cannot extend to previous imports
of similar goods made by the same party. The Court then went on to
hold that the MPT Act is not a comprehensive code, and has to be read
together with other Acts wherever the MPT Act is silent. It was then
held that section 171 of the Indian Contract Act, 1872 speaks of a general
lien which may be exercised by the Port Trust as it is a “wharfinger”
within the meaning of said section.This being so, the Port Trust may
continue to retain the goods bailed as security for past dues, but would
have to have recourse to proceedings in accordance with law for securing
an order, which would then enable the Port Trust to sell the goods to
realise the amounts due to it. This could be done by filing a suit for
recovery of the amount due to it under section 131 of the MPT Act.
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66. However, the judgment goes on to make certain observations,
in particular in paragraph 23, stating that a relationship of bailor and
bailee comes into existence, when the Board is required to store goods
that have been imported, between the Board and the consignee of those
goods. Apart from the fact that this is directly contrary to Rowther-I
(see page 940), the consignee cannot be considered to be a bailor if the
definition of bailor under the Indian Contract Act, 1872 is read. Under
section 148 of the Contract Act, a bailor is defined as a person who
delivers the goods to the bailee.In this case, the person who delivers the
goods to the bailee is the vessel and not the consignee, as has been
correctly stated in Rowther-I (supra).Therefore, the observations that
the consignee is the bailor of the goods, with the Port Trust being the
bailee thereof, made in paragraphs 23 and 25 of Sriyanesh Knitters
(supra) cannot be said to state the law correctly, and are accordingly
overruled. However, since we are not going into the point of sub-bailment
as argued by Shri Pratap, we leave open the question as to whether the
Port Trust, as sub-bailee, is entitled to recover its dues from the original
bailor– the consignor, and persons claiming through it, given the statutory
scheme of the MPT Act.
67. However, Rowther-I (supra) was correctly distinguished by
the Court in Sriyanesh Knitters (supra) in paragraph 24 thereof, and
its ratio qua the MPT Act not being an exhaustive code has our
concurrence.
68. In Forbes-I (supra), two learned Judges of this Court doubted
the correctness of Rowther-II (supra) and framed three questions
(referred to earlier in this judgment) to be answered by a larger Bench.
On 13.08.2014, the larger Bench of three Judges held:
“We have gone through the order whereby the matter has been
referred to this Bench. We have noted the fact that no reason for
not agreeing with the Judgment delivered by a three-Judge Bench
has been assigned in the said order. Moreover, upon going through
the Judgment delivered in 1997 (10) SCC 285, we see no reason
to disagree with the ratio laid down in the said Judgment. In these
circumstances, we refer the matter back to the regular bench for
further hearing as we do not see any inconsistency in the said
Judgment.”
69. The matter then came back to a Bench of two Hon’ble Judges
of this Court, which delivered the judgment in Forbes-II (supra). In
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Forbes-II, the Court set out the question of law that arose before it as
follows:
“1…The common question of law that arises in these appeals,
though in different facts and circumstances, is with regard to the
liability of the agent of a shipowner (hereinafter referred to as the
“steamer agent”) to pay demurrage and port charges to the Board
of Trustees of a Port (hereinafter referred to as “the Port Trust
Authority”) in respect of goods brought into the port and
warehoused by the said authority. Before proceeding to answer
the aforesaid question it will be convenient to take note of the
core facts in each of the appeals under consideration.”
70. Agreeing with the High Courts of Bombay and Calcutta that
the steamer agent cannot be made liable for demurrage, the Court went
on to hold:
“10. While it is correct that the liability to pay demurrage charges
and port rent is statutory, in the absence of any specific bar under
the statute, such liability can reasonably fall on a steamer agent if
on a construction of the provisions of the Act such a conclusion
can be reached. Determination of the aforesaid question really
does not hinge on the meaning of the expression “owner” as
appearing in Section 2(o) of the 1963 Act, as has been sought to
be urged on behalf of the appellant though going by the language
of Section 2(o) and the other provisions of the Act especially
Section 42, an owner would include a shipowner or his agent.
