Case: Trustees of The Port of Madras Through Its Chairman Vs. K. P. V. Sheikh Mohd. Rowther and Company Private Limited and Another

1. The question before the High Court was whether the demurrage charges, harbour dues etc. payable to the Port Trust of Madras were to be recovered from the "steamer agent" The High Court on the facts of the case came to the conclusion that the consignee was liable to pay the charges. We reproduce hereunder with approval the reasoning of the High Court in thisthe case of the above provisions, the question is as to who is liable for the demurrage charges in relation to the goods which were in the custody of the Port Trust till they were ultimately confiscated by the Customs authorities. 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 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 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."

Court's reasoning:
The High Court distinguished the judgment, from the facts of the present case, on the followingas 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."We agree with the reasoning and the conclusions reached by the High Court. We are further supported in this behalf by the judgment of this Court in International Airports Authority of India v. Grand Slam International ( 1995 (3) SCC 151 : (1995) 1 Scale 859 ), where this Court held as under : (SCC p. 187, parathe above decisions of this Court it becomes clear that an authority created under a statute even if is the custodian of the imported goods because of the provisions of the Customs Act, 1961, would be entitled to charge demurrage for the imported goods in its custody and make the importer or consignee liable for the same even for periods during which he/it was unable to clear the goods from the customs area, due to fault on the part of the Customs authorities or of other authorities who might have issued detention certificates owning such fault."73 ofcannot do better than to reproduce the reasoning of the Division Bench of the High Court which is asfive appeals come together because of a common issue raised namely, whether customs duty was leviable in respect of stores supplied out of the bonded stock to what are called daughter vessels What appeared to have happened was that foreign vessels, super tankers owned or operated by foreign shipping companies, carried wheat and milo from the United States for unloading in this country. But the super tankers, due to their deep draft requirements, could not enter the ports for loading their cargo, and they naturally had to use what are called daughter vessels for the onward carriage of the goods to the ports. This transaction took place as early as 1967. But, in July 1969, the Assistant Collector of Customs who is the appellant, served notices on the respondents, claiming certain amounts as customs duty payable in respect of the stores supplied out of the bonded stock to the daughter vessels. Nowas filed. The learned Judge, who dealt with the writ petitions, felt that apart from the fact that nowas filed even on substance, the demands could not be supported. He, therefore, quashed the demand orders. Hence these appealsMr. Parasaran, appearing for the Department, has aready and seeks leave to file it. In the particular circumstances, we have granted leave. Thewill be treated as part of the record in the appeal. But, in our opinion, themakes no difference whatever to validity of the order made by the learned Judge. The vessels, which brought wheat and milo, indisputably were foreign vessels owned or operated by foreign shipping companies, but because of the defects which we have mentioned, they could not be berthed in the port premises themselves for the purpose of unloading. They, therefore, employed daughter vessels. These daughter vessels could not be treated in any way different from the foreign vessels from which cargo had to be discharged. The daughter vessels were only a means adopted or used in order to enable the discharge of the cargo on land. The supplies made from the bonded stock should, therefore, in substance and in truth, be taken to be supplies made to foreign vessels. If that be so, as we think it was the case, no customs duty would be leviable."