Gujarat High Court
Amira Foods (India) Ltd & vs Board Of Trustees Of The Port Of ... on 19 April, 2017
Author: C.L.Soni
Bench: C.L. Soni
C/SCA/53/2002 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 53 of 2002
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE C.L. SONI
=============================================
1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of No
the judgment ?
4 Whether this case involves a substantial question of No
law as to the interpretation of the Constitution of
India or any order made thereunder ?
=============================================
AMIRA FOODS (INDIA) LTD & 1
Versus
Board OF TRUSTEES OF THE PORT OF KANDLA/KANDLA PORT TRUST
& 1
=============================================
Appearance:
MS MINI M NAIR, ADVOCATE for the Petitioners
MR DHAVAL D VYAS, ADVOCATE for the Respondent No. 1
RULE SERVED for the Respondent No. 2
=============================================
CORAM: HONOURABLE MR.JUSTICE C.L. SONI
Date : 19/04/2017
ORAL JUDGMENT
1. By the present petition filed under Article 226 of the Constitution, the petitioners seek to quash and set aside the decision dated 21.07.2001 of respondent no.2 - Chairman, Page 1 of 17 HC-NIC Page 1 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT Board of Trustees of the Port of Kandla / Kandla Port Trust at Annexure - FF to the petition. By the impugned decision, the petitioners are held jointly and severally liable to pay demurrage charges of Rs.43,37,760/- as demanded in the notice dated 04.08.2000 issued under Section 56 of the Major Port Trusts Act, 1963 ("MPT Act").
2. As per the case of the petitioners, M/s. RASL Enterprises of USA had agreed to purchase 5000 Metric Tone (MT) of double polished PR-106 (15% broken) of rice crop 1997 from the petitioner no.1 and such rice would export from the Port of Kandla to the Port of Nikolev, Ukrain. To transport the cargo from Kandla Port to Nikolev Port, the petitioners entered into charter party on 24.03.1998 with one Chinese Shipping Company through the vessel MV Rongjiang from Kandla to Nikolev and also to transport 7000 MT of rice from Kandla to Novorossisk. For such purpose, petitioner no.1 obtained necessary approval from the Director General of Shipping, Ministry of Surface Transport on 03.04.1998 for chartering the vessel. On 30.03.1998, petitioner no.1 filed three shipping bills bearing nos.007732-34 with the custom authority for the export of 5000 MT of rice. On 04.04.1998, the rice cargo consisting of 60731 bags of 50 kilograms each totaling to 3036 MT to be exported against the contract of 5000 MT was brought in the port area and stacked in the transit shed. On Page 2 of 17 HC-NIC Page 2 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT 07.04.1998, vessel MV Rongjiang arrived at the Kandla Port, however, the petitioners were unable to load the cargo on the said vessel since during the period of the stay of the vessel at Kandla, the Letter of Credit opened by the same buyer for 7000 MT of rice for Novorossisk was not extended and, therefore, it was not economically viable for the owner of the vessel to load only 5000 MT of cargo against charter party for 12000 MT of price. The petitioner no.1 entered into a charter party with M/s.Tiger Lines Ltd., Malta on 30.04.1998 for transporting 5000 MT rice part which was lying in the transit shed. However, the vessel MV Indian Tiger of M/s. Tiger Lines Ltd. which arrived at Kiandla on 07.05.1998 refused to take the cargo of petitioner no.1 lying in the transit shed due to non-availability of other cargo. It was then on 31.05.1998, the petitioners shifted the cargo from the transit shed to the warehouses of the Kandla Port Trust on rental terms as the next vessel MV Romanati for transportation of the rice under charter party dated 28.05.1998 was to arrive at Kandla only on 15.06.1998. As per the further case of the petitioners, on 09.06.1998, a devastating cyclone hit the Kandla Port causing tremendous damage to the port and the warehouses of the port wherein cargo of various exporters and importers had stored. In view of the cyclone, the port was damaged and become non-operational, the vessel MV Romanati did not arrive at the port on 15.06.1998 and the cargo stored in the Page 3 of 17 HC-NIC Page 3 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT rental warehouse which was partly damaged in the cyclone could not be exported and the Kandla Port Trust authority gave directives to remove the damage cargo from its warehouses. In view of such directives of the Kandla Port Trust, the petitioners were required to destroy the damage cargo under the supervision of the representative of the port trust and removed the balance cargo to enable the Kandla Port Trust to repair its warehouses. The damaged cargo destroyed of 50 MT to 250 MT respectively were destroyed