Madras High Court
Marine Container Services (South) Pvt. ... vs The Board Of Trustees Of The Port Of ...
Author: N.Anand Venkatesh
Bench: N.Anand Venkatesh
W.P.No.15617 of 1999
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Orders reserved on Orders pronounced on
22.08.2022 24.08.2022
CORAM
THE HONOURABLE MR. JUSTICE N.ANAND VENKATESH
W.P.No.15617 of 1999
Marine Container Services (South) Pvt. Ltd.,
18, Swami Sivananda Salai
Chennai 600 005. ...Petitioner
Vs.
1. The Board of Trustees of the Port of Chennai
Rajaji Salai
Chennai 600 001
represented by its Chairman.
2. Vasecraft Granite (P) Ltd.,
Thatchur Cross Road
Ponneri 601 204. ...Respondents
This Writ Petition is filed under Article 226 of the Constitution
of India, to issue a writ of Certiorarified Mandamus or any other Writ,
order or direction of a like nature calling for the records of the first
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W.P.No.15617 of 1999
respondent culminating in the Bill dated 26.04.1999 bearing No.039071
debiting the petitioner's current account with a sum of Rs.6,04,390/-
(Rupees Six Lakhs Four Thousand Three Hundred and Ninety only) and
the communication dated 09.06.1999 bearing No.CT/II/692/99/T(CT) and
quash the same and consequently, forbear the first respondent from
making any demand and debiting the petitioner's account with the amounts
payable by the second respondent to the first respondent in respect of the
container storage charges and direct the first respondent to forthwith
refund the sum of Rs.1,78,750/- (Rupees One Lakh Seventy Eight
Thousand Seven Hundred and Fifty only) and the sum of Rs.6,04,390/-
(Rupees Six Lakhs Four Thousand Three Hundred and Ninety only)
debited to the petitioner's current account under the impugned bill dated
26.04.1999.
For Petitioner : Ms.Sharanya Vaidhiyanathan
For Respondent-1 : Mr.R.Karthikeyan
For Respondent-2 : No appearance
ORDER
This Writ Petition has been filed challenging the impugned bill dated 26.04.1999 issued by the first respondent debiting the 2/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 petitioner's current account and the subsequent communication dated 09.06.1999 and for a consequential direction for the refund of the amount that was debited from the current account of the petitioner, through the impugned bill dated 26.04.1999.
2. The case of the petitioner is that they are carrying on the business as Steamer Agents and in the course of their business, shipper at Antwerp entrusted two containers for being carried to the port of Chennai and to deliver the same to the second respondent, who was the consignee of the goods. The containers contained saw-cutting machines.
3. The further case of the petitioner is that the containers landed at Chennai port on 25.08.1992. The petitioner issued the cargo arrival notice to the second respondent and informed them to arrange for the clearance of the cargo without any delay.
4. The further case of the petitioner is that they issued a 3/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 letter dated 24.09.1992 to the second respondent to present the original bill of lading and pay the freight and other charges to enable the petitioner to issue the delivery order. The second respondent failed to clear the cargo and as a result, the storage and demurrage charges started to accrue on the petitioner and the first respondent started to debit the same from the current account of the petitioner.
5. The petitioner left with no other option, through letter dated 15.10.1992, informed the first respondent that they are abandoning the containers/cargo and the first respondent was advised to recover from the second respondent all the amounts on account of the cargo lying uncleared.
6. It is stated that the first respondent acted upon the said letter issued by the petitioner and stopped debiting the current account of the petitioner. The first respondent also took steps to bring the cargo for public auction. Pursuant to the request made by the second respondent 4/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 and the assurances given by them, the steps taken for conducting the auction was withdrawn. Inspite of the same, the second respondent failed to clear the cargo.
7. The grievance of the petitioner is that the first respondent debited a sum of Rs.6,04,390/- (Rupees Six Lakhs Four Thousand Three Hundred and Ninety only) towards the demurrage and container storage charges, from the petitioner for the period from 25.08.1992 to 18.04.1999. According to the petitioner, recovery of the charges must be made only from the second respondent and it was not open to the first respondent to recover the same from the petitioner. This is inspite of the fact that the petitioner had abandoned the cargo as early as on 15.10.1992. Aggrieved by the same, the present Writ Petition has been filed before this Court.
