Supreme Court of India
THE CHAIRMAN, BOARD OF TRUSTEES COCHIN PORT TRUSTversusM/S AREBEE STAR MARITIME AGENCIES PVT. LTD. & ORS.
- Citation
- 2018 INSC 216
- Decided
- 7 March 2018
- Disposal
- Matter referred to larger bench
- Bench
- R K AGRAWAL
Holding
Due to conflicting precedents on liability for ground rent under the Major Port Trust Act, the Court referred the matter to a larger Bench for definitive resolution.
Summary
The Cochin Port Trust sought to recover ground rent for containers that had been destuffed but not cleared by the consignees, arguing that liability could be imposed on the steamer agents beyond the 75‑day limit set by the Tariff Authority of Major Ports. The Kerala High Court held that the Port Trust could only claim ground rent for a maximum of 75 days and that the steamer agents were not liable to clear the goods. The Supreme Court noted inconsistencies among earlier decisions (Rowther‑I, Rowther‑II, Sriyanesh Knitters, Forbes‑I, Forbes‑II, Rasiklal) regarding who—steamer agent or consignee—bears liability for port charges. It identified several unresolved legal questions concerning the interpretation of Section 2(o) of the Major Port Trust Act, the relevance of title passage, and the extent of the Port Trust’s obligations. Consequently, the Court referred the matter to a larger Bench for authoritative clarification.
Issues considered
- Whether the interpretation of Section 2(o) of the Major Port Trust Act requires consideration of the title of goods and the time at which title passes to the consignee to determine liability for port charges.
- Whether a consignor or steamer agent is absolved of responsibility to pay port charges for goods not cleared by the consignee once the bill of lading is endorsed or a delivery order issued.
- Whether a steamer agent can be held liable for storage/demurrage charges for goods not cleared by the consignee when no delivery order has been issued, and to what extent.
- What principles determine whether a Port Trust may recover its dues from the steamer agent or the consignee.
- Whether the Port Trust has a statutory or contractual obligation to de‑stuff every container entrusted to it and return empty containers to the shipping agent.
Legislation cited
- Bills of Lading Act, 1856
- Customs Acts. 48
- Major Port Trust Act, 1963s. 2(o), s. 42, s. 43, s. 47A, s. 48, s. 49, s. 59, s. 60, s. 61, s. 62
Subjects
Major Port Trust Actground rentsteamer agent liabilityconsignee liabilitybailmentdemurrageTariff Authority of Major Portslarger bench referral
Judgment
196 [2018]
SUPREME COURT 3 S.C.R. 196
REPORTS [2018] 3 S.C.R.
A THE CHAIRMAN, BOARD OF TRUSTEES
COCHIN PORT TRUST
v.
M/S AREBEE STAR MARITIME AGENCIES
PVT. LTD. & ORS.
B
(Civil Appeal No. 2525 of 2018)
MARCH 07, 2018
[R. K. AGRAWAL AND DR. D. Y. CHANDRACHUD, JJ.]
Major Port Trust Act, 1963 – s. 2(o) – Liability of the consignee
C
or steamer agent in respect of ground rent charges to be paid to the
port trust – Determination of – Containers unloaded at port trust,
but not cleared by the consignees or importers and refused to be
de-stuffed by the Port, on the ground of inadequate storage space
– Liability to pay ‘ground rent’, if can be imposed on the owners of
D the vessel/steamer agents beyond the period of 75 days, fixed by
the Tariff Authority of Major Ports – Held: In view of the
inconsistencies in the decisions in *Rowther-I, **Rowther-II,
***Sriyanesh Knitters, ****Forbes-II and *****Rasiklal as regards on
whom the Port Trust has to fasten the liability for payment of its
charges, matter referred to the larger Bench – Reference to larger
E
Bench.