and balance cargo was, thereafter, under the directives of the Kandla Port Trust, moved out of the port area. Such cargo had moved out of the port area was repacked under the supervision of buyer's surveyor and petitioner no.1 entered entered into a charter party for transport of 4000 MT of the rice from Kandla to Nikolev and obtained necessary permission from the Director General of Shipping, Ministry of Surface Transport. The petitioners filed fresh shipping bills for total of 4200 MT and loaded 3907 MT on the vessel MV Ocean Line III for transport under the earlier contract dated 16.02.1998 to Nikolev which included the repacked rice and some further quantity of rice and for permitting export of such cargo, the Kandla Port Trust raised a bill for storage charges/rentals and demurrage charges with interest for some of Rs.10,59,822/- which was paid by the petitioners. As averred by the petitioners, the petitioners were shocked and surprised when Page 4 of 17 HC-NIC Page 4 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT the Kandla Port Trust raised further demurrage charges to the tune of Rs.43,37,760/- on 21.08.1998. Against such demand of the Kandla Port Trust, the petitioners made representation, however, the petitioner no.1 was asked to pay such amount within seven days, but since the petitioners were threatened to stop providing any service in the Kandla Port Trust, the petitioners constrained to file Special Civil Application No.3889 of 1999 against the action of the Kandla Port Trust for demanding the additional demurrage charges. In the said petition, the Court quashed the impugned demand with a liberty to the Kandla Port Trust to give notice under Section 56 of the Act and to decide the matter according to law after giving opportunity to the petitioners. The petitioners then received show-cause notice under Section 56 of the Act on 04.08.2000 to which the petitioners filed their reply on 21.08.2000. The petitioners also approached the Tariff Authority of the Major Port by representation dated 29.08.2000. However, the Tariff Authority did not entertain the representation on the ground that this Court has quashed the demand of additional demurrage charges. Still, however, fresh bills of demurrage of Rs.43,37,760/- were issued to the petitioners and, thereafter, the petitioners were heard pursuant to the show-cause notice and the petitioners also gave further written submission addition to the reply to the show-cause notice and the Chairman of the Kandla Port Trust Page 5 of 17 HC-NIC Page 5 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT passed the impugned order.
3. Learned senior advocate Mr.Mihir Thakore appearing with learned advocate Ms.Mini Nair for the petitioners submitted that the additional demurrage charges sought to be recovered from the petitioners were on the basis of the change / amendment made by the Board of Kandla Port Trust in the conditions framed by the Board vide resolution no.71 dated 09.01.1997 on availability of rebate of 50% of damurrage charges for export cargo. Mr.Thakore submitted that on account of amendment made in conditions rebate of 50% on demmurage charges was made available only on physical export of cargo not otherwise. Mr.Thakore submitted that as provided in Section 52 then existed in the Act, in absence of sanction from the Central Government no change in any condition framed by the Board shall have effect. Mr.Thakore submitted that Act No.15/1997 (to be referred to as "the amending Act") came into force w.e.f. 09.01.1997, i.e. the date on which the Board passed the resolution no.71 and by amending Act, while deleting Section 52 of the Act, the amendment was also brought in Section 48 of the Act and other provisions and by virtue of such amendment in other provisions only the authority to be constituted will be competent to fix the scale of rates and other conditions, however, since, the authority was not appointed, the scale of Page 6 of 17 HC-NIC Page 6 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT rates and conditions framed by the Board as existed shall continue to operate and the amended conditions could not be allowed to operate to the prejudice of the petitioners. Mr.Thakore submitted that even otherwise, the same cargo which was removed from the warehouse of the port as per the directives of the Board after destroying the cargo damaged during the cyclone was again exported and, therefore, the petitioners remained entitled to claim benefit of free days, as also the benefit of rebate on export cargo as existed prior to the resolution no.71 passed by the Board. Mr.Thakore submitted that the demand of additional demurrage charges is not only contrary to the scale of rates for demurrage charges but also without authority of law and, therefore, such demand is required to be quashed.
