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2016 (7) TMI 277 - CALCUTTA HIGH COURT

2016 (7) TMI 277 - CALCUTTA HIGH COURT - TMI - To what extent the Kolkata Port Trust (in short ‘KPT’) is entitled to recover demurrage charges from the respondent no. 1/writ petitioner in respect of containers in which poppy seed was imported by the respondent company from Karachi to Kolkata on route to Nepal - Held that:- Indian Trident Maritime (P) Ltd. (ITM) was not liable for the port charges incurred for storing the cargo in question on port premises after the issuance of the delivery order .....

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question then arises is what happens to the claim of KPT? In our considered opinion, KPT has to look towards the consignee of the cargo in question for recovering its dues. It is not disputed that under the Major Port Trusts Act, the port trust authorities are entitled to frame scale of rates regarding the port rent, harbour charges, wharfage etc. and the port authorities have a statutory right to recover the same from the person liable to pay the same. In the facts of this case, the person lia .....

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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. - 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 consign .....

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Mr. S. Dasgupta, Adv. Mr. T. K. Sen, Adv. JUDGEMENT Arijit Banerjee, J.: (1) This appeal is directed against the judgment and order dated 25 June, 2014 passed by the Learned First Court, whereby WP No. 1936 of 1995 was disposed of. The question that arises for determination is as to what extent the Kolkata Port Trust (in short KPT ) is entitled to recover demurrage charges from the respondent no. 1/writ petitioner in respect of containers in which poppy seed was imported by the respondent compan .....

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n Nepal. (3) By reason of delay on the part of the consignee to take delivery of the cargo, ITM s containers remained blocked causing commercial loss and inconvenience to ITM. Accordingly, ITM wrote a letter dated 8 September, 1994 to the Customs Authorities requesting them to allow ITM to destuff the containers and store the cargo in the port sheds or any other place as directed by the Customs Authorities. This was followed by a letter dated 24 September, 1994 written by ITM requesting the Cust .....

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provided suitable shed was allocated by KPT and the cargo was secured consignment wise. (6) By a letter dated 13 March, 1995, ITM requested KPT to allot suitable shed within the port area for destuffing of the containers. (7) BY a letter dated 16 March, 1995, KPT permitted ITM to destuff 5 containers for the time being at 13 Netaji Subhas Docks. (8) By a letter dated 29 March, 1995 KPT requested M/s. Nepal Transit and Warehousing Co. Ltd. (in short NTW ) to allow destuffing of containers at the .....

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of the remaining containers in the Nepal transit shed. (10) By a letter dated 22 August, 1995 ITM informed KPT that it was in constant touch with the NTW officials for their permission to destuff the remaining containers in the Nepal transit shed but till such permission was granted, KPT should accept some of the cargo in its sheds. (11) In November, 1995 ITM filed WP No. 1936 of 1995 before the Ld. Single Judge praying for a direction on the KPT and the Customs Authorities to release 78 contain .....

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their use. The court reserved liberty to the KPT to take recourse to the provisions of Sections 61 and 62 of the Major Port Trusts Act, 1963 in respect of the cargo of poppy seeds or to take such other steps as they may be entitled to in law to recover their rents and rates in respect thereof from the persons liable to pay the same. KPT was also directed to refund to the petitioners the ground rent debited from their marine A/c. No. 1-33 (13) On an appeal preferred by KPT against the said judgm .....

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6 the Appeal Court disposed of the appeal by remanding back the matter to the Ld. First Court for being heard on affidavits. ITM was directed to deposit a further sum of ₹ 14 lacs with its Advocate on record as security for demurrage charges. KPT was directed to destuff the containers in question within 15 days at its own cost at the first instance subject to the outcome of the order to be passed at the final hearing of the writ petition. ITM was directed to arrange for removal of the dest .....

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same. It was further recorded by the Appeal Court that the parties had agreed that the writ petitioner would not be made liable for any claim that any of the Authorities may have against the owner of the destuffed cargo in question. (16) On 16 December, 1996, ITM s Advocate on record wrote to the Advocate on record for the Customs Authorities that as per the order dated 4 December, 1996, the Customs Authorities were to inform ITM about the godown where the goods would be kept but no such intimat .....

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he order of the Division Bench, space for storage of the destuffed goods was available at CWC, Howrah. (18) Destuffing of the containers was commenced by KPT on 20 December, 1996. (19) By a letter dated 21 December, 1996 ITM s Advocates informed KPT s Advocates and the Advocate for the Customs that the poppy seeds that ITM removed from the Port premises were not accepted by the CWC godown. (20) The matter was brought to the notice of the Appeal Court. The Appeal Court by an order dated 23 Decemb .....

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n the three customs bonded warehouses in the West Bengal State Warehousing Corporation. (22) By an order dated 24 December, 1996, the Appeal Court extended the time for destuffing of the containers till 3 January, 1997. Subsequently, by an order dated 8 January, 1997 the Appeal Court extended the time fixed by the earlier orders by four weeks. (23) Between 23 December, 1996 and 17 February, 1997, 78 containers were removed by the writ petitioners from the port premises after destuffing the same. .....