Synthetic woolen rags were imported in containers. The
said containers were destuffed in the Cochin Port Trust premises
to facilitate Customs examination. The destuffed-unloaded cargo
F occupied much larger space and was not promptly cleared by the
consignees due to certain reasons. The goods were lying idle in
the Port premises for quite long. The port trust charged ground
rent from the steamer agents/owners of the containers. The same
was challenged. The question arose before the High Court that
whether the liability to pay ‘ground rent’ on containers unloaded
G at Cochin Port, but not cleared by the consignees/importers and
refused to be de-stuffed by the Port, on the ground of inadequate
storage space, can be imposed on the owners of the vessel/
steamer agents beyond the period of 75 days, fixed by the Tariff
Authority of Major Ports. The High Court held that there was no
justification for the Port Trust to collect ‘ground rent’ charges in
H
196
THE CHAIRMAN, BOARD OF TRUSTEES COCHIN PORT TRUST v. 197
M/S AREBEE STAR MARITIME AGENCIES
respect of the containers indefinitely; and that the Port Trust A
could demand ‘ground rent’ only for a maximum period of 75
days, under the orders issued by Tariff Authority of Major Ports.
Hence the present appeals by the appellant-Port Trust.
Referring the matter to larger Bench, the Court
B
HELD: 1.1 The decisions in *Rowther- I, **Rowther- II,
***Sriyanesh Knitters, ****Forbes-II and *****Rasiklal do not
seem to follow a consistent line about whom the Port Trust has
to fasten the liability for payment of its charges.
(ii) The Constitution Bench judgment in Rowther-I holds C
that when Port Trust takes charge of the goods from the ship-
owner, the ship-owner is the bailor and the Port Trust is the bailee.
While the Bench of two Judges in Sriyanesh Knitters holds that
there comes into existence the relationship of bailor and bailee
between the consignee and the Port Trust, the decision in Forbes-
II disagrees with this view of Sriyanesh Knitters. Rasiklal opines D
that enquiry into such relationship is irrelevant in determining
the right of a Port Trust to recover its dues.
(iii) While the decision in Sriyanesh Knitters was based on
the interpretation of the term “owner” under Section 2(o) of the
Major Port Trust Act, 1963, the judgment in Forbes-II and E
Rasiklal do not find the question of interpretation of the term
“owner” to be relevant.
(iv) While Forbes-II relies upon the Constitution Bench
decision in Rowther-I to come to its conclusions, Rasiklal does
not find Rowther-I to be an authority for the proposition that until F
the title in goods is passed to the consignee, the liability to pay
various charges payable to a Port Trust, for its services in respect
of goods, falls exclusively on the steamer agent.
(v) In Rowther-II, it was held that once the goods are handed
over to the Port Trust by the steamer and the steamer agents G
have duly endorsed the bill of lading or issued the delivery order,
their obligation to deliver the goods personally to the owner or
the endorsee comes to an end. The decision in Rasiklal, which
has been delivered after the reference of Forbes-I was disposed
of, takes a contrary view that in cases where the consignee does
H
198 SUPREME COURT REPORTS [2018] 3 S.C.R.
A not come to take delivery of goods, the position of law laid down
by Rowther-II would result in a situation that the Port Trust would
incur expenses without any legal right to recover such amount
from the consignor, with whom there was no contractual obligation.
(vi) The Bench of two Judges in Rasiklal opined that it
B agrees with the conclusions recorded in Rowther-II and
Forbes-II that a Port Trust could recover the rates due, either
from the steamer agent or the consignee. However, the holding
in Rowther-II finds only the consignee to be liable. [Para 14]
[212-B-C]
C 1.2 In view of the inconsistencies in the judgments delivered
after the pronouncement by the Constitution Bench in
Rowther-I, the following issues need to be resolved by a larger
Bench:
(a) Whether in the interpretation of the provision of Section
2(o) of the MPT Act, the question of title of goods, and the point
D
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;
(b) Whether a consignor or a steamer agent is absolved of
the responsibility to pay charges due to a Port Trust, for its
E 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;
(c) Whether a steamer agent can be made liable for payment
of storage charges/demurrage, etc. in respect of goods which are
F not cleared by the consignee, where the steamer agent has not
issued a delivery order; if so, to what extent;
(d) What are the principles which determine whether a Port
Trust is entitled to recover its dues, from the steamer agent or
the consignee; and
G (e) 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 de-stuff every container that is entrusted to it and
return the empty containers to the shipping agent. [Para 15]
[213-D]
H
THE CHAIRMAN, BOARD OF TRUSTEES COCHIN PORT TRUST v. 199
M/S AREBEE STAR MARITIME AGENCIES
Forbes Forbes Campbell and Co. Ltd. v Board of A
Trustees, Port of Bombay [Forbes- I]
(2008) 4 SCC 87 ; The Trustees of the Port of Madras
v K P V Sheik Mohamed Rowther & Co. [1963] Suppl.