4. Learned senior advocate Mr.Mihir Joshi appearing with learned advocate Mr.Dhaval D. Vyas for the respondents submitted that by resolution no.71, the Board, in fact, has not made any amendment or change in the statement of conditions either concerning the scale of the rate or any allowances. Mr.Joshi submitted that the Board has just clarified that the rebate of 50% on the rates of demurrage charges would be available on physically exported cargo. Mr.Joshi submitted that rebate of 50% on demurrage charges was never available on the cargo not meant for export and, therefore, the benefit of the rebate Page 7 of 17 HC-NIC Page 7 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT would be naturally available only on physically exported cargo. Mr.Joshi submitted that if the rebate was available on the export cargo, the clarification made in the matter of giving allowance of rebate for export cargo could not be read as amendment or change in the statement of conditions framed by the Board. Mr.Joshi submitted that even otherwise, since by amending Act, Section 52 stood deleted w.e.f. 09.01.1997, the Board was not required to take any sanction from the Central Government when resolution no.71 was passed. Mr.Joshi submitted that since the Authority was not appointed, as per of the provision of Section 29(3) of the Act, the Board was authorized to fix the scale of rates and such provision brought in by amending Act to ensure that there remains no vacuum for the purpose of fixing the scale of rates and providing for conditions concerning the scale of rates. Mr.Joshi submitted that as recorded in the impugned order, the petitioners themselves could not export their cargo and additional demurrage charges demanded was for the period before the cyclone came. Mr.Joshi submitted that the petitioners were also not found to have, subsequently, exported the same cargo. Mr.Joshi submitted that when the petitioners asserted that they exported the same cargo, it becomes disputed question of fact which may not be gone into by this Court in exercise of power under Article 226 of the Constitution. Mr.Joshi submitted that in any case the fact remains that Page 8 of 17 HC-NIC Page 8 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT during the period for which the demand for additional demurrage charges is made, the petitioners stored their cargo in the port area and, therefore, they become liable for payment of demurrage charges without benefit of free 15 days and the rebate of 50%. Mr.Joshi, thus, urged to dismiss the petition.
5. The Court, having heard learned advocates for both the sides, finds that after this Court passed the order dated 17.07.2000 in the petition being Special Civil Application No.3889 of 1999 preferred by the petitioners for quashing the bill demanding additional demurrage charges of Rs.43,37,760/- from the petitioners, with a liberty to the Board to issue notice under Section 56 of the Act and to give an opportunity of hearing to the petitioners and then to decide the matter in accordance with law, the petitioners were issued show-cause notice dated 04/09.08.2000 under Section 56 of the Act, copy whereof is annexed at Annexure - AA calling upon the petitioners to show-cause as to why the difference of above amount of demurrage charges should not be recovered from them. It appears that the petitioners submitted the reply to the show- cause notice and, thereafter, hearing was kept and the petitioners presented the written submissions. The Chairman of the Board has recorded the following finding and reasoning in the impugned order.
