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TMI Blog2011 (9) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority for Major Ports) Orders dated 10/11/1999, 19/07/2000 and 13/09/2005, is the point. 2. Altogether nine Writ Appeals have been preferred against the common judgment dated 16/09/2002 in OP 9730 of 2000 and five other original petitions (total six original petitions). The above original petitions were filed by concerned Shipping Agents mainly for destuffing the cargo and to release the containers; to stop appropriation of any amount towards 'Ground Rent' from the 'pre-deposits' effected by them and also to refund the excess amount appropriated. OP 21041 of 1999 is a similar petition (as amended) filed by another Shipping Agent; which however was omitted to be tagged along with the connected cases, when they are heard and decided as per the common judgment dated 16/09/2002. 3. Writ Appeals 2549, 2564, 2565, 2567, 2569 and 2576 of 2002 have been preferred by the Shipping Agents; while Writ Appeals 2783 and 2791 of 2002 have been preferred by the Port Trust challenging the verdict in OP Nos. 9690 and 9648 of 2000 (in respect of the very same cause of action forming the subject matter of Writ Appeals 2569 and WA 2576 of 2002 respectively preferred by the conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention of the Shipping Agents that they were not liable to satisfy the 'Ground Rent' in respect of the containers, holding that only on issuance of the 'Delivery Order', would the ownership over the goods stand transferred to the consignee, leaving the dispute between the consignee and the Shipping Agents to be decided by way of Civil Suit / Arbitration (however, ordering destuffing in a phased manner); which led to the appeals preferred by the Shipping Agents. In two cases (OP Nos. 9648 and 9690 of 2000), some wider relief was given, referring to the letters given by the Shipping Agents to cause destuffing and confining the liability till such date, which led to the appeals filed by both the concerned Shipping Agents and also by the Port Trust, to the extent they were aggrieved. The observation made by the learned Judge, that the dispute between the Consignee and the Shipping Agents had to be resolved by approaching the Civil Court or by invoking the remedy by way of Arbitration, based on the terms of the agreement in between, forms the subject matter of challenge in WA 2611 of 2002 filed by the Consignee. 8. In WP (C) 32191 of 2004, though Delivery Order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it was impossible to store destuffed cargo in the premises. It is also stated that the Port is empowered under the 'MPT Act' to prescribe the scale of rates for the services provided by it to the persons concerned. The Port filed an additional affidavit dated 12/11/2001 stating that, it was open for the Consignee or the Steamer Agents to destuff the cargo in bonded warehouses to minimise payment of Ground Rent Charges; however conceding that the Port was aware of the identity of the importers, through the information furnished by the Clearing agents. The Port filed an additional counter - affidavit dated 17/06/2002 as well, producing letters written by the Shipping Agents to retain the cargo till their consent was obtained / produced. 10. The Customs has filed statement / counter - affidavit in different cases, contending that destuffing of the goods is a matter which comes absolutely within the purview of the Port as stated by the petitioner; that the Customs had not prevented destuffing of the goods; that it is the responsibility of the Importer to arrange destuffing and present the goods for examination by the Customs; that the Customs actually wanted an earlier d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 26/07/1999 declining the request. The relevant portion reads as follows: On verification of records it is noticed that Bills of Entry have been filed by importers in all these cases and hence your submission that the cargo is delinquent is not correct. As regards permission to move these containers to CWC - CFS , Pettah and to de - stuff the cargo there, same requires the concurrence of the importer. Based on the above proceedings, it is contended that all necessary steps were taken by the Shipping Agents, moving the Port and the Customs, to have the cargo destuffed, either in the Port premises or by taking out which was not agreed upon and that there was no fault or lapse on their part. Further, the Central Board of Excise and Customs, as per Circular 50/97 / CUS dated 17/10/1997, had issued guidelines for disposal of unclaimed / uncleared cargo and for sharing the sale proceeds on the basis of 50:50 between the Port and Customs in respect of the cargo landed prior to 31/12/1996. In view of severe congestion felt at all Ports, the same course was followed in respect of all the cargo landed till 31/12/1998 as well, as per Ext. P7 Circular, holding that no charge woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in respect of the services rendered by the Port or in respect of the use of the premises / infrastructure made