2 SCR 915 ; [Rowther- I] Trustees of the Port of Madras
v K P V Sheikh Mohd. Rowther & Co. Pvt. Ltd.
B
[Rowther- II] (1997) 10 SCC 285 ; Board of Trustees
of the Port of Bombay and Others v Sriyanesh Knitters
(1999) 7 SCC 359 : [1999] 3 SCR 1238 ; Forbes Forbes
Campbell & Co. Ltd. v Board of Trustees, Port of Bombay
(2015) 1 SCC 228 : [2014] 12 SCR 337 ; Rasiklal
Kantilal & Co v Board of Trustee of Port of Bombay C
[Rasiklal] (2017) 11 SCC 1 – referred to.
Case Law Reference
(2008) 4 SCC 87 referred to Para 7
[1963] Suppl. 2 SCR 915 referred to Para 9 D
(1997) 10 SCC 285 referred to Para 10
[1999] 3 SCR 1238 referred to Para 11
[2014] 12 SCR 337 referred to Para 12
(2017) 11 SCC 1 referred to Para 13 E
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2525
of 2018.
From the Judgment and Order dated 27.09.2011 of the High Court F
of Kerala at Ernakulam in Original Petition No.21041 of 1999 (E)
WITH
Civil Appeal Nos. 2526, 2527, 2530, 2529, 2528, 2531, 2532, 2533,
2534 and 2535 of 2018.
G
V. Giri, Prashant Singh Pratap, A.K. Panda, Sr. Advs, V.K. Monga,
Senthil Jagadeesan, Vikas Mehta, Ms. Sunita Rani Singh, Ajai Singh,
M.P. Vinod, Arvind Kumar Sharma, M.T. George, B. Krishna Prasad,
O.P. Gaggar, Advs for the appearing parties.
H
200 SUPREME COURT REPORTS [2018] 3 S.C.R.
A The Judgment of the Court was delivered by
DR. D.Y. CHANDRACHUD, J. 1. Leave granted.
2. These proceedings have arisen from a judgment dated 27
September 2011 of a Division Bench of the Kerala High Court in a
B batch of writ appeals and original petitions, preferred by various shipping
agents.
3. The question before the High Court was whether the liability to
pay ‘ground rent’ on containers unloaded at Cochin Port, but not cleared
by the consignees/importers and refused to be de-stuffed by the Port, on
C the ground of inadequate storage space, can be imposed on the owners
of the vessel/steamer agents beyond the period of 75 days, fixed by the
Tariff Authority of Major Ports1, a statutory body constituted under Section
47A of the Major Port Trust Act2, 1963.
4. The facts of the case are summarized in the following extract
D of the judgment of the High Court:
“The sequence of events that led to the stalemate refers to the
incidents which happened in 1998 when there (sic) imports
synthetic woollen rags (in containers) in the Cochin Port Trust
premises. The said containers were destuffed to facilitate Customs
E examination and to return the empty containers to the Steamer
Agents. The destuffed cargo occupied much larger space and
was not promptly cleared by the consignees in view of the hurdles
placed by the Customs stating that the cargo actually did not
constitute old woollen rags as declared, but mostly were brand
F new clothes which could not have been cleared. The ‘modus
operandi’ of the consignees/importers attracted wide attention of
all concerned and taking note of the probable extent of liability to
be imposed by the Customs Department, and the liability to be
satisfied to the Port and others concerned, the consignees did not
turn up to clear the goods and they were lying idle in the Port
G premises for quite long.”
