Calcutta High Court
The Board Of Trustees For The Port Of ... vs Swahom Shipping Services Pvt. Ltd. And ... on 12 May, 2006
Equivalent citations: AIR2006CAL239, AIR 2006 CALCUTTA 239, 2006 AIHC NOC 349
Author: Pinaki Chandra Ghose
Bench: Pinaki Chandra Ghose
JUDGMENT Pinaki Chandra Ghose, J.
1. This appeal is arising out of an order dated June 28, 2005 passed by Hon'ble First Court disposing of the writ petition inter alia holding that the Port Authority was negligent in not taking steps after expiry of two months as to disentitle it to claim demurrage charges. Further His Lordship held that the Port Trust is not entitled to get full demurrage charges till 4th April, 2003 which has to be. shared equally by the Port Trust and the writ petitioners and the balance demurrage should be waived by the Port Trust.
2. Facts of the case briefly are as follows:
On November 13, 2001 two loaded containers were landed at the Port of Kolkata per vessel 'Cambodia Star'. The petitioner No. 1 acted as the sub-agent of the Foreign Slot Charterer of Singapore in the matter of. clearance of the said two containers which arrived from Jakarta. The respondent No. 5 was the consignee.
3. No representation was made by the writ petitioner either to the Customs Authorities or to the Port Authorities during November, 2001 and October, 2002, During November, 2002 and March, 2003 the writ petitioner wrote several letters to the Customs Authorities requesting them to take steps under the Customs Act, 1962 as the consignee failed to take delivery in spite of requests. On April 4, 2003 the writ petitioner for the first time approached the Kolkata Port Trust informing it about the non-clearance of the consignment by the consignee and the Port Trust was requested to make arrangement for the return of the empty containers to the writ petitioner.
4. Port Authorities informed the writ petitioner that the containers were landed on 13th November, 2001, but no attempt was made to remove the containers from Dock to Off Dock Containers Freight Station. The Port Trust by its letter dated April 10, 2003 asked consent from the writ petitioners to put up the contents on sale in "as is where is basis" and the same should be done at the risk and responsibility of the writ petitioner. The writ petitioner did not give its consent for about seven months and thereafter filed this petition before the Hon'ble Court in November, 2003. Ultimately, Special Officer was appointed to sell the goods for a sum of Rs. 3 lakhs inside the containers and after deduction of the cost for sale finally the Hon'ble Court directed the Port Trust authorities to accept about Rs. 2 lakhs i.e. net sale proceeds towards the claim of the Port Trust. According to the Port Trust, a sum of Rs. 5,75,899/- became payable as container rent and a sum of about Rs. 30 lakhs became payable on account of Cargo rent as on 31st March, 2004 and further accrual of demurrage on container is Rs. 681.85 p. per day and for Cargo Rs. 3,569/- per day.
5. It is submitted on behalf of the appellant that the Hon'ble First Court was pleased to hold that the Port Authorities were negligent and its being contributory to this negligent act cannot be substantiated since the writ petitioners did not make out such case in the writ petition.
6. It is submitted that directions and/or decision of the Hon'ble First Court is contrary to the settled law on this issue. Under the statute Board of Trustees of a Port is entitled to charge demurrage even in respect of period during which importer was unable to clear goods from its premises for no fault or negligence on his part and the Learned Advocate relied upon a decision (I.A.A.I. v. grand Slam International). He also relied upon a decision (Trustees of Port of Madras v. Nagavedu Lungi & Co.)
7. It is further contended on behalf of the appellants that the responsibility to destuff the containers lies with the Port Trust authorities is thoroughly incorrect and is contrary to the ruling of the Hon'ble Division Bench of this High Court (presided over by His Lordship Ashok Kumar Mathur, C. J. and Girish Chandra Gupta, J.) in FMA No. 77 of 1996 reported in AIR 2002 Cal 179 (Board of Trustees for the Port of Calcutta v. Seahorse Shipping and Ship Management). He submitted that in the said decision the issue was whether steamer agent/slot charterer is liable to pay rent on cargo transported inc. containers in terms of the Board's resolution dated 21st October, 1982, the liability to pay container rent (not cargo rent) by the steamer agent/slot charterer was not disputed. The Hon'ble Division Bench held that the steamer agent-slot charterer is liable to pay cargo rent also as until the cargo is destuffed, the consignee cannot be made responsible for the cargo rent and as the responsibility to destuff the container is with the steamer agent/slot charterers, it was modified vide resolution dated 28th August, 1991 of the Board of Trustees. The said resolution, on the representation of the steamer agent/slot charterer, was modified vide resolution dated 28th August, 1951 whereby it was resolved that the demurrage on cargo i.e. cargo rent landed after 11th September, 1991 in respect of the slot charterer, the ratio of the Hon'ble Division Bench decision to the effect that the responsibility is with the steamer agent/slot charterer is in any way affected by the alternation of the said resolution of the Board. In any event, in the instant case we are only concerned about the rent payable by the slot charterer in respect of the container only and not cargo.