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, 2014 which is impugned in the present appeal, the operative portion whereof is as follows:- The position that emerges on the facts in this case is the Port Authority should have sold the goods within two months from 12th February, 1996 being the date of the said earlier order wherein the submissions made on behalf of the Customs were recorded, that their detention of the goods had been set aside by this court upon being challenged. The Port Authority having had collected demurrage charges from .....

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the instance of the Port Authority when it had no lien and demurrage charges for that period cannot be fastened on the petitioners. The petitioners having admitted their liability to pay de-stuffing charges to the tune of ₹ 6,84,849.80/- on account of cost of de-stuffing 78 containers in terms of the said order dated 4th December, 1996, there will be a direction upon the learned Advocate on record of the petitioners to pay the said sum to the Port Authority alongwith demurrage charges pay .....

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unt out of the total interest accrued on the said principal sum kept deposited by applying the said ratio. The writ petition is disposed of with the above directions. Contention of the KPT:- (26) Appearing on behalf of the KPT, Mr. S. K. Roychowdhury, Learned Sr. Advocate submitted that the Learned Single Judge erred in preventing KPT from releasing its statutory dues specially when KPT was not at fault in discharging its statutory duties under the Major Port Trusts Act, 1963 (in short MPT Act ) .....

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o inside the containers. The claim of KPT was on account of demurrage charges in respect of the containers. ITM being the owner of the containers, it is liable for such rent/demurrage charges. (28) Mr. Roychowdhury then submitted that the decisions in the cases of Trustees of The Port of Madras-vs.-K.P.V. Sheikh Mohd. Rawther & Co. Pvt. Ltd., (1997) 10 SCC 285, Om Shankar Biyani-vs.-Board of Trustees, Port of Calcutta, (2002) 3 SCC 168 and Natvar Parekh Industries Ltd.-vs.-Board of Trustees .....

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ould have sold the cargo within two months from 12 February, 1996 being the date of the order passed by Altamas Kabir, J. (as His Lordship then was). (30) Mr. Roychowdhury referred to the Supreme Court decision in the case of Om Shankar Biyani (supra). He referred to paragraph 17 of the judgment wherein the Hon ble Apex Court observed as follows:- 17. Statutorily the 1st Respondent is entitled to claim payment of all demurrage charges before the goods were cleared. The Appellants never offered t .....

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. Ltd.-vs.-Board of Trustees, Port of Bombay, AIR 2015 SC 1150, wherein at paragraphs 10 and 11 of the judgment the Hon ble Apex Court, inter alia, observed as follows:- 10. While it is correct that the liability to pay demurrage charges and port rent is statutory, in the absence of any specific bar under the statute, such liability can reasonably fall on a Steamer Agent if on a construction of the provisions of the Act such a conclusion can be reached. Determination of the aforesaid question re .....

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he owner as provided therein under Section 42(2). At that stage the goods may still be in the custody of the ship owner under a separate bailment with the shipper or the consignor, as may be. Even de hors the above question the liability to pay demurrage charges and port rent would accrue to the account of the Steamer Agent if a contract of bailment between the Steamer Agent and the Port Trust authority can be held to come into existence under Section 42(2) read with Section 43(1)(ii) of the Act .....

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en endorsed or delivery orders have not been issued and therefore the consignee is yet to surface, the following observations of the Constitution Bench in K.P.V. Sheik Mohamed Rowther & Co. and Others (supra) will have to prevail. "Section 40 speaks of the responsibility of the Board for the loss, destruction or deterioration of the goods of which it has taken charge as a bailee under Ss. 151, 152 and 161 of the Indian Contract Act. Section 148 of the Contract Act states that a bailment .....

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the Board's responsibility for the goods thereafter is that of a bailee. The Board does not get the goods from the consignee. It cannot be the bailee of the consignee. It can be the agent of the consignee only if so appointed, which is not alleged to be the case, and even if the Board be an agent, then its liability would be as an agent and not as a bailee. The provisions of Ss. 39 and 40, therefore, further support the contention that the Board takes charge of the goods on behalf of the shi .....

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ent is one between the Steamer Agent (bailor) and the Port Trust Authority (bailee) giving rise to the liability of the Steamer Agent for such charges till such time that the bill of lading is endorsed or delivery order is issued by the Steamer Agent. (32) Finally Mr. Roychowdhury referred to the Supreme Court decision in the case of International Airports Authority of India-vs.-Grand Slam International, (1995) 3 SCC 151, wherein at paragraph 32 of the judgment the Hon ble Apex Court after refer .....