The Port Trust charged ‘ground rent’ from the Steamer Agents/
owners of the containers.
1
TAMP
2
MPT Act
H
THE CHAIRMAN, BOARD OF TRUSTEES COCHIN PORT TRUST v. 201
M/S AREBEE STAR MARITIME AGENCIES [DR. D.Y. CHANDRACHUD, J.]
5. The case revolves around the interpretation of the provisions A
of the MPT Act. The Act makes provision for the constitution of port
authorities in whom it vests administrative control and management of
ports. Section 3 authorises the Central Government to constitute a Board
of Trustees (“Board”3) in respect of any major port. Under Section 5,
every Board is to be a body corporate. Section 35 empowers the Board
B
to execute works within or without the limits of the port and provide any
such appliances for the port as it “may deem necessary or expedient”.
Section 43 places responsibility on a Board for the loss, destruction or
deterioration of goods of which it has taken charge.
6. Section 2(o) defines an “owner”, in relation to goods, to include C
“any consignor, consignee, shipper or agent for the sale, custody, loading
or unloading of such goods”; and in relation to any vessel or any aircraft
making use of any port, to include “any part-owner, charterer, consignee,
or mortgagee in possession thereof”. Section 42 authorises the Board to
undertake certain services. Sub-section (2) of Section 42 provides that a
Board may, if requested by the owner of the goods, take charge of the D
goods for the purpose of performing services. Section 42(7) provides
that after goods have been taken charge of and a receipt given for them
under the Section, no liability for any loss or damage which may occur to
them shall attach to any person to whom a receipt has been given or to
the master or owner of the vessel from which the goods have been E
landed or transhipped.
Chapter VI of the Act provides for imposition and recovery of
rates at ports. The right to prescribe the scale of rates for services
performed by the Board or other persons and to prescribe the statement
of conditions under which the premises of the Board can be used, was F
vested earlier, mainly under Sections 48 and 49, with the Board of Trustees
of the Port. Later, with an amendment of the Act in 1997, Section 47A
was inserted by which TAMP was created. The power to prescribe a
scale of rates now vests with TAMP.
Under Section 59(1), a lien on goods is created in favour of the G
Board (in respect of any service rendered for such goods). The Board
is empowered to seize and detain the goods until its rates and rents are
fully paid. Section 60 provides for the Ship-owner’s lien for freight and
3
“Board” and “Port Trust authority” have been used interchangeably.
H
202 SUPREME COURT REPORTS [2018] 3 S.C.R.
A other charges.4 Under Sections 61 and 62, such seized/detained goods
can be sold by the Board by public auction or in any other manner,
subject to the conditions and procedures prescribed in those provisions.
Though the term ‘ground rent’ is not defined in the MPT Act, the
source of authority to levy it is in Section 49(1) (d)5 of the Act. The
B scheme of the MPT Act appears to be silent with regard to the persons
from whom ‘ground rent’ and other charges could be collected.
7. During the course of submissions before the High Court, it was
pointed out that the question whether a “Steamer Agent” can be
construed to be the “owner” of the goods carried in the vessel belonging
to its principal, in view of the definition in Section 2(o) and whether the
C “Steamer Agent” can be made liable for the payment of storage charges/
demurrage in respect of the goods, which are uncleared by the consignee,
has been referred by a Bench of two learned Judges of this Court to a
larger Bench in Forbes Forbes Campbell and Co. Ltd. v Board of
Trustees, Port of Bombay6 [Forbes- I]. This Court had then framed
D the following questions of law of public importance:
a) 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;
E b) Whether a steamer agent can be made liable for payment of
storage charges/demurrage in respect of goods, which are
uncleared by the consignee, even where the steamer agent has
not issued a delivery order; and
4
Section 60(1) provides: (1) “if the master or owner of any vessel or his agent, at or
F before the time of landing from such vessel any goods at any dock, wharf, quay, stage,
jetty, berth, mooring or pier belonging to or in the occupation of a Board, gives to the
Board a notice in writing that such goods are to remain subject to a lien for freight or
other charges payable to the ship-owner, to an amount to be mentioned in such notice,
such goods shall continue to be liable to such lien to such amount.”