8. Mr. Roy Chowdhury further contended that there is no duty cast upon the Port Trust to enquire about the uncleared sale of goods within two months from the date of landing. Section 62 of the Major Port Trust Act can be invoked when the goods are outside the containers, but when the goods are within the containers then there is no application of Section 62 of the said Act. He further submitted that in any event Section 62 is only an enabling provisions and cannot be equated with an absolute obligation cast upon the Board as held by the Hon'ble Division Bench of this Court (presided over by V.K. Gupta, J. and Vidya Nand, J.) in an unreported decision in Matter No. 3691 of 1990 (Chairman, Calcutta Port Trust v. Star Iron Works Pvt. Limited) delivered on 18th September, 1997 (since ).
9. He further drew our attention to the Bye-law of the Port Trust being Bye-law No. 55 C. The said Bye-law may be reproduced hereunder:
Bye-law No. 55 C - Receipts for cargo contained in imported containers. The Trustees shall not accept custody of nor give any receipt for nor be responsible in any manner whatsoever in respect of any goods or cargo landed from any vessel in containers, except when such goods are unstuffed from the container by the Master, Owner or Agent of the vessel and directly received in a transit shed or a warehouse assigned for the purpose of by the Traffic Manager of his Authorized Officers.
10. Therefore, it is submitted that Port Trust has no right to accept the custody of the said containers in accordance with the said Bye-law.
11. He further drew our attention to Clause 7 under the scale of rates approved by the Tariff authority for Major Ports which is reproduced hereunder:
The storage charges on abandoned FCL containers/shipper owned containers shall be levied upto the date of receipt of intimation of abandonment in writing or 75 days from the date of landing of the container, whichever is earlier subject to the following condition:
i) The consignee can issue a letter of abandonment at any time.
ii) If the consignee chooses not to issue such letter of abandonment, the container Agent/Main Line Operator can also issue abandonment letter subject to the condition that.
(a) The Line shall resume custody of container along with cargo and either take back it or remove it from the port premises; and
(b) The Line shall pay all port charges accrued on the cargo and container before resuming custody of the container.
12. Mr. Roy Chowdhury submitted that the writ petitioner is guilty of laches and further negligence in not obtaining clearance from the Customs Authorities at the early stage and in not approaching the Port Trust for permission to destuff the containers. It would be evident from the facts that they approached the Port Trust Authorities after 17 months when the Port Trust Authorities wanted to cooperate with the petitioner by disposing of the goods after destuffing, but the writ petitioner did not respond to it and moved, this Hon'ble Court by this writ petition. Hence, he submitted that the Port Trust in any way is not at fault and is entitled to receive demurrage charges in full before handing over the empty containers lying with them. He further submitted that the appeal should be allowed with a direction to the respondents to take delivery of the two containers lying with the appellant upon payment of the demurrage charges with full accrual of demurrage on the container.
13. Learned Counsel appearing on behalf of the respondents contended that the Hon'ble Division Bench in FMA Nos. 77 of 1996, 772 of 1988 and FMA No. 725 of 1987 (reported in AIR 2002 Cal. 179) came to the conclusion that the steamer agent was liable to pay the container demurrage charges on the basis of the Circular of the Board of Trustees for the Port of Kolkata dated 21st October, 1982. It would be proper for us to reproduce the same hereunder:
Extract from the proceedings of the Trustees' 11th Meeting held on the 21st October, 1982.
Subject : Rent on cargo in containers
1. The Trustees by their Resolution No. 41 dated 22-2-1982 decided to allow three days rent-free period to importers for clearance of cargo carried in containers, provided the containers are destuffed within 15 days from the date of landing. This was done on the basis of the recommendation made by the Operations Committee.