available by the Port. It was pointed out that the appellant, by their letter dated 12/02/2000 called upon the Port to sell the cargo as per the provisions of the Major Port Trusts Act, 1963, but no action was taken by the Port to destuff the containers and sell the cargo, which is contrary to the statutory duty on the Port to sell the goods by public auction which remained uncleared for a period exceeding 30 days. The learned counsel submitted that the provisions pertaining to cargo demurrage are clearly applicable here as well, since the services provided by the Port are in respect of the 'goods' kept in the containers, for which the Port is entitled to charge demurrage on the uncleared cargo as provided under Section 48(1) (d) of the Major Port Trusts Act; but not any Ground Rent charges, the container being only a device for the purpose of storage of cargo and the retention is only due to failure to clear the cargo and not due to failure to remove the container. The learned counsel further submits that it is the Bill of Lading in favour of the consignee or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 4752/- which was still to be satisfied to the Port of Bombay (now Mumbai) in respect of the default in clearing the goods imported on 05/02/1972. Since the goods were not cleared, the Port issued letters to the Shipping Agent to furnish the name and address of the Consignee and since it was not responded, the Shipping Agent was informed of the proposed sale, requesting the same to be communicated to the Consignee. Since no further steps were taken by the Shipping Agent, in spite of further notice asking to clear the goods within 10 days, satisfying the charges payable to the Port, the goods were sold in public auction on 02/09/1976, realising a sum of ₹ 62,000/-, which was appropriated against the Port charges, Customs duty etc.; followed by filing a Civil Suit before the Court of Small Causes for realising the balance amount of ₹ 4572/- wherein the Shipping Agent was arrayed as the second defendant. 17. The Trial Court exonerated the Shipping Agent (second defendant) which however was reversed in appeal, finally leading to the appeal before the Supreme Court. Though the amount involved was trivial, the Apex Court observed that, having regard to the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent TAMP Order dated 13/09/2005 clarifying the position was not the subject matter or the point highlighted. As such, the scope of consideration in these appeals / original petition / writ petition stands restricted to the scheme of the Statute and the effect of the TAMP Orders with regard to fixation / extent of liability on the Steamer Agents to pay the Ground Rent. 19. The sequence of events that led to the stalemate refers to the incidents which happened in 1998 when there were imports of 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 liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed time in view of the practical difficulties. The main points raised by the Cochin Port Trust in the joint hearing stands summarised in paragraph 7.3 of the TAMP order dated 13/09/2005, which includes the charging of Ground Rent beyond 75 days and non - issuance of delivery orders of Synthetic Rags by the Shipping Lines to the Consignees for non - satisfaction of the payments demanded from them (Sub-clause 'vi' and elsewhere). As observed in sub - clause 'ix' of paragraph 7.3, the Cochin Port requested the TAMP to amend its order by incorporating the following provisions: (a) the cargo items such as hazardous waste, perishable food items, etc., which cannot be destuffed in the port premises due to the very nature of the cargo, especially being FCL, the port trust shall not be insisted upon to destuff the containers till such time they are disposed of or removed by the shipping line or the consignee from the port premises. (b) The cargo items brought into the country in contravention of the law of the land subjected to investigation by DRI, Customs, Environmental Agencies and restricted by PHO and Plant Quarantine officials, shall also not be insisted upon to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Section 3 and the powers of the Board are prescribed under various provisions so as to give effect to the Act. Section 29 deals with the transfer of assets and liabilities of the Central Government and by virtue of sub-section(1)(a), all property, assets and funds and all rights to levy rates, vested in the Central Government or, as the case may be, any other authority for the purposes of the Port immediately before such day, shall vest in the Board. 25. However, by virtue of introduction of Chapter VA providing for constitution and incorporation of Tariff Authority for Major Ports under Section 47A with such other incidental provisions, the power vested with the Board especially, with regard to the right to prescribe the scales of rates for the services performed by the Board and also in respect of such other matters / conditions, came to be vested exclusively with the TAMP. This necessitated introduction of sub-section (3) as well to Section 29 whereby, it was stipulated that notwithstanding anything contained in clause (a) of sub-section (1), the right to fix rates vested in the Board shall vest in the 'TAMP' as from the date it is constituted under sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 of the Indian Contract Act, 1872; while sub-section (7) says that after any goods have been taken charge of and a receipt given as above, 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 transshipped. 