8. The first respondent has filed a counter affidavit and the relevant portions in the counter affidavit are extracted hereunder:- 5/32
https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 “3) I state that two containers bearing Nos.CCAU 2900006 and CCAU 2947261 consigned to M/s.Vasecraft Granite (P) Ltd., were landed on 25.08.1992 from m.v.Mettesif., S.No.620 arrived on 25.08.1992. The containers are said to contain a Bridge Saw Cutting machinery. In accordance with the Rules, it is the Steamer Agent that has to arrange destuffing the FCL containers in the presence of the customs and entrust the cargo to the Port Trust and thereafter, the Trust will take charge of the cargo under Section 42 of the Major Port Trusts Act.
4) No one filed import application and no steps were taken by the Steamer Agent, the petitioner herein for destuffing the container and deliver the cargo to the Trust. While so, the first respondent Steamer Agent by letter dated 15.10.1992 6/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 abandoned the cargo. Since the cargo was not cleared within 60 days from the date of landing, the cargo in the said container were included in the auction list under Section 62 of the Major Port Trust's Act after notice under Lot No.393 and 393A/93. But the Assistant Collector of Customs (Dock Sales) had withdrawn the lot from auction. The second respondent had not produced the documents for clearance. But the second respondent by letter dated 04.02.1994 requested the first respondent herein to waive the demurrage charges and by letter dated
09.03.1994 requested not to auction the cargo. By letter dated 23.08.1994, this respondent informed the second respondent that the request for the waiver of demurrage charges was rejected and also advised them to clear the cargo within 15 days time. However, the same is not cleared till now. The cargo was not 7/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 deleted from the auction list, but the auctioning of the subject cargo was postponed.
5) In Sections 61 & 62 of the Major Port Trust's Act, nothing is mentioned regarding containers. In Section 62, it is stated “where any goods place in the custody of the Board”. In the instant case the goods inside the containers were not destuffed and placed in the custody of the Board. Section 62 should be read with Section 42(2) of the Major Port Trust Act which states that:-
“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 on such form as the Board may specify.” In the instant case, the goods inside the 8/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 container viz., “Bridge saw cutting machine type gresory automatic slab polishing type mainali pantograph cutting machine” were not destuffed and the Board has not taken charge and issued receipt as required in Section 42(2) of Major Port Trust Act, 1963.
6) The storage charges are being recovered from the Main Line Operators as per the provision laid down in Scale 'B' Chapter IIA of the Trust's Scale of Rates, which is extracted below:-
LOADED CONTAINERS: “Storage charges on loaded container lying anywhere in the Transit Area ... from the date of landing to the date of prior to the date of destuffing of the imports or to the date of removal from the Trust as unit load”.
9/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 There is no specific provision in the Scale of Rates to stop the recovery of storage charges under any circumstances except the containers are destuffed or cleared as unit load. As per the Scale of Rates, the storage charges for FCL containers are recovered from the Main Line Operators. The storage charges are not collected from the consignees/importers directly by the Trust. The wharfage and additional storage charges for the containerised cargo are collected from the importer/consignee by the Trust in the relevant Import Application filed by the Consignee's Agent.
i) All the Main Line Operators who are the carriers of all kinds of containers including shipper owned containers are regularly paying the storage charges to the Port as per the Scale of Rates since the inception of the Container Terminal.
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ii) The recovery of storage charges for such shipper owned containers is recovered not only from the petitioner, but also from all other MLOs who are operating in the Chennai Port Trust whenever they handle such containers. The container is occupying considerable space in the Port Premises and as such, storage charges are payable until the container is cleared.
8) The petitioner in the alleged letter dated 15.10.1992 has abandoned the cargo in the container Nos.CCAU 2900006 and CCAU 2947261. They have not abandoned cargo along with the container since the containers are FCL containers. As per the condition 1(c) Chapter I Book II of the Scale of Rates, the release of the cargo from the container on the import side shall be responsibility of 11/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 the steamer agents. The petitioner ought to have destuffed the containers and handed over the alleged abandoned cargo to the Trust for further disposal by auction. But the petitioner has not requested the Trust to destuff the container. The containers along with the cargo are physically lying. As per Scale 'B' Chapter IIA of the Trust's Scale of Rates, storage charges will be recovered until they are destuffed or cleared as unit load. The charges recovered from the petitioners are towards storage only and not towards demurrage charges and container services charges as stated by the petitioner.