5
Section 49(1) (d) provides: [(1) The Authority shall from time to time, by notification
in the Official Gazette, also frame a scale of rates on payment of which, and a statement
G of conditions under which, any property belonging to, or in the possession or occupation
of, the Board, or any place within the limits of the port or the port approaches may be
used for the purposes specified hereunder]:-
…
(d) any other use of any land, building, works, vessels or appliances belonging to or
provided by the Board.
6
(2008) 4 SCC 87
H
THE CHAIRMAN, BOARD OF TRUSTEES COCHIN PORT TRUST v. 203
M/S AREBEE STAR MARITIME AGENCIES [DR. D.Y. CHANDRACHUD, J.]
c) In the event that a steamer agent is held liable, to what extent is A
he liable and whether it absolves the Port Trust from acting
promptly under Sections 61 or 62 of the Act?
In view of the above reference, the High Court did not deal with
these specific issues. However, the High Court observed that the
reference did not cover: B
(i) The scope and the power of TAMP (with effect from
9 January 1997) to prescribe the scale of rates and conditions,
as specified under Sections 48 and 49 of the MPT Act; and
(ii) Whether various TAMP orders limiting the entitlements of the
Port Trust to realize the ‘ground rent’ was in tune with the C
mandate of Sections 61/62 of the MPT Act.
The High Court restricted the scope of consideration in the batch
of petitions and appeals to the scheme of the MPT Act and the effect of
the TAMP orders with regard to fixation of and the extent of liability
upon the Steamer Agents to pay the ‘ground rent’. D
8. The High Court held thus:
“Nowhere has it been specified in the statutes or elsewhere that
the Steamer Agents have a duty or liability to clear the goods
from the custody of the Port, which in fact is the onus of the
E
Consignee/their agents. This is more so since, as per the Bills of
Lading Act, the ownership and title to the goods are vested on the
Consignee or an endorsee of the Bill of lading. Once the goods
are landed in the Port premises, the same cannot be cleared by
the Owners of the Vessel/Steamer Agents and their rights stand
confined ‘only to the lien’ for freight and other charges to be F
exercised in conformity with S. 60(1) of the Major Port Trusts
Act which of course is having priority in the matter of satisfaction/
appropriation in the event of sale of the goods, as provided; on
pursuing the course stipulated under Section 61/62 of the Major
Port Trusts Act or such similar course as contemplated under
G
Section 48 of the Customs Act. In both the cases, the Shippers’
lien gets precedence and priority over any other dues/lien including
the lien of the Port Trust or the amounts payable to the Customs/
Government or under such other heads, except the expenses for
the sale proceedings, which is the mandate under Section 63 of
the MPT Act and Section 150 of the Customs Act.” H
204 SUPREME COURT REPORTS [2018] 3 S.C.R.
A The High Court came to the conclusion that the scheme of the
statute does not contemplate a liability to be fulfilled by the vessel owners
except to the extent as specified and the freight and other charges payable
to them get priority over other dues payable to the Government and also
to the Port, if the lien is exercised in the manner specified under Section
60(1).
B
The High Court held that there is no justification for the Port
Trust to collect ‘ground rent’ charges in respect of the containers
indefinitely. The High Court held that the authority and power to prescribe
the scale of rates and conditions under Sections 48 and 49 of the MPT
Act stands vested exclusively with TAMP with effect from 9 January
C 1997. It held that the Port Trust can demand ‘ground rent’ only for a
maximum period of 75 days, under the orders issued by TAMP. The
High Court rejected the contention of the Port Trust, that there was no
obligation cast upon it, to have destuffed the goods when the containers
landed.