Otherwise it is difficult to
reconcile how custody of the goods for
the purpose of rendering services under Section 42 can be
entrusted to the Port Trust Authority by the owner as provided
therein under Section 42(2). At that stage the goods may still be in
the custody of the shipowner under a separate bailment with the
shipper or the consignor, as may be. Even dehors the above
question the liability to pay demurrage charges and port rent would
accrue to the account of the steamer agent if a contract of bailment
between the steamer agent and the Port Trust Authority can be
held to come into existence under Section 42(2) read with Section
43(1)(ii) of the 1963 Act.
11. For the reasons already indicated the decision in Sriyanesh
Knitters with regard to existence of a relationship of bailor and
bailee between the consignee and the Port Trust Authority instead
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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of the steamer agent and the Port Trust Authority cannot be
understood to be a restatement of a general principle of law but a
mere conclusion reached in the facts of the case where the
consignee had already appeared in the scene. In all other situations
where the bill of lading has not been endorsed or delivery orders
have not been issued and therefore the consignee is yet to surface,
the following observations of the Constitution Bench in K.P.V.
Sheik Mohamed Rowther & Co. [Port of Madras v. K.P.V.
Sheik Mohamed Rowther & Co., 1963 Supp (2) SCR 915] will
have to prevail: (SCR p. 940)
“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 Sections 151, 152 and 161 of the Contract
Act, 1872. 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 shipowner, the shipowner is the
bailor and the Board is the bailee, and the Board’s 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 Sections 39 and 40, therefore, further support
the contention that the Board takes charge of the goods on behalf
of the shipowner 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 ship.”
12. From the above, the position of law which appears to emerge
is that once the bill of lading is endorsed or the delivery order is
issued it is the consignee or endorsee who would be liable to pay
the demurrage charges and other dues of the Port Trust Authority.
In all other situations the contract of bailment is one between the
steamer agent (bailor) and the Port Trust Authority (bailee) giving
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rise to the liability of the steamer agent for such charges till such
time that the bill of lading is endorsed or delivery order is issued
by the steamer agent.
13. In the orders of the Calcutta High Court under challenge, it is
mentioned that Section 60 of the Act provides a remedy to the
steamer agent to recover the dues from the consignee. Section
60 of the 1963 Act confers a limited lien on the shipowner “for
freight and other charges payable to the shipowner” which
expression does not extend to demurrage and other port charges.
The High Court, therefore, does not appear to be correct in its
conclusions. However, the said error would not be fundamental
to the final conclusion reached by the High Court. In this regard
we cannot help noticing the special provisions of Sections 61 and
62 of the Act which enable the Port Trust Authority to proceed
against the goods within its custody to recover the charges which
may be payable to the Port Trust Authority. Ordinarily and in the
normal course if resort is made to the enabling provisions in the
1963 Act to proceed against the goods for recovery of the charges
payable to the Port Trust Authority there may not be any occasion
for the said authority to sustain any loss or even suffer any shortfall
of the dues payable to it so as to initiate recovery proceedings
against the shipowners.”
71. Paragraph 10 of the judgment does hold that the language of
section 2(o) read with other provisions of the MPT Act,
especially section
42, would include a ship-owner or his agent. We have already pointed
out that the principle of noscitur a sociis cannot be applied to this
definition clause, both on its plain language, as also the fact that it is an
inclusive definition clause, which shows that this statement of the law is
correct. However, the statement in this paragraph that even de hors the
above question, the liability to pay demurrage charges and port rent would
accrue to the account of the steamer agent because of the statutory
bailment that comes into existence under section 42(2) read with section
43(1)(ii), is plainly incorrect, in view of our finding that after the Port
Trust takes charge of the goods and issues a receipt therefor (at which
point of time the statutory bailment comes into force), the vessel or the
steamer agent cannot be held liable.
72. Insofar as paragraph 11 is concerned, we have already made
it clear that Sriyanesh Knitters (supra) cannot be said to reflect the
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
AREBEE STAR MARITIME AGENCIES PVT. LTD. [R. F. NARIMAN, J.]