Page 9 of 17
HC-NIC Page 9 of 17 Created On Sat Aug 12 06:58:41 IST 2017
C/SCA/53/2002 JUDGMENT
"It is party's own submission that the cargo had been stored from 4.4.1998 and the storage was completed by 7.4.1998. The cargo remained in the Transit Shed No.I till it was completely removed to the rental godowns by 31st May, 1998. The party has submitted that despite their efforts they could not ship the goods during this period. It is pertinent to note that the party's own averment made in the memo of the Petition shows that the original validity of the Letter of Credit in case of M/s.OOO Patriot had itself expired on 1st April, 1998 and the cargo for shipment had arrived on the transit shed only from 4th April, 1998, till 7th April, 1998. Thus, the party had absolute knowledge, understanding that their Letter of Credit in case of M/s.OOO Patriot had expired on 1st April 1998 itself, The party had taken a sheer chance for brining cargo in this behalf within the transit shed. The party's expectation of having the Letter of Credit extended cannot be permitted to be pleaded by the party for denial of their liability to pay the demurrage. It is further pertinent to note that when the company itself has submitted that the load of 5000 MT was refused by the Vessel, which was on account of M/s. RASL Enterprises at Nikolaev Port then the same also cannot be held against the Port for denying the payment of demurrage charges on this account. Similarly, it is company's own say that MV Indian Tiger also did not accept the cargo for no fault on the part of the respondent Port. Thus, the lying of the cargo on the transit shed was absolutely company's own decision and for their decision, they have to be made responsible and their failure in shipping the cargo cannot be attributed to any force, major events or an Act of God and therefore, for such reasons, the company cannot be permitted to make a plea that the demurrage be waived.
The company has in their own statement made it clear that they had shifted the cargo from transit shed and stopped incurring the demurrage latest by 31st May 1998. Thus, the company's decision of shifting the cargo could have been well affected even earlier also. For company's error in assessment and/or judgment or its failure in striking appropriate business deal with the vessel owners cannot permitted to be pleaded against Kandla Port Trust for evading the statutory liability of demurrage. It is further pertinent to note that the suggestion of the company that had the cyclone not hit the Port on 9th June, 1998, they would have certainly shipped the cargo in MV Romanati by 15th of June, 1998 seems to be a plea taken with a view to claim Export Concession available to the physically Exported Cargo and the Cargo in respect whereof there were definite attempts for Shipment. This is impermissible to the Company as it is very clear from the development of the Page 10 of 17 HC-NIC Page 10 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT events that the company on it own had decided to cancel the Shipping Bill as it is evident from the documents on record. The company's averment in the petition shows that they had applied for cancellation of Shipping Bill on 14th June and 17th June 1998. It is pertinent to note that as per their own say, the goods were badly damaged and they were not to fit for export due to cyclone. In view of this, they had requested the Custom Authorities to cancel the Shipping Bill. Thus, the cancellation of the Shipping Bill cannot be attributed to Kandla Port Trust at all......"
On above finding and reasoning, the Chairman of the Board came to the conclusion that the representations made before him were not acceptable and held the parties jointly and severally liable to pay the demurrage charges as demanded in the notice dated 04.08.2000. The Court does not find that the finding recorded by the Chairman of the Board is in any way erroneous. Apart from this, the Court since not sitting in appeal over the decision of the Chairman, is not to interfere with the finding recorded by the High Court in exercise of power under Article 226 of the Constitution.
6. However, the contention is raised that since the same cargo was exported, the petitioners remained entitled to the benefit of free days and 50% rebate on demurrage charges. Whether the petitioners exported the same cargo is a question of fact and not to be decided in the petition filed under Article 226 of the Constitution. The Chairman of the Board has dealt with such aspect in the impugned order as under :-
Page 11 of 17
HC-NIC Page 11 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT ".....In fact, the reading of the instructions issued by the Kandla Port Trust on 18th June, 1998 would clearly show that it is only in respect of destroying the cargo which is damaged. The cyclostyled letter states as under:-
"While taking the delivery of sound cargo it is requested to destroy the suggested damaged cargo simultaneously alongwith sound cargo. The damaged cargo should be destroyed at outside West Gate II in presence of your representative; security staff and Shed Master and a joint certificate should be given for the damaged cargo destroyed.