9. Heard Ms.Sharanya Vaidhiyanathan, learned counsel for the petitioner and Mr.R.Karthikeyan, learned counsel for the 1st respondent. The 2nd respondent was served with notice through substituted service and the 2nd respondent did not contest this case even though their 12/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 name was printed in the cause-list.
10. The short issue that arises for consideration in the present writ petition is as to who is liable for the payment of the charges to the 1st respondent / Port Trust in respect of goods which are not cleared by the consignee : whether it is the steamer agent viz., the petitioner or the 2 nd respondent who is the consignee of the goods, who will be liable to pay the storage charges / demurrage etc., to the Port Trust ?
11. The petitioner has taken a very clear stand that they through their letter dated 15.10.1992 informed the Port Trust that they are abandoning the cargo and they advised the port trust to collect the charges due on the cargo left uncleared, from the 2nd respondent. Therefore, from that moment, the petitioner claims that they are not liable to pay the charges to the Port Trust and it is the 2nd respondent who must be burdened with the liability.
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12. Per contra, the Port Trust has taken a stand that they did not take charge of the goods by endorsing the bill of ladding or issuing the delivery order and hence, it is the petitioner who has to take the liability and pay the dues. Yet another stand that has been taken by the port trust is that the petitioner ought to have destuffed the container and handed over the abandoned cargo and since the petitioner did not undertake this process, the cargo was lying along with the container and the port trust did not take charge of the cargo and hence, the petitioner is liable to pay the storage charges as per the scale of rates till the cargo is destuffed and handed over to the Port Trust.
13. The issue involved in the present writ petition is sufficiently covered by the judgement of the Hon'ble Supreme Court in [Chairman, Board of Trustees, Cochin Port Trust Vs. Arebee Star Maritime Agencies Private Limited and others] reported in 2021 11 SCC
641. The Apex Court was dealing with a direct question as to whether the liability to pay the charges for the goods which remains uncleared by the 14/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 consignee and refused to be destuffed, will fall on the steamer agent or the consignee. There were inconsistent judgements and the same was settled by a larger bench. For proper appreciation, the issues that were taken up for consideration by the Apex Court are extracted hereunder :-
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 15/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 goods which are not cleared by the consignee, where the steamer agent has not issued a delivery order; if so, to what extent;
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.
14. The Apex court answered the above issues in the following manner :-
92. Based on the above discussion, our answers to the 16/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 questions framed in the reference order are as follows: 92.1. (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;
92.2 (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 17/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 importer, owner, consignee or their agent is liable to pay demurrage charges for storage of goods; 92.3 (4). As per paragraph 24 of our judgment; 92.4 (5). The answer to question number 5 is really in two parts:
92.4.1. 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.
92.4.2 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 18/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 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 19/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 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.
15. The Apex Court before reaching the above conclusions, dealt with the scope of Section 2 (o) of the Major Port Trusts Act, 1963 (hereinafter referred to as “MPT Act”) which defined an “owner”. Considering the inclusive nature of the definition, the Apex Court held that even a steamer agent will come within the fold of the definition. After having held so, the Apex Court independently dealt with the scope of Sections 60 to 63 of the MPT Act and held as follows :-
31 . 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 20/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 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 21/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 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.
32. 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 22/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 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 23/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 the vessel or the vessel itself.
33. 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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34. 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.
16. It is clear from the above that until the stage of landing and removal to a place of storage, the steamer agent is deemed to be the owner and hence, liable for the payment of the charges. Post landing and 25/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 removal to a place of storage, the port trust takes charge of the goods and at that stage, it is the consignee who will be considered as the owner and the storage and demurrage charges will be recoverable from him. There is a clear distinction made between the steamer agent and the consignee and the goods that are stored in the premises of the port trust will have a nexus only with the consignee and not with the steamer agent.
