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The Board of Trustees for the Port of Kolkata v/s German Express Shipping Agencies Pvt. Ltd. & Others

    APO. Nos. 223 of 2011 & 87 of 2018 & WP. Nos. 911 of 2005 & 719 of 2006

    Decided On, 31 July 2019

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE I. P. MUKERJI & THE HONOURABLE MR. JUSTICE MD. NIZAMUDDIN

    For the Appellant: Abhrajit Mitra, Sr. Advocate, Rachit Lakhmani, Ashok Kumar Jena, Advocates. For the Respondents: Pradip Kumar Ghosh, Sr. Advocate, Sayan Ganguly, Joydeep Mukhopadhyay, Reetobroto Mitra, Advocates.



Judgment Text

I.P. Mukerji, J.

German Express Shipping Appeal:-

One of the latest developments in the international transportation of goods was by the introduction of multi modal transport. By this mode, cargo is often transported from door to door.

Every one of us has seen very large and heavy steel containers, rectangular in shape, made of solid steel and of considerable volume mounted on trailers, being carried from the port to an establishment and from an establishment to the port. The journey does not end here. These containers are loaded in large cargo ships, to be unloaded in a port in another country.

The cargo carried in these containers may be unloaded in that foreign port to be taken delivery of by the consignee or notified party. Very often these containers make another journey from the port to the establishment of the foreign consignee or notified party and unloaded there. Thereafter, the containers are returned to their owner. Usually, these containers are owned by an entity which is different from the ship owner, the shipper or consignor and the consignee/notified party. The contract of the container owner may be with the shipper/consigner or with the consignee/notified party depending on the terms and conditions of carriage.

The respondent company (hereinafter referred to as "the respondent") is the agent of a well-known organization in the shipping trade "Hapag Lloyd Pte. Ltd.", in Kolkata and Haldia. The principal of the respondent is the owner of two "marine" containers. Their numbers are HLXU2328520 and HLXU3006745.

On 4th August, 2001 the first container was brought to Haldia port and was unloaded at Haldia dock. On 5th August, 2001 the second container was also unloaded, there. They were brought to this port by a vessel "Tiger Creek". These containers were stuffed with betel nuts. The consignee named in the shipping documents was M/s. Chirag Enterprises, Jaipur. They did not come forward to take delivery of the cargo. For nearly one year these two stuffed containers lay in the dock premises. On 31st July, 2002 the respondent wrote to the customs in the following manner:

"We are hereby putting forward our request inorder to allow destuffing of the said cargo as per enclosed copy of the IGM. Above mentioned consignment of Betel-nuts was imported for Haldia discharge by the consignee, details furnished as per IGM. Same import containers were discharged on: 04/08/01 and till date no one has approached us for the Delivery-Order.

We have been unable to contact the customer and hence have come across for your help, enable us to release the said cargo, which is a perishable item as notified under the manifest."

On 23rd November, 2002 they wrote to the appellant stating the following: "We are hereby putting forward our request in order to allow destuffing of the said cargo as per enclosed copy of the IGM. Above mentioned consignment of Betel-nuts was imported for Haldia discharge by the consignee, details furnished s per IGM. Same import containers were discharged on : 04/08/01 and till date no one has approached us for the Delivery-Order.

We have been unable to contact the customer and in reference to the same, we had submitted an application to the office to the DIU customs, who than proposed us to take the matter to the Disposal Dept. of K.O.P.T, understand the listed items has been raised for Auction, would like to therefore put in our request through this application and enable us to release the said cargo, which is a perishable item as notified under the manifest."

Both the containers were de-stuffed on 4th November, 2004. The cargo of betel nuts remained unclaimed. On being removed from the containers they were found to be worthless and unfit for human consumption. Both learned counsel submitted that they were destroyed by the appellant. The dispute between the parties arose on 5th November, 2004, when by a letter written to the respondent, the appellant (which reference includes the port authority at Haldia) claimed demurrage charges or rent from 4th August, 2001 till 4th November, 2004 in respect of container no. HLXU2328520 and from 5th August, 2001 till 4th November, 2004 for the container HLXU3006745. A sum of Rs.2,61,681/- was claimed. The letter also stated that if the containers were continued to be kept in the dock further storage charges would be claimed by the appellant. The containers were removed. This amount has been debited from the marine account maintained by the respondent with the appellant. The respondent denies their liability to pay the charges or any part thereof. Learned counsel for the respondent submitted that the amount was small. This proceeding was being pursued by his client to seek a decision from this court with regard to the charging of demurrage on containers, for their future guidance.