You are therefore requested to comply the above instruction strictly"
This Instruction is sought to be construed to be Instructions compelling the petitioner to take delivery of the cargo. In fact, the said Instruction cannot be interpreted to mean that it was compulsion upon the parties to remove their cargo. In fact, it was a general Circular issued to all the parties that in case, the parties are taking delivery then they have to destroy the damaged Cargo with a view to see to it that no party is having any temptation to put this Cargo in human consumption. This Instruction is in fact wrongly interpreted with a view to create a ground for evading the demurrage. It is pertinent to note that even the parties understanding at the relevant time was not as it is projected in their representation. The parties have submitted necessary undertaking about payment of Port charges before effecting the delivery. The parties have no where indicated even remotely that they intent to ship the same cargo later on. Nor did they record in writing that they were taking the cargo out of the Port premises but they intend to ship the same cargo when the situation is normalized. In fact, the conduct of the party clearly suggested that they wanted to take advantage of their Exporting the rice later on 9th September 1998. This cannot be said to be Exporting of the same cargo. It is pertinent to note that it was party's own say that the Cargo had been badly damaged and it was not fit for Export. Therefore, the subsequent lot of cargo which was exported on 9th September 1998 cannot be said to be the same goods. The said plea is made only with a view to take the advantage of the concession available to the physically Exported Cargo. It is pertinent to note that the two transactions were different and the same can not be said to be a single transaction. As per the statutory requirement, the parties are required to make immediate payment for using the port facilities. This being a statutory requirement, it can not be permitted to be evaded by the parties on grounds mentioned in the representation.
Page 12 of 17
HC-NIC Page 12 of 17 Created On Sat Aug 12 06:58:41 IST 2017
C/SCA/53/2002 JUDGMENT
The aforesaid facts and narrations of the development of incident show that the parties have been trying to take shelter of the Cyclone for evading their liability to pay Demurrage under the statutorily framed Scale of Rates."
7. The Court does not find any error in reaching to the above conclusion by the Chairman. When it is the case of the petitioners that they removed cargo from port area and part of which was destroyed and then repacked the cargo with some further quantity of rice as averred in the petition, the Chairman could not be said to have committed error in holding that the subsequent lot of cargo exported on 09.09.1998 by the petitioners was not same cargo and, therefore, no interference is called for in the conclusion reached by the Chairman on such aspect by this Court in exercise of power under Article 226 of the Constitution.
8. As regards the contention that the Board has no power to make change in the conditions framed for services to be rendered concerning the scale of rates after amending Act, it is required to note that though as per amending Act, on constitution of Authority, it will be for such Authority to exercise power for framing conditions concerning the scale of rates, however, till the authority was constituted, and since Section 52 was deleted, the Board could have exercised such powers as authorized under Section 29(1)(a) and (3) of the Act Page 13 of 17 HC-NIC Page 13 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT which reads as under:
"29. Transfer of assets and liabilities of Central Government, etc. - (1) As from the appointed day in relation to any port -
(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;
(b) ..... ..... .....
(c) ..... ..... .....
(d) ..... ..... .....
(e) ..... ..... .....
(f) ..... ..... .....
(2) ..... ..... .....
(3) Notwithstanding anything contained in clause (a) of sub-
section (1), the right to fix rates vested in the Board shall vest in the Authority as from the date it is constituted under sub- section (1) of section 47A]"
9. The right to fix the rates when specifically given to the Board in Sub Section (3) of Section 29 of the Act till the Authority is constitute, could be taken to have included the right to make changes in the conditions concerning fixation of the scale of rates. If such right is not read therein, there would have been vacuum in the matter of exercise of such rights with the result that even if exigency demanded to exercise such rights, the Board would be left with no power to deal with the emergent situation.