28. As mentioned herein before, prior to the constitution of 'TAMP' under Section 47A (brought into force w.e.f. 09/01/1997), the power to prescribe the scale of rates for the service performed by the Board or other persons and so also to stipulate the scales of rates and statement of conditions for use of the property belonging to the Port absolutely vested with the 'Board'. After introduction of Chapter VA giving shape to TAMP, such power came to be transferred to the said authority and the power vested with the Board was taken away including the authority to prescribe the fees for pilotage and certain other services, fixation of Port dues, consolidated rates for combination of services, port dues on vessels in ballast, port dues on vessels not discharging or taking in cargo, power to levy concessional rates in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to such goods for the time during which they may be retained. The consequence which follows the failure to pay the rates or rent payable to the Port or the freight, is stipulated under Section 61; while Section 62 deals with the disposal of goods not removed from the premises of the Port within the time limit. Sub-section (1) of both the above sections are relevant to the cases in hand and hence, are extracted below: 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 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 pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale as provided under Section 150 of the Customs Act specifying the manner of appropriation. To put it short, the scheme of the statute does not contemplate any liability to be satisfied by the Vessel Owner except to the extent as specified and the freight and other charges payable to them get top priority over other dues payable to the Government and also to the Port, if the lien is exercised in the manner as specified under sub-section (1) of Section 60. 30. The dispute involved in the instant cases pertains to the 'Ground Rent' Charges demanded / appropriated by the Port for retaining the goods kept in the containers at the Port premises, for the lapses on the part of Consignee / Importer in clearing the same on time. When the goods were sought to be destuffed by the writ petitioners / Shipping agents, the stand of the Port was that they cannot do so for inadequacy of the space, since, once the goods are destuffed, it will occupy more space and will lie there uncleared because of the dispute between the Consignee / Importer and Customs, who, in turn asked the writ petitioner / Shipping Agents to 'pressurise' the Customs (vide Ext. P4). When the writ peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms approved place and the Vessels have to discharge their goods only at such places. Section 61 and Section 62 of the MPT Act enable the Port to sell the cargo, if the rates / rent payable to the Port are not paid or the goods are not cleared within 30 days from the date of landing, to be effected after a period of two months, in the manner as specified. True, the expression given in the aforesaid provisions is 'may' and not 'shall'; based on which a contention is raised by the Port that there is no obligation to destuff the goods immediately on landing. But considering the scheme of the statute, particularly the very purpose of the enactment and constitution of the Board of Trustees, the wide powers conferred on the Central Government to give effect to the various provisions of the Act, the transfer of assets and liabilities of the Central Government to the Board under Section 29 and other provisions as discussed already, it gives a clear idea that the Port Trust is bound to provide the various services in connection with the shipping activities as referred to under Section 42 of the MPT Act. The power fixed upon the Board to prescribe the scale of rates and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riyanesh Knitters, (1999) 7 SCC 359 that, by virtue of the definition of the term 'owner' under Section 2(o) of the MPT Act and the relevant provisions of the Bills of Lading Act, the consignee of the goods named in the Bills of lading or every endorsee of the Bill of lading for the purpose of MPT Act, is regarded as the owner of the goods and that, it is from the owner that the recovery of charges under the MPT Act is provided in respect of such goods. The Port being a statutory authority, cannot allow the goods to lay around simply stating that there is no obligation to sell the same, despite the default on the part of the Consignee / Importer to clear the same, as observed by the Apex Court in Om Shanker Biyani v. Board of Trustee, Port of Calcutta and Others, (2002) 3 