2. It has been represented by the Trade that destuffing of containers is not under their control and their charges to be imposed by CPT for delay in destuffing if any, would be recoverable from the Shipping Companies Container Operators. The matter has been examined by the Traffic Manager and he has recommended that rent on containers be recovered as follows:
(i) The date of destuffing may continue to be treated as the date of landing of the cargo contained in the containers and rent on such cargo may be recovered in terms of Section 6(A) of the Trustees' Scale of Rates. In other words, in all cases whether destuffing be done within the free time of 15 days or thereafter, the consignee should always be given the benefit of 3 clear working days : after the date of destuffing of the containers, after which rent, if any, may be realized from the consignee,
(ii) Rent on cargo transported in containers may be recovered from the Marine Account of the Steamer Agent from the 16th day from the date of landing of the containers upto and inclusive of the date of destuffing, if destuffing is not done within the free time of 15 days.
(iii) As regards Nepal cargo contained in containers, the existing facilities i.e. 7 clear working days as rent free period after the date of destuffing may continue to be allowed to the consignee.
(iv) As regards hazardous cargo contained in containers, rent may be recovered under Section 19 of the Trustees' Scale of Rates irrespective of the date of destuffing. It may, however, be suggested that rent on such cargo from the date of landing of the container upto the date previous to the date of destuffing may be recovered from the Marine Account of the Steamer Agents and that rent on the same may be recovered from the importer from the date of destuffing upto the date of delivery.
3. Financial Advisor and Chief Accounts Officer have concurred in the recommendations made by Traffic Manager.
4. The sanction of the Trustees is requested to the proposal of Traffic Manager, as indicated above.
Shri S.K. Sen mentioned that he had raised certain points in a letter which he had just sent to Chairman.
It was agreed that the proposal, as presented to the Trustees, should be sanctioned. The points by Shrj Sen would be examined and placed before the Trustees at a subsequent meetings.
14. It is submitted that the writ petitioner No. 1/respondent No. 1 is not the Steamer Agent, but the sub-agent of the container owner. It is further submitted that the Boards Circular dated 21st October, 1982 has been replaced by a new Circular of the Board of Trustees held on 28th August, 1991 which became effective from 30th August, 1991. The relevant portion of the said Circular dated 28th August, 1991 is reproduced hereunder:
Demurrage on cargo contained in Containers, landed at Calcutta Dock System on or after 1st September 1991 shall be recovered from the Consignee clearing and Forwarding Agents instead of the concerned Steamer Agents/Slot Hirers.
15. In these circumstances it is submitted that the said orders and/or judgments of the Hon'ble Division Bench and the Hon'ble Single Bench cannot be made applicable in these changed circumstances.
16. It is also submitted that in the decisions of the Hon'ble Supreme Court it was held that Port demurrage would have to be paid because there is no fault on the part of the Port Authorities who under the statute are entitled to claim demurrage. It is submitted on behalf of the respondent that in the instant case Port Authorities were not at fault.
17. Learned Counsel appearing on behalf of the respondent also drew our attention to Section 45(2) of the Customs Act, 1962 and submitted that the respondent No. 1 cannot on its own destuff the material and remove the containers nor consent can be given to the Port Trust Authorities to destuff the containers. He also drew our attention to Sections 48 and 150 of the Customs Act, 1962.
18. Learned Counsel only strenuously urged before us that a duty has been cast upon the Port Trust Authorities as well as the Customs Authorities to ensure that goods imported but not for home consumption or warehoused or transshipped are to be sold after a particular period of time. Port Authorities are custodian of the containers. When containers are incurring demurrage, the Port Authorities ought to have taken steps to sell the consignments in containers. It is submitted that the respondent Nos. 1 and 2 are not liable to pay the demurrage charges accrued on the said containers.
19. He also relied upon a decision (Om Shankar Biyani v. Board of Trustees, Port of Calcutta) and submitted that the appellant should have taken a step to sell the goods. By not doing so, the appellant cannot have a right to charge demurrage charges from the respondent.