17. It is clear from the above that the most crucial test to determine as to who is liable to pay the charges to the port trust for cargo that remains uncleared, will depend upon the fact as to whether the port trust “has taken charge of the goods”. If the port trust has not taken charge of the goods, the liability will fall on the steamer agent. If they have taken charge of the goods, the liability will fall on the consignee. The Apex court has made it clear that the destuffing of the cargo from the container is irrelevant for determining the liability payable and it will be the duty of the Port trust to take charge of the cargo and thereafter, return the destuffed container to the person entitled for the same. 26/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999
18. In the present case, even though the 1 st respondent has taken the stand that they did not take charge of the goods, it goes against the letter dated 09.03.1994 written by the 2nd respondent to the port trust and the communication of the 1st respondent dated 09.08.1994 made to the 2nd respondent. It is clear from these letters that after the petitioner abandoned the cargo through their letter 15.10.1992, the 1st respondent took steps to bring the abandoned containers for auction and the 2nd respondent made a request to the 1st respondent to give time for the clearance of the cargo and considering the said request, the auction was terminated. The 1st respondent has further informed the 2nd respondent that if the goods are not cleared before the end of August 1994, it will be brought for public auction. Hence, the 2nd respondent was informed to take necessary arrangements to pay the dues and clear the cargo.
19. If really, the 1st respondent had not taken charge of the goods, there was no question of the 1 st respondent bringing the same for 27/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 auction. This fact was also very much within the knowledge of the 2 nd respondent and the 1st respondent as early as on 09.08.1994, clearly understood that the liability is only on the 2nd respondent and that is why the 2nd respondent was directed to pay the dues and clear the cargo, failing which, the goods will be brought for public auction.
20. The 1st respondent all of a sudden changed their stand much later in the year 1999 and mulcted the liability on the petitioner and debited from their current account. This was more due to the fact that the 1st respondent found it easier to recover the dues from the petitioner since money was available in their current account and the 1st respondent thought it fit not to run behind the 2 nd respondent to recover the liability. The 1st respondent failed to see that fixing of liability is not based on convenience and it is based only on determining who actually is liable to pay the charges / dues for the uncleared cargo.
21. The Apex Court in the above judgement has made it 28/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 sufficiently clear that till the port trust takes charge of the goods, it is the steamer agent who is liable and once they take charge, it is the consignee who is liable to pay the dues. The destuffing of the cargo from the container is not a relevant factor for determining the onus of the liability.
22. In view of the above discussion, this Court is of the considered view that the charges / dues are liable to be recovered only from the 2nd respondent and not from the petitioner.
23. The 1st respondent has recovered towards wharfage, equipments and storage charges from the petitioner to the tune of Rs.7,82,544/- for the period from 25.08.1992 to 18.04.1999. Thereafter, the 1st respondent found that there was excess recovery for the period from 25.08.1992 to 08.02.1995 and hence, refunded a sum of Rs.2,89,494/- to the petitioner. Thus, the balance amount that requires to be refunded to the petitioner is a sum of Rs.4,93,050/-.
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24. In the result, the impugned proceedings of the 1st respondent recovering the charges/dues from the petitioner is hereby set- aside and there shall be a direction to the 1st respondent to refund the amount of Rs.4,93,050/- to the petitioner within a period of four weeks from the date of receipt of the copy of this order. It is made clear that it will be left open to the 1st respondent to recover the dues / charges from the 2nd respondent either directly or by bringing the cargo for public auction.
25 This writ petition is allowed in the above terms. No costs.
Mra/rka 24.08.2022
Speaking/Non Speaking order
Index : Yes
Internet: Yes
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W.P.No.15617 of 1999
To
1. The Board of Trustees of the Port of Chennai Rajaji Salai Chennai 600 001 represented by its Chairman.
2. Vasecraft Granite (P) Ltd., Thatchur Cross Road Ponneri 601 204.
N.ANAND VENKATESH,J 31/32 https://www.mhc.tn.gov.in/judis W.P.No.15617 of 1999 rka Pre-delivery order in W.P.No.15617 of 1999 24.08.2022 32/32 https://www.mhc.tn.gov.in/judis