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correct position in law, insofar as a bailment between the consignee and
the Port Trust is concerned, and thus Sriyanesh Knitters (supra) has
been overruled by us to this extent.
73. Paragraph 12 of the said judgment contains the same confusion
that is contained in Rowther-II (supra), and cannot therefore be said to
lay down the law correctly. The correct position in law is, as has been
stated hereinabove, that after the Port Trust takes charge of the goods,
and issues a receipt therefor, and thereafter stores the goods in a place
belonging to it, such storage charge cannot be to the account of the
vessel or an agent of the vessel.
74. Paragraph 13 refers to one other aspect of the case that has
been argued before us. It may be recalled that the impugned judgment
of the Kerala High Court in the present case had held that the word
“may” occurring in sections 61 and 62 of the MPT Act must be read as
“shall”. This is not the correct position in law, as a discretion is vested in
the Board to sell the goods in the circumstances mentioned in sections
61 and 62. However, such discretion cannot be exercised arbitrarily, as
the Board is “State” within the meaning of Article 12 of the Constitution,
and is therefore bound by the constraints of Article 14 of the Constitution
of India (see Dwarkadas Marfatia and Sons v. Board of Trustees
of the Port of Bombay (1989) 3 SCC 293 at paragraph 22). Therefore
while it may not be
correct to say that “may” has to be read as “shall” in
sections 61 and 62 of the MPT Act, yet in all future cases the Board is
under a constitutional duty to sell the goods in its custody within a
reasonable time from which it takes custody of those goods. Ordinarily,
the time of four months from the date of landing of the goods mentioned
in section 63(1)(c) of the MPT Act should be the outer-limit within which
such goods should be put up for sale. If not put up for sale within such
time, the Board must explain as to why, in its opinion, this could not be
done, which explanation can then be tested by the Courts. If the
explanation is found to be reasonable, and the owner or person entitled
to the goods does not remove the goods thereafter, penal demurrage
may then be levied and collected by the Board. To this extent, therefore,
while overruling the impugned judgment of the Kerala High Court on the
aspect of “may” being read as “shall” in sections 61 and 62 of the MPT
Act, yet the hovering omnipresence of Article 14 over the Board must
always be given effect to, and there must be a very good reason to
continue detention of goods beyond the period of four months as mentioned
hereinabove before they are sold.
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75. We now come to a judgment of two honourableJudges of this
Court in Rasiklal (supra). The question that arose in this case was as to
whether the Appellant ‘Rasiklal Kantilal and Company’, who was a
person interested in purchasing goods, and did not at the time have title
to the goods, would be liable to pay demurrage charges for a period of
roughly six months, which began with the date on which he applied to
the customs authorities to have bills of entries substituted in his name.
On the facts in that case, during the period from November, 1991 to
January, 1992, 78 shipments of goods were imported by 5 different
consignees from a UK company, one M/s Metal Distributors (UK)
Ltd;these consignments were landed at Bombay Port. The consignees
filed bills of entry for 37 out of 78 consignments, but subsequently failed
to lift the consignments, as a result of which they came to be stored at
the Port of Bombay. The consignments were shipped on a “CAD basis”,
i.e. cash against documents, in which title would remain with the UK
company till such time that an importer would retire the documents
against payment.
76. This Court held that despite Rasiklal not being an owner of
the goods, he was liable to pay demurrage for the aforesaid period.Strictly
speaking, this judgment does not apply to the facts of the cases before
us, in that Rasiklal was neither the owner of a vessel or its agent. It was
an importer of goods who had beneficial title to the said goods, as a
formal agreement between the UK company and Rasiklal to purchase
the said goods was made in April, 1992. Given our reading of the MPT
Act, and section 63(2) in particular, this judgment could have been
supported on the basis that Rasiklal was an importer (within the meaning
of section 63(2))of the goods, and as beneficial owner of the goods
would therefore be liable to pay storage charges of the aforesaid goods.