20. After hearing the Learned Counsel for the parties and after scrutinizing the facts in the instant case admittedly it appears to us that on November 13, 2001 goods arrived at the Port and were landed. There is no dispute that the respondent No. 1 acted as the sub-agent of Foreign Slot Charterer of Singapore in the matter. It further appears that there was no letter addressed to the Port Trust Authorities by the writ petitioner until April 4, 2004 for the first time requesting the Port Trust to make arrangement for the return of the empty containers to the petitioner. By a letter dated April 10, 2003 the Port Authorities duly asked consent to put up the contents on sale in "as is where is basis". Admittedly, no answer was received by the Port Trust Authorities for almost seven months followed by a writ petition in this Hon'ble Court.
21. After analyzing the Sections and the decisions cited before us we are not in a position to accept the contention of the respondent that the decision cited by the appellant has no application in the facts and circumstances of this case although Learned Counsel submitted that on 21st October, 1982 Circular was issued by the Port Trust Authorities and relied upon by the Hon'ble Division Bench in its decision dated 11th October, 2001 and the said Board Circular has been replaced by the new Circular of the Board of Trustees held on 28th August, 1991, but a copy whereof has not been furnished by the Learned Counsel on behalf of the respondent before us. Hence, we are not in a position to accept such change in the Circular as the orders so passed by the Hon'ble Division Bench and the Hon'ble Single Bench are much after the Circular tried to be relied upon by the respondent being dated 28th August, 1991. In our opinion, all the decisions cited before us by Mr. Roy Chowdhury about the Circular dated 21st October, 1982. Therefore, we cannot accept the contention that the decisions of the Hon'ble Division Bench as well as the Hon'ble Single Bench cannot be made applicable in this changed circumstances, since we feel that there is no such circumstance. We further have been able to find out from the decision cited before us that the case of the writ petitioners has already been decided on the point as to whether they are liable to make the payment as demurrage as has already been decided by the Court and therefore, order so passed by the Hon'ble First Court that the demurrage charges accrued from the date of expiry of two months till 4th April, 2003 have to be shared equally by the Port Trust Authorities and the writ petitioner is to forego 50% of the amount for the said period whereas the writ petitioner has to bear the rest. We do not find that the Port Authorities was negligent in not taking step after expiry of two months from the date of landing of the containers as contended by the Hon'ble First Court since it appears to us that in an unreported decision in Appeal No. 717 of 1991, Matter No. 3691 of 1990 (The Chairman, Calcutta Port Trust v. Star Iron Works Pvt. Limited) delivered on 18th September, 1997 since , it has been held that Section 62 of the Major Port Trust Act is only an enabling provision. It merely permits the Board, in its discretion, in a particular fact situation and in a set of circumstances, to decide whether the goods received in the Port area should or should not be removed immediately after the expiry of one month. The said Section does not say that in every case the goods must be removed after one month. It is only in some conditions that the Board may have to take a decision that goods are required to be removed. The basis for taking such a decision can be for a variety of reasons, such as the lack of space in the Port area, some unforeseen eventuality, some emergency or the quality of nature of the goods. Therefore, the Hon'ble Division Bench held that, the said Section cannot be equated with an absolute obligation cast upon the Board that in every case it must issue notice immediately upon expiry of one month from the date of receipt of the goods in the Port area. The Hon'ble First Court in our opinion, interpreted the Section differently and we with such interpretation accept the same following the decision of the Hon'ble Division Bench and we hold that the Port Trust is not negligent since there is no obligation cast upon it that in every case it has to act or to issue notice immediately upon the expiry of one month from the date of receipt in the Port area.
22. After analyzing Bye-Law 55 C we have to hold as follows:
Therefore, Port Trust has no right to accept the custody of the said containers in accordance with the Bye-Law...
23. In our opinion, destuffing of containerized cargo is a function of discharge by the shipping agents and the slot charterers. As such, primary responsibility is with the shipping agents and the slot charterers. Therefore, in our opinion, the Board has power to impose fee and in accordance with the schedule of rates approved by the appropriate authority, and the question of interference of the imposition of the same would not arise in this writ application. Therefore, we have to hold that the petitioners are liable to be charged by the Port Trust Authorities. Accordingly, we have to hold that the order so passed by the Hon'ble First Court cannot be sustainable in law and is hereby set aside and we also direct the Port Authorities to return the containers upon payment of the damages and/or demurrage in accordance with the provisions of law to the writ petitioners.
Arun Kumar Bhattacharya, J.
24. I agree.