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Interpretation of Section 61 and 62 of Major Port Trusts Act: SC


The Bench consisting of Hon’ble Justice R.F. Nariman, Hon’ble Justice Navin Sinha and Hon’ble Justice Indira Banerjee pronounced the judgement on appeal on the verdict given in Kerala High Court.

The learned Senior Advocate who led the arguments on behalf of the shipping agents before the High Court made one important concession, namely, that the shipping agents do not propose to press the contention as to their liability in satisfying ground rent, except that they ought not to be mulcted with any such liability beyond the period of 75 days, which was set out in the relevant Tariff Authority for Major Ports (“TAMP”) Orders. At the point of time that the Division Bench delivered its judgment, a Division Bench of this Hon’ble Court in Forbes Forbes Campbell & Co. Ltd. v Board of Trustees, Port of Bombay (2008) 4 SCC 87 [“Forbes-I”], had referred the following three questions to a larger Bench: The questions of law of public importance in this appeal are as follows:

  1.  Whether a steamer agent can be construed as owner of the goods carried in his principal’s vessel within the definition of “owner” in relation to goods under Section 2(o) of the Major Port Trusts Act, 1963?

  2.  Whether a steamer agent at all can be made liable for payment of storage charges/demurrage, which are uncleared by the consignee, even where steamer agent has not issued delivery order?

  3. In the event a steamer agent is held liable, to what extent he is liable and whether it absolves the respondent from acting promptly under Sections 61 or 62 of the Act?

Shri Ritin Rai, learned Senior Advocate appearing on behalf of the Appellant Port Trust, referred to various provisions of the Customs Act, 1962 and the MPT Act, and argued that once responsibility for the goods is taken over by the Port Trust, the Port Trust becomes a bailee of the goods delivered to it by the ship-owner, who in turn is relieved of its liability for loss or damage to the goods during the period when the goods are in the custody of the Port Trust. Thus, the Port Trust is entitled to recover, from the shipping agents, demurrage and other dues for the period until a delivery order is issued by the shipping agent to the consignee, and for this purpose is entitled to exercise a lien over the goods for realisation of such demurrage. He added that where a delivery order is withheld or withdrawn, disabling the consignee from getting delivery of the goods, the position remains as if no delivery order was issued at all. In such a case, the liability for payment of demurrage and other dues of the Port Trust will continue to be with the shipping agent. According to the learned Senior Advocate, the different strands of the judgments of this Court can all be reconciled to reach the conclusion canvassed for by the learned Senior Advocate. He argued that the submission that upon landing and discharge of the goods from the vessel, the Port Trust becomes a sub-bailee of the shippers/consignors, and that the Port Trust can therefore recover its dues only from the consignors, or the consignee who steps into the consignor’s shoes upon endorsement of the bill of lading pursuant to section 1 of the Indian Bills of Lading Act, 1856, is wholly incorrect. He dealt with the decision of the Privy Council in “The K.H. Enterprise” [1994] 1 Lloyd’s Law Reports 593, and distinguished the said decision from the present case, stating that the decision nowhere relates to the obligations of the bailee to the sub-bailee for services undertaken by it at the bailee’s request. He went on to argue that in any case, the sub-bailee in K.H. Enterprise (supra) was entitled to payment for its services from the bailee pursuant to the agreement between them, and not from the bailor/shipper.

Shri Prashant S. Pratap, learned Senior Advocate appearing on behalf of Respondent No.1, a shipping/steamer agent, was at pains to point out that endorsement on the bill of lading by the shipping agent, and a delivery order being given by the shipping agent, does not pass title to the goods. The endorsement on the bill of lading by the consignor in favour of a notified party or a consignee, when read with section 1 of the Indian Bills of Lading Act, 1856, is the endorsement that passes title to goods, and must not be confused with his client’s endorsement on the bill of lading. He relied heavily on the Privy Council judgment in K.H. Enterprise (supra), stating that the decision applied on all fours to the present case, and that therefore the Port Trust as a sub-bailee of the goods steps into the shoes of the bailee, i.e. the ship-owner/ship-owner’s agent, and must therefore sue the bailor i.e. the consignor/shipper, and not the original bailee.

Shri Rahul Narichania, learned Senior Advocate appearing on behalf of Respondent No.6 (The Container Shipping Lines Association), who is an Intervenor in these proceedings, argued that the definition of “owner” in section 2(o) of the MPT Act differentiates between owner of the “vessel”, and owner of the “goods”, and that a steamer agent does not come within the first part of section 2(o) if the doctrine of noscitur a sociis is applied. He argued that a steamer agent is an agent of a disclosed principal, i.e. the ship-owner, and therefore cannot be made liable for demurrage charges. It is only an agent for loading and unloading of cargo, i.e. an agent of the consignor or consignee who can be made so liable. He went on to argue that a steamer agent must be distinguished from a stevedoring agent, and is not involved in loading and unloading cargo. He referred to various provisions of the MPT Act, and argued that section 48(1)(d) therein does not contemplate any liability on a steamer agent. This section has to be contrasted with section 49(1)(c), which expressly contemplates liability on a steamer agent, but only with respect to land that is taken on lease from the Port Trust by the steamer agent.

As has been pointed out by the court , no such right has been denied on a correct reading of the MPT Act. The importer, the consignee and the consignor, or their agents, can all be held liable to pay demurrage charges. However, since Rasiklal (supra) does not involve either the owner of the vessel or its agent, the court leave open the question as to whether the Port Trust, as sub-bailee, is entitled to recover its dues from the original bailor – the consignor, and persons claiming through it, given the statutory scheme of the MPT Act, as has already been indicated in paragraph 66 . This court does not, on the facts of this case, think that the justice of the case demands that the court should interfere with the impugned High Court judgment. The steamer agents themselves did not dispute liability to pay ground rent upto 75 days before the High Court, and have admittedly paid the said charges long ago. As a matter of fact, the steamer agents paid ground rent even beyond the period of 75 days – the High Court having ordered the Appellant Port Trust to recompute the liability of the steamer agents, and return the balance to the parties concerned within two months from the date of receipt of a copy of the impugned judgment. To order a refund of ground rent paid for 75 days to the steamer agent, and direct the Board to then recover the same from the importer, consignor and/or the owner of the goods at this late stage of the proceedings would not be in the interest of justice.

Accordingly, the court disposes of the appeals that have been filed against the impugned High Court judgment. The impugned judgment is set aside on one question of law, namely, that the expression “may” in sections 61 and 62 of the MPT Act cannot be read as “shall”, subject to the caveat that as the “State” under Article 12 of the Constitution, a Port Trust must act reasonably, and attempt to sell the goods within a reasonable period from the date on which it has assumed custody of them.


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Karthik K.P (School of Law, SASTRA Deemed to be University)



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