However, this Court did not choose this route in order to arrive at its
conclusion. On the other hand, it went on to consider Rowther-I (supra),
Rowther-II (supra), and Forbes-II (supra), and arrived at the following
conclusion in paragraph 47:
“47. With respect, we agree with the conclusions recorded by
this Court in Rowther-2 and Forbes that a Board could recover
the rates due, either from the steamer agent or the consignee but
we are of the humble opinion that enquiry into the question as to
when the property in the goods passes to the consignee is not
relevant.”
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
AREBEE STAR MARITIME AGENCIES PVT. LTD. [R. F. NARIMAN, J.]
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77. The Court then went on to examine various provisions with
regard to bailment, and stated that passing of title in goods is irrelevant
conceptually to bailment, which concerns itself with delivery and not
title of goods. It then framed the question in paragraph 51, thus:
“The only question is: from whom can the board recover – we
emphasise the question is not who is liable.”
78. From paragraphs 52 to 60, the Court then went on to consider
the observations made in Rowther-I (supra) that the first respondent,
i.e. the Port Trust, is a sub-bailee of the goods bailed by the consignor to
the ship-owner.This being so, it is the consignor to whom the Port Trust
has to look for payment of these charges, and since in this case Rasiklal
is a consignee claiming through the consignor, Rasiklal would be liable.
Section 158 of the Indian Contract Act, 1872 and section 1 of the
IndianBills of Lading Act, 1856 were relied upon to reach this conclusion.
79. First and foremost, Rowther-I (supra) did hold that the Port
Trust is a sub-bailee of goods bailed by the consignor to the ship-owner,
but so held in order to distinguish an English judgment – as has been
pointed out hereinabove – which would then lead to the proposition that
once the goods are placed in the charge of the Board, it would amount to
delivery to the consignee, which proposition was turned down by the
Court. The question whether section 158 of the Contract Act can
apply
to a statutory bailment under the MPT Act is left open,given that the
Port Trust is not limited only to recovering”necessary expenses” to be
payable by the bailor, but is statutorily is entitled to recover, by way of
levy of rates and expenses incurred for storage of the goods, together
with something more – the something more being rates of storage higher
than warehousing rates as a deterrent against keeping these goods in
the Port Trust premises. This Court in Board of Trustees of the Port
of Bombay v. Jai Hind Oil Mills Co. and Ors.(1987) 1 SCC 648 has
observed:
“10. The power of a Port Trust to fix rates of demurrage and to
recover the same from an importer or exporter (although the
question of an exporter paying demurrage arises rarely) under
law and to show concession as regards demurrage charges in
certain specified cases is recognised by this Court in the Trustees
of the Port of Madras v. Aminchand Pyarelal [(1976) 3 SCC
167] and in the Board of Trustees of the Port of Bombay
v. Indian Goods Supplying Co. [(1977) 2 SCC 649]. These
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decisions are no doubt based on the relevant laws which were in
force at the material time. But the decisions are still relevant insofar
as cases arising under the Act because the Act also contains
provisions more or less similar to the statutory provisions considered
in the said decisions. Demurrage charges are levied in order to
ensure quick clearance of the cargo from the harbour. They are
always fixed in such a way that they would make it unprofitable
for importers to use the port premises as a warehouse. It is
necessary to do so because congestion in the ports affects the
free movement of ships and the loading and unloading operations.
As stated earlier, the Port Trust shows concession to the party
concerned in certain types of cases.”
80. As a matter of fact, the Division Bench in Rasiklal (supra)
seems to have put the cart before the horse, on a ground based in equity.
The Court stated:
“60…Denying such a right on the ground that the person claiming
delivery of the goods acquired title to the goods only towards the
end of the period of the bailment of the goods with the first
respondent would result in driving the first respondent to recover
the amount due to it from the bailor or his agent who may or may
not be within the jurisdiction of the municipal courts of this country
(by resorting to a cumbersome procedure of litigation). The first
submission is, therefore, rejected.”