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or the authorities under the Import Trade Control Regulations, which detentions were thereafter found to be unjustified. (33) Relying on the aforesaid submissions Mr. Roychowdhury prayed for setting aside of the order of the Learned Single Judge. Contention of ITM:- (34) Appearing on behalf of ITM, Mr. Pradip Kumar Ghosh, Ld. Sr. Counsel submitted that upon delivery order being issued by ITM as the Steamer Agent in September, 1994 and upon endorsement of the bill of lading in favour of the clea .....

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gent. The High Court held that it was the consignee who was liable to pay the charges. The Hon ble Supreme Court affirmed the reasoning and the judgment of the High Court. It was held that once the goods are handed over to the Port Trust by the steamer and the steamer agents have duly endorsed the bill of lading or issued the delivery order, the obligation to deliver the goods personally to the owner or the endorsee comes to an end. The subsequent detention of the goods by the Port Trusts as a r .....

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e goods is also said to be that of a bailee. It cannot be said that the steamer agents have undertaken any responsibility for the custody of the goods after the transit has come to an end and after the bill of lading has been endorsed or a delivery order issued. By the endorsement of the bill of lading or the issuance of a delivery order by the steamer agents, the property of the goods vests in the consignee or the endorsee and the steamer or the steamer agents are not responsible for the custod .....

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to such a responsibility, in most cases where the goods are detained without delivery in the hands of the Port Trust at the instance of the customs, the steamer or steamer agents have to pay a storage or demurrage charge which would be quite disproportionate to the freight they collect for the carriage of the goods. No carrier will undertake such a risk and responsibility. The provisions of the Port Trusts Act cannot be so construed as to impose an additional liability or obligation on the carri .....

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pbell & Co. Ltd. (supra) and in particular on paragraph 11 of the said judgment which has been extracted above. (36) Learned Counsel further submitted that the Division Bench order dated 4 December, 1996 directed the KPT to bear the costs of destuffing of the containers at the first instance which will be subject to the outcome at the final hearing of the writ application. Learned Single Judge erroneously directed ITM to pay to KPT the destuffing charges amounting to ₹ 6,84,848/- witho .....

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e case of K.P.V. Sheikh Mohd. Rowther (supra) and fell in error in directing ITM to pay the costs of destuffing of ₹ 6,84,848/- and detention charges of 78 containers amounting to ₹ 22,92,912/- although KPT had agreed that ITM shall not be liable to pay any charge which is payable by the cargo owner. ITM did not voluntarily pay the detention charges of the 78 containers to KPT. On the contrary, ITM claimed refund of the said amount in the writ petition which was illegally debited to .....

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incurred in connection with stowing of goods in port premises? (40) It is not in dispute that ITM is not the owner of the poppy seeds that were imported from Karachi to Kolkata in transit to Nepal. ITM is admittedly the steamer agent and handling contractors of the writ petitioner no. 2 in India. The writ petitioner no. 2 is a ship owner and owner of the containers in which the consignment of poppy seeds was imported. Between 24 July, 1994 and 28 August, 1994 a total of 125 containers, each 20 f .....

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n in the business of carriage of goods. The details of the correspondence exchanged between the parties have been recorded above. It will be seen from the said correspondence that the containers were ultimately removed by the writ petitioners from the port premises between 23 December, 1996 and 17 February, 1997. The KPT debited the Marine A/c. of the writ petitioner no. 1 to the tune of ₹ 22,92,912/- for the period up to 14 August, 1995 on account of rent in respect of the containers that .....

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ge 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 ev .....

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he 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 un .....

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iving 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). (42) In view of the aforesaid being the legal position, we have to hold that the ITM was not liable for the port charges incurred for storing the cargo in question on port premises .....

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naction on the part of the KPT. There was no lack of effort or action on the part of ITM. Naturally, ITM could not remove the containers without de-stuffing the same as the cargo in the containers did not belong to ITM. The delay in de-stuffing the containers cannot in any manner be attributable to ITM. Hence, in our opinion, KPT was not entitled to debit the Marine A/c. of ITM to the tune of ₹ 22 lakhs approximately nor is it entitled to claim or recover from ITM any further sum as mentio .....

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e scale of rates regarding the port rent, harbour charges, wharfage etc. and the port authorities have a statutory right to recover the same from the person liable to pay the same. In the facts of this case, the person liable is the consignee. Hence, the remedy of KPT is against the consignee. (44) 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 Au .....

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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 follow .....

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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. (45) 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 reco .....

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for the same. By its tardy conduct, KPT has allowed the cargo over which it has statutory lien, to become completely useless and valueless waste products. (47) It was sought to be argued on behalf of the KPT that ITM is liable for the rent or demurrage charges in respect of the containers. We are unable to accept such argument. It was not that ITM failed, neglected or refused to remove the containers from the port premises. It was not possible for them to remove the containers without first des .....

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e here. 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. It is also pertinent to note that in the order dated 4 December, 1996, the Appeal Court recorded the agreement of the parties that any of the Authorities would not make the writ petitioner liable for any .....

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