In or about April, 2005, the respondent filed the instant writ application in this Court. The principal relief claimed therein was that the appellant should facilitate removal of the two containers and not charge them any amount on account of demurrage. As the containers were removed by the time the writ was heard out, the reliefs claimed were confined to an order directing that the respondent should not be charged rent for the above period of time.

On 7th June, 2011 the writ was allowed substantially by directing the appellant not to claim demurrage charges or port charges for any period beyond 75 days from the date of landing of the containers. The appellant appeals to this court from that judgment and order. Mr. Mitra, learned Senior Advocate appearing for appellant, submitted that Section 61 of the major Port Trust Act, 1963 gave a right to his client to sell the cargo lying in the port premises after the expiry of two months from the date of its landing in the port area, for realization of unpaid rent. The Act did not restrain his client from charging and recovering storage charges in case the cargo was not removed in that period and the port was unable to sell it immediately thereafter. It was only by virtue of the TAMP (Tariff authority for major ports constituted under Section 47A of the said Act of 1963,) orders or notifications that restrictions were imposed in respect of charging of storage rent. He argued that there was no abandonment of the cargo. Hence, the TAMP order did not apply and his client was entitled to charge rent right upto the time the containers were removed from the port premises. The TAMP order could not take away or restrict this right. Mr. Ghosh, learned Senior Advocate for the respondent submitted that the letter of the respondent to the appellant dated 23rd November, 2002 amounted to abandonment of the cargo by the consignee and that the right of the said authority to claim rent was extinguished on that date. This was in the form of an alternative argument, the first being that the appellant had no authority to charge rent after expiry of two months from the date of landing of the cargo, relying on Section 48 and 49 of the said Act with the TAMP orders.

At this point of time it is necessary to discuss Section 61 of the Major Port Trust Act, 1963. It provides that after the expiry of two months from "assuming custody of the goods", the port authority may sell them by public auction, if any rate payable to the port in respect thereof has not been paid. A shorter period of not less than 24 hours is prescribed in the case of perishable or hazardous goods Section 62gives power to the port to dispose of the goods, upon notice, in special circumstances, like shortage of space. Now, let us take a look at Section 48 of the said Act. The port authority, under this section is empowered to fix the rates of and conditions for rendering any service by the port. Section 49 is more specific. It relates to the rates which the authority could charge for the property in its custody. On 10th November, 1999 TAMP (Tariff authority for major ports) made an order. Although the source of power was not recited in it, was issued under Sections 48 and 49 of the Major Port Trusts Act, 1963, because these are the only provisions vesting this authority with the power to make this kind of an order. It was in modification of its order made on 5th September, 1999. It was gazetted by notification no.104 dated 6th December, 1999. The stipulation regarding abandoned containers is most important. It stated that storage charges on abandoned FCL containers/shipper owned containers shall be limited up to the date of receipt of an intimation of abandonment in writing by the harbour office or two months from the date of landing of the containers whichever was earlier. This order was sought to be clarified on 19th July, 2000 by another order notified in the gazette by notification No.120 dated 28th August, 2000.

These clarifications were treated by learned counsel for the parties as supplementary orders or directions. In those circumstances, the court also treats the same as such. A part of it merely reiterated the law on the subject. It stated that until a delivery order was issued by the ship-owner in favour of a consignee it remained responsible for payment of rent for the containers landed in the port premises. It also said that the ship owner had the right of abandoning the cargo in the absence of the consignee. Upon such abandonment it had the duty to take back the containers into its hold. Obviously if this was done from that time, the ship-owner would cease to be liable for the cargo. It went to an add that if the ship-owner did not take the necessary action for destuffing the cargo then even on expiry of the period of 75 days rent would be payable on the containers. In the absence of abandonment a ship owner had to wait for the expiry of 75 days for the port authority to act under Section 61 of the said Act.

In M/s. Rasiklal Kantilal & Co. Vs. Board of Trustee of Port of Bombay and Ors. reported in AIR 2017 SC 1283, cited by Mr. Mitra a very important observation was made by the court that where the consignee failed to take delivery of the goods and its removal from the port by auction sale was delayed because of the acts of the consignee, the container owner was entitled to consideration by the port, of remission of a part of the charges on account of storage of the goods, claimed by the port. I read paragraph 53 of the judgment:

"53. However, we must make it clear that the authority of the 1st respondent to grant or decline remission of any amount due towards any rate payable under THE ACT must be based on rational consideration and a sound policy. Such a requirement is inherent in the fact that 1st respondent is a statutory body discharging important statutory obligations. 1st respondent could not bring anything on record to our notice which demonstrates the reasons for declining remission as claimed by the appellant nor any clear policy of the respondent which regulates the discretion. In the circumstances, we deem it appropriate to set aside the decision of 1st respondent dated 16.09.1995 in declining the remission and leave it open to the respondent to take appropriate decision on the application duly recording the reasons for such decision."