81. As has been pointed out by us, no such right has been denied
on a
correct reading of the MPTAct. The importer, the consignee and
the consignor, or their agents, can all be held liable to pay demurrage
charges. However, since Rasiklal (supra) does not involve either the
owner of the vessel or its agent, we leave open the question as to whether
the Port Trust, as sub-bailee, is entitled to recover its dues from the
original bailor– the consignor, and persons claiming through it, given the
statutory scheme of the MPT Act, as has already been indicated in
paragraph 66 above.
82. Based on the above discussion, our answers to the questions
framed in the reference order areas follows:
1. The point of time at which title to the goods passes to the
consignee is not relevant to determine the liability of the consignee or
steamer agent in respect of charges to be paid to the Port Trust;
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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2. and 3. The bill of lading being endorsed by the steamer agent
is different from the bill of lading being endorsed by the owner of the
goods.In the first case, the endorsement leads to delivery; in the second
case, the endorsement leads to passing of title. For the reasons mentioned
in the judgment, both stages are irrelevant in determining who is to pay
storage charges – we have held that upto the point that the Port Trust
takes charge of the goods, and gives receipt therefor, the steamer agent
may be held liable for Port Trust dues in connection with services rendered
qua unloading of goods, but that thereafter, the importer,owner, consignee
or their agent is liable to pay demurrage charges for storage of goods;
4. As per paragraph 24 of our judgment;
5. The answer to question number 5 is really in two parts:first, as
to whether carrying goods in a container would make any difference to
the position that only the owner of the goods or person entitled to the
goods is liable to pay for demurrage; and second, as to whether the Port
Trust is obliged to destuff containers that are entrusted to it and return
empty containers to the shipping agent.The answer to the first question
is contained in paragraphs 45 to 51 of our judgment. The answer to the
second question is that a container which has to be returned is only a
receptacle by which goods that are imported into India are
transported.Considering that the container
may belong either to the
consignor, shipping agent, ship-owner, or to some person who has leased
out the same, it would be the duty of the Port Trust to destuff every
container that is entrusted to it, and return destuffed containers toany
such person within as short a period as is feasible in cases where the
owner/person entitled to the goods does not come forward to take delivery
of the goods and destuff such containers.What should be this period is to
be determined on the facts of each case, given the activities of the port,
the number of vessels which berth at it, together with the volume of
goods that are imported. While it does not lie in the mouth of the Port
Trust to state that it has no place in which to keep goods after they are
destuffed – as in the facts in the present case – yet a court may, in the
facts of an individual case, look into practical difficulties faced by the
Port Trust.This may lead to the “short period” in the facts of a particular
case being slightly longerthan in a case where a port is less frequented,
and goods that are stored are lesser in number, given the amount of
space in which the goods can be stored.
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83. Having answered the questions that have been posed before
this Court, we do not, on the facts of this case, think that the justice of
the case demands that we should interfere with the impugnedHigh Court
judgment. The steamer agents themselves did not dispute liability to pay
ground rent upto 75 days before the High Court, and have admittedly
paid the said charges long ago. As a matter of fact, the steamer agents
paidground rent even beyond the period of 75 days – the High Court
having ordered the Appellant Port Trust to recompute the liability of the
steamer agents, and return the balance to the parties concerned within
two months from the date of receipt of a copy of the impugned judgment.
To order a refund of ground rent paid for 75 days to the steamer agent,
and direct the Board to then recover the same from the importer, consignor
and/or the owner of the goods at this late stage of the proceedings would
not be in the interest of justice.
84. Accordingly, we dispose of the appeals that have been filed
against the impugned High Court judgment. The impugned judgment is
set aside on one question of law, namely, that the expression “may” in
sections 61 and 62 of the MPT Act cannot be read as “shall”, subject to
the caveat that as the ‘‘State” under Article 12 of the Constitution, a
Port Trust must act reasonably, and attempt to sell the goods within a
reasonable period from the date on which it has assumed custody of
them.
Divya Pandey
Reference
answered.
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
AREBEE STAR MARITIME AGENCIES PVT. LTD. [R. F. NARIMAN, J.]