SCC 168 making it clear that such a course to have it sold on time, would have put to an end to the necessity to satisfy the demurrage, besides saving much valuable godown space, making available the same for further transaction. This is more so, in view of the further observation of the Supreme Court in Dwarkadas Marfatia and Sons v. Bombay Port Trust, (1989) 3 SCC 293 holding that the Port Trust is very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;container shipping' is of recent origin, as the handling and transportation of cargo in olden days was in bulk. The goods so unloaded in the port premises were to be cleared by the Consignee / Importer on the strength of the endorsement on the Bills of lading and on production of the delivery order from the Shipping Agents, subject to the satisfaction of the lien of the Owner of the Vessel on such cargo. The delay, if any, in clearing the cargo, as above, invited payment of demurrage, as provided, which was exclusively on the shoulders of the Consignee and not on the Vessel Owner / Shipping Agent. The goods, actually belong to the Consignee / holder of the Bill of lading on endorsement, whether it is lying in bulk or kept in the storage device by name 'container'. 38. By the advent of container era, more and more goods were facilitated to be transported / handled, generating more income by all concerned including the Ports and also lesser expenses and lesser time for the Consignee / Importer. By virtue of the very nature of transaction in containers, the Port also could handle more cargo as the goods contained in containers occupied only lesser space, thus earning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the alleged / admitted non availability of sufficient space or infrastructure to store the same after destuffing, but for keeping such goods in the containers themselves, the Port was indirectly making use of the containers as their storage sheds, retaining the containers without paying any consideration to the owners of the containers / Shipping Agent, at the same time charging Ground Rent for storing such containers. In other words, by retaining the containers without causing the goods to be destuffed, the Port was generating revenue by way of Ground Rent, for no fault of the Steamer Agents / Owners of the containers / Vessels. If the Port were conscious as to the inadequacy of the storage space and lack of sufficient infrastructure, they should have limited their extent and area of operation, instead of accepting more and more containers, attempting to render 'more and more service' (which cannot but be a defective service). Had the Port been vigilant and prudent enough in handling the cargo, causing the uncleared cargo to be sold in public auction by virtue of the enabling provision under Section 61 and Section 62, they could have legally aspired generating more incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sufficient storage space indefinitely, (at the same time with liberty to realise Ground Rent in respect of the containers lying there) is accepted, it may be equally open for such 'other persons' engaged under sub-section (3) of Section 42 to raise similar contention, also referring to some or other similar circumstances as well like inadequacy of staff, obsolete appliances / devises, insufficient infrastructure etc. This will only enable them to make unlawful gains by collecting Ground Rent in respect of the containers brought in, thus generating 'easy money' without doing any work deploying sufficient staff / infrastructure. This is not the scheme of the statute. As such, the contention raised by the Port that there is no obligation to have the goods destuffed within a reasonable time does not hold any water at all. 43. The only defence raised by the Port Trust to refuse the destuffing of cargo is the lack of sufficient storage space. It is to be noted that sufficient infrastructure to provide the various services contemplated under Section 42 of the MPT Act have necessarily to be provided by the Port, which is very much discernible from Section 37, Section 38 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quest, 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 public auction, realising the funds, to be apportioned in the manner as 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. 45. Obviously, scope and effect of the TAMP Orders as aforesaid has not been discussed by the learned Single Judge while passing the common judgment. So also, the learned Single Judge has not considered the power, scope and authority of the Tariff Authority on Major Ports constituted as per Section 47A of the MPT Act, but proceeds to hold that, it is for the 'Port' to prescribe the scale of rates and conditions (Paragraph 13) which obviously is a mistake. We find it difficult to sustain the judgment passed by the learned Single Judge as to fixation of the extent of liability and the same is accordingly set aside, declaring that the maximum liability of the Shipping Agent for paying the Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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