As rightly pointed out by learned counsel for the respondent that the TAMP order and its clarifications were neither relied on by the parties nor had the court the occasion to consider it.

In Kutch Shipping Agency Private Limited Vs. Board of Trustees, Kandla Port Trust reported in (2010) 11SCC 795 also cited by learned counsel, on 1st October, 1996 the consignees of the cargo contained in eight containers abandoned it. On 11th December, 1997 Kutch Shipping Agency Private Limited handed over another four containers to the port authority for auctioning of the cargo. On 10th March, 1998 another container was handed over by the said agency to the port for auctioning. The Supreme Court considered Sections 61 and 62 of the Major Ports Trust Act, 1963 along with the TAMP orders. It ruled that the port authority could only collect storage charges till the date of abandonment of the first eight containers and upto the date the other containers were handed over to the port for auction of the goods.

Learned counsel for the respondent was quick to submit that this judgment contained only directions and there was no binding ratio. The Board of Trustees for the Port of Kolkata & Anr. Vs. Swahom Shipping Services Pvt. Ltd. & Ors. reported in AIR 2006 Cal 239, a division bench judgment of our Court was very strongly relied on by Mr. Mitra. It related to two stuffed containers which were unloaded at Kolkata port. The consignee failed to take delivery of the cargo. The first respondent in that appeal was the sub-agent of the owner of the containers. A most important feature of this case was that the learned judges found that the respondents were asked by the port to give consent for sale of the cargo by the authority to which there was no response for seven months. On 3rd November, 2001 the goods arrived at the port. On 10th April, 2003 the port asked for the respondents' consent for sale of the cargo. There was no reply for seven months by the first respondent. Only on 4th April, 2004 a request was made by the first respondent to the port make arrangement to return the empty containers. In those circumstances, the court held that the port was entitled to charge rent beyond the period of two months stipulated by Section 61, to sell the goods. It is also note worthy that the TAMP orders were not under consideration by the court.

We do not understand how Om Shankar Biyani Vs. Board of Trustees, Port of Calcutta and Ors. reported in (2002) 3SCC 168 cited by Mr. Ghosh assists the respondent. The Supreme Court simply held that since the matter was before the Court on and after 10th January, 1992, the appellant before it could not sell the goods. Demurrage charges would cease to accrue on and after 10th January, 1992.

In our case, there was no court order restraining discharge of cargo or removal of the containers.

In Natvar Parikh Industries Ltd. & Anr. Vs. Board of Trustees for the port of Calcutta & Ors. reported in (2008) 1CHN 198, cited by Mr. Ghosh another division bench judgment of our court differed with The Board of Trustees for the Port of Kolkata & Anr. Vs. Swahom Shipping Services Pvt. Ltd. & Ors. reported in AIR 2006 Cal 239. It directed the appellant before it to charge demurrage upto 23rd April, 1997, the date of filing of the writ application. The division bench remarked that in the 2006 case the reason why the port had no fault was not specified by the learned Judges and that the port had an obligation after two months landing of the goods to sell it.

In none of the two division bench decisions of our court the TAMP orders were under consideration. We do not find that any clear cut ratio has been laid down in either of these two judgments. The decisions were on the special facts of the cases before it. Hence we are not called upon to decide which division bench judgment we propose to follow.

The Board of Trustees, for the Port of Calcutta & Ors. Vs. India Trident maritime (Pvt.) Ltd. & Ors. reported in (2016) 3 Cal 494 cited by Mr. Ghosh was another division bench judgment of our court. The law relating to the liability of a ship owner on account of port and container charges has been eloquently and in a most erudite manner summarised by brother Arijit Banerjee, J. I read certain parts of that judgment:

"40. It is settled law that the liability of a carrier is not unlimited. In the case of carriage of goods by ship, the duty of the carrier and of the steamer agent comes to an end once the goods are off-loaded from the ship at the destination port, delivery order is issued and the bill of lading is endorsed in favour of the consignee or its agent. From the point of time when the bill of lading is endorsed in favour of the consignee, it is he who is liable for the port charges incurred on account of storing of the goods in the port premises. Under a contract of carriage by sea which is evidenced by the bill of lading, the obligation of the steamer/carrier or its agent is limited to carrying the cargo in question to the port of discharge, unload the cargo, endorse the bill of lading and issue delivery order in favour of the consignee or his agent. Once this is done, the carrier or its agent stands discharged of his obligations. If the delivery of the cargo is not taken by the consignee or his agent thereafter, the rent/demurrage in respect of the cargo must be to the account of the consignee. To make the carrier or his agent liable for the rent/demurrage payable to the Port Trust even after endorsement of the bill of lading and issuance of delivery order would be imposing too onerous a burden on them and the same is not contemplated under the contract of carriage. If the cargo is kept on the port premises for an indefinite period of time, for no fault on the part of the carrier or his agent, in that event, making them liable for payment of the rent/demurrage would be unjust, unfair and inequitable. In the case of K. P. V. Sheikh Mohd. Rawther & Co. Pvt. Ltd (supra), the Hon'ble Apex Court clearly held that once the carrier/steamer agent endorsed the bill of lading or issued the delivery order, it is the consignee who would be liable to pay the port dues. Prior to endorsement of such bill of lading or issuance of delivery order, the position in law is that there would be a contract of bailment between the steamer agent (bailor) and the port trust (bailee) giving rise to the liability of the steamer agent for the port charges. However, such liability ceases as soon as the bill of lading is endorsed or the delivery order is issued. The aforesaid decision of the Hon'ble Supreme Court was followed by it in the subsequent case of Forbes Forbes Campbell & Co. Ltd (supra).

43. What happens if the consignee disappears from the scene, abandons the consignment in question or evinces no intention to clear the goods after clearing the port charges? In such situations the Port Authority's claim is protected and secured by Sections 59, 61 and 62 of the MPT Act. Section 59recognizes a statutory lien of the KPT on any goods which may have been placed on any port premises for the amount of all rates leviable under the Act in respect of the goods and for the rent due to the port authorities. Such lien of the port authorities have priority over all other liens and claims except for general average and ship owner's lien on the said goods for freight and other charges.

44. Section 61 of the Act provides that the port authorities may, after the expiry of two months from the time when any goods have passed into its custody or in case of perishable goods, after the expiry of such shorter period not being less than 24 hours after the landing of the goods as the Board may think fit, sell by public auction or if necessary, by private agreement or in any other manner such goods or portion thereof for recovering the rates and rent payable to the Board. The procedure to be followed in such case is detailed in other sub- Sections of Section 61.

45. Section 62 of the Act provides that where any goods placed in the custody of the Board upon the landing thereof are not removed by the owner or other person entitled thereto from the port premises within one month, the Board may call upon the owner of the goods or the person entitled to the goods to remove the goods from the port premises and in default of such removal, the port authorities may sell the goods by public auction or by private agreement or in any other manner. In case of perishable goods, notice of removal may be served even prior to expiry of one month.

46. It will be seen from the above discussion that any claim of the port authorities on account of rent or rates or other port charges has been protected by the MPT Act. The port authorities have a statutory lien over the goods which are stored on its premises for the unpaid rent/rates and in exercise of such lien the authorities may sell the goods to recover their dues.

49. Further, we having held that the writ petitioners are not liable for any port charges once the bill of lading was endorsed or delivery order was issued, it would be preposterous to hold that the port authorities have a claim against the containers belonging to the writ petitioner no. 2.

51. In view of the aforesaid, we hold that any debit entry made by KPT in ITM's Marine A/c held with it on account of rent/demurrage charges for the period subsequent to endorsement of bill of lading and/or issuance of delivery order by ITM in favour of the consignee, is not sustainable in law and must be reversed. ITM is liable for rent/demurrage charges only up to the date of endorsement of bill of lading and/or issuance of delivery order. The sum of Rs. 6,84,849.80 on account of destuffing charges in respect of the 78 containers are not payable by the writ petitioners. The writ petitioners are at liberty to withdraw the sum of Rs. 14 lakhs deposited with their Advocate on record as per the earlier order of the Division Bench, along with interest accrued thereon. The KPT is at liberty to proceed against the consignee of the goods in question or against the cargo in question for recovery of its dues in accordance with law."

The facts of our case are different. In our case there was no question of endorsement of the bill of lading. The consignee or the notified party did not come forward. Nobody produced the bill of lading before the master of the ship or his agent to take delivery of the goods. In such a case the ship owner was saddled with the liability for port charges unless and until he had issued a delivery order in favour of a genuine consignee or notified party to the knowledge of and identifiable by the appellant. In the absence of the consignee/notified party, the ship owner had the option of lifting the containers from the port and reloading them into the vessel or payment of port charges till such time or alternatively to pay the entire port charges. Sections 61 and 62 of the Major Port Trusts Act, 1963 and Sections 48 and 49thereof operate in different fields. Section 61 deals with the situation where the port has the right and the power to sell the goods lying in its premises after a period of two months of their landing to realize unpaid rent for storage of the goods in the port. In specific situations it has the power to sell the goods earlier. For example, if the goods are rapidly perishing. Under Section 62 it has the same power to sell the goods if for example there is a space problem.