10. Learned senior advocate Mr.Thakore, however, submitted that the right to fix the rates given under Sub Section (3) of Section Page 14 of 17 HC-NIC Page 14 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT 29 of the Act would not include making changes in the conditions framed by the Board and, therefore, after deletion of Section 52 from the Act, the unchanged conditions would continue till Authority was constituted. Mr.Thakore relied on the judgment of the Hon'ble Supreme Court in the case of State of Maharashtra Vs. The Central Provinces Manganese Ore Co. Ltd. reported in (1977) 1 SCC 643, especially, the observation made in paragraph no.22 which reads as under:
22. A principle of construction contained now in a statutory provision made in England since 1850 has been:
"Where an Act passed after 1850 repeals wholly or partially any former enactment and substitutes provision for the enactment repealed, the repealed enactment remains in force until the substituted provisions come into operation".
(See: Halsbury's Laws of England, Third Edn. Vol. 36, P. 474; Crales on "Statute Law", 6th Edn. p.386). Although, there is no corresponding provision in our General Clauses Acts, yet, it shows that the mere use of words denoting a substitution does not ipso facto or automatically repeal a provision until the provision which is to take its place becomes legally effective. We have, as explained above reached the same conclusion by considering the ordi- nary and natural meaning of the term "substitution" when it occurs. without anything else in the language used or in the context of it or in the surrounding facts and circumstances to lead to another inference. It means, ordinarily, that unless the substituted provision is there to take its place, in law and in effect, the pre-existing provision continues. There is no question of a "revival".
11. The above observations as rightly submitted by learned senior advocate Mr.Joshi will not apply in the facts of the case. The Page 15 of 17 HC-NIC Page 15 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT above observation would apply in a case where existing provisions are substituted by new provisions and the substituted provisions are not brought into force. Such is not the facts situation in the present case.
12. However, even if the Court is agree with the learned senior advocate Mr.Thakore that Sub Section (3) of Section 29 of the Act would not authorize the Board to make change in the conditions concerning the sale of rates, the Court finds from the resolution no.71, the copy whereof is placed at Annexure - B, that it is passed to interpret the provisions of the scale of rates in respect of demurrage charges. The interpretation given in this resolution as regards the rebate of 50% demurrage charges for export cargo is that rebate of 50% in demurrage rates shall be allowed only on cargoes physically exported but not otherwise. Such could be read as clarificatory note. Before such interpretation was done under resolution no.71, rebate of 50% in demurrage charges was available on export cargo which would mean that if the cargo was meant to be exported then only rebate of 50% would be available. The intention was very clear that every Cargo brought in port area would not carry benefit of rebate of 50% on demurrage charges. In that context, by clarificatory note under Resolution No.71, the Board let everybody knew that rebate of 50% in demurrage charges could be made available only if cargo was Page 16 of 17 HC-NIC Page 16 of 17 Created On Sat Aug 12 06:58:41 IST 2017 C/SCA/53/2002 JUDGMENT actually and physically exported and not otherwise. The Court finds that interpretation in the provisions of scale of rates under Resolution No.71 could not be thus taken as any change in the conditions framed by the Board concerning the scale of rates of demurrage charges or concerning benefit of rebate to be given on export cargo. Therefore, when it was within the power of the Board to make such interpretation or to clarify its existing provisions concerning scale of rates, the question whether the Board could have exercised power under Section 29(3) of the Act or whether the sanction of the Central Government was required or not, pale into insignificance.
13. The Court finds that there is no substance in the challenge to the impugned decision. The petition, therefore, is required to be dismissed. It is accordingly, dismissed. Rule discharged. Interim relief, if any, stands vacated.
(C.L.SONI, J.) vijay Page 17 of 17 HC-NIC Page 17 of 17 Created On Sat Aug 12 06:58:41 IST 2017