Sections 48 and 49 of that Act give the TAMP the power to fix the scale of rates for services rendered by the port authority, which include storage charges. The TAMP orders have been made further to the power conferred by these Sections, regulating the exercise of power under Sections 48 and

49. They specify the circumstances when rent would cease to be chargeable or payable. In normal circumstances when the shipowner has issued the delivery order to the consignee/notified party to the knowledge of the port but he has failed to take delivery of the goods, the latter is liable for the storage charges from the date of accepting the delivery order. The port authority acquires the right to sell the goods after two months of its landing. Under Section 61(2) of the said Act it is to give 10 days' notice of the sale. The TAMP authority has given a further 5 days' allowance to it to undertake the formalities. After 75 days of the landing of the goods the port cannot claim any charges for storing the cargo or the stuffed containers. The liability of the consignee/notified party or shipowner to pay this rent also ceases upon intimation to the port that either of them is abandoning the goods. The port immediately, has the duty of disposing of the goods expeditiously.

Different circumstances may arise, as in this case. The consignee/notified party disappeared. They did not even present the bill of lading to the master of the vessel. The responsibility for payment of rent for the containers remained with the master. The letter dated 31st July, 2002 of the respondent to the customs could not be termed as a letter of abandonment of the goods because it was not addressed to the port authority. The 23rd November, 2002 letter was certainly a letter of abandonment. The respondent stated that nobody had approached them for taking delivery of the stuffed containers and that they were unable to contact their customers. They requested the appellant to enable them "to release the said cargo which is a perishable item". This letter referred to the respondent's earlier letter to the customs for the same purpose as the ship owner did not evince any interest to take back the containers. This letter could be taken as an expression of a clear intention by the shipowner to abandon the goods. In this case, most certainly abandonment of the goods was notified to the port on 23rd November, 2002.

Now, the TAMP orders say that the storage charges would cease on expiry of 75 days from the date of landing of the goods or their abandonment whichever was ea

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rlier. Those goods arrived at the port between 4th and 5th August, 2001. So this abandonment was much after 75 days. The appellant had the right to sell it immediately after two months. It did not exercise this right. Therefore, it could not claim any rent after 75 days of landing of the goods, in this appeal. APL Appeal In this appeal seven containers are involved. They were landed in the port premises on 23rd January, 2002. The consignee of the cargo was NKR Foods which by their letter dated 8th April, 2002 had abandoned the cargo. This was informed to the appellant by the respondent on 9th May, 2002. On 30th May, 2002, it replied to this letter stating that they did not have adequate storage facility in the port and that the respondent should move the containers elsewhere. Learned counsel for the respondent submitted that there was no format for abandonment and that on 8th April, 2002 NKR Foods had abandoned the cargo in their letter to the respondent. On 9th May, 2002 the respondent on the basis of that letter wrote to the appellant that the goods were abandoned. Three attempts were made by the appellant to sell the cargo. It was finally sold at the fourth attempt on 24th July, 2004. It raised a demand of Rs.14,02,203/- on the respondent, on account of rent, for the entire period. The submission of learned counsel for the respondent that there was no format for abandonment is absolutely correct. But if the goods are abandoned by the consignee and the shipowner wants rent not to be charged thereafter, for the containers stuffed with the cargo or the cargo itself, he is under a duty to inform the port authorities about the abandonment of the goods, to enable it to take steps. The appellant was only informed on 13th May, 2002, the date of receiving the letter dated 9th May, 2002. Abandonment took effect from that date. The abandonment in this case also was much later than 75 days of landing of the goods. OPERATIVE PART In those circumstances, the appellant is allowed to charge rent for 75 days after landing of the containers involved in the above appeals and not beyond. The appellant is directed to make the calculation of rent in accordance with this order within four weeks of communication thereof and reverse the entry made in the marine account of the respondent accordingly or pay the respondent the excess amount collected by cheque within 10 weeks from the date of communication of this order. We find no infirmity in the impugned judgment and order dated 7th June, 2011. We affirm the same. Both these appeals are accordingly dismissed. No order as to costs. Certified photocopy of this judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities. I agree, MD. Nizamuddin, J.
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