D 9. Relevant to the present context, there is a line of judicial
precedent. In 1963, a Constitution Bench in The Trustees of the Port
of Madras v K P V Sheik Mohamed Rowther & Co.7 [Rowther- I]
upheld the power of the Board to collect rates/charges from the steamer
agent:
E “There is no doubt that the shipowner is the bailee of the shipper,
the consignor, and that he is responsible for the delivery of the
goods to the consignee or a transferee according to the terms of
the bill of lading. This duty the ship-owner discharges only when
he has delivered the goods to the consignee or such person who is
entitled to take delivery in accordance with the endorsements on
F the bill of lading. Delivery to the Board is not delivery to the
consignee or such person, both because the delivery is to be on
the presentation of the Bill of lading and because the Act contains
no provision which would constitute the Board an agent of the
consignee for the purpose of taking delivery of the goods.”
G The case revolved around the question whether the Board acted
as an agent of the consignee. The Constitution Bench held that the Board
takes charge of the goods on behalf of the ship-owner and not on behalf
of the consignee. The contention that the Board acted an agent of the
consignee was rejected:
H 7
(1963) Supp. 2 SCR 915
THE CHAIRMAN, BOARD OF TRUSTEES COCHIN PORT TRUST v. 205
M/S AREBEE STAR MARITIME AGENCIES [DR. D.Y. CHANDRACHUD, J.]
“Section 40 [of Port Trust Act 1905] speaks of the responsibility A
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 is the delivery of goods by one person to
another for some purpose, upon a contract that they shall, when
B
the purpose is accomplished, be returned or otherwise disposed
of according to the directions of the person delivering them. The
person delivering the goods is called the bailor and the person to
whom they are delivered is called the bailee. It is clear therefore
that when the Board takes charge of the goods from the ship-
owner, the ship-owner is the bailor and the Board is the bailee, C
and 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
D
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 shipowner and not on behalf of the
consignee, and whatever services it performs at the time of the
landing of the goods or on their removal thereafter, are services
rendered to the ship.” E
10. A decision of a three-Judge Bench of this Court in Trustees
of the Port of Madras v K P V Sheikh Mohd. Rowther & Co. Pvt.
Ltd.8 [Rowther- II]dealt with the question “whether the demurrage
charges, harbour dues etc. payable to the Port Trust of Madras were to
be recovered from the consignee of the goods or from the steamer F
agent”. In this case, the goods remained in the custody of the Port Trust
for a long time till they were ultimately confiscated by the Customs
authorities. It was held that only the consignee was liable to pay the
demurrage charges. The learned Judges approved the reasoning of the
Madras High Court that:
“Once the goods are handed over to the Port Trust by the steamer G
and the steamer agents have duly endorsed the bill of lading or
issued the delivery order, their obligation to deliver the goods
personally to the owner or the endorsee comes to an end… Even
8
(1997) 10 SCC 285 H
206 SUPREME COURT REPORTS [2018] 3 S.C.R.
A though the consignee is not a party to the contract of carriage
once the property in the goods had passed to him, he becomes
liable to pay the storage or demurrage charges as owner of the
goods to the shipowner.”
This Court also agreed with the conclusion of the High Court that
B the provisions of the MPT Act cannot be so construed as to hold that the
steamer agent has undertaken the responsibility for the safety of the
goods till they are cleared by Customs and taken delivery of by the
consignee. The facts in Rowther II were distinguished from those in
Rowther I.
C Rowther-I was distinguished in Rowther-II on the ground that
while the charges in the former case related to services rendered by the
Port Trust at the time of the landing of the goods and their removal
thereafter to its custody those charges being for services provided for
the benefit of the steamer, Rowther-II related to demurrage charges
after the goods were landed and taken charge of by the Board and after
D the steamer agent had endorsed the Bill of lading or issued a delivery
order for effecting delivery to the consignee, that is, after the property in
the goods had passed to him.
11. In a subsequent judgment of this Court in Board of Trustees
of the Port of Bombay and Others v Sriyanesh Knitters9, it was
E held that by virtue of the definition of the term “owner” under Section
2(o) of MPT Act and the relevant provisions of the Bills of Lading Act,
the consignee of the goods named in the Bill of lading or every endorsee
of the Bill of lading for the purpose of the MPT Act, is regarded as the
owner of goods and it is from the owner that the recovery of charges
F under the MPT Act is provided in respect of such goods. It was held:
“It is the consignee which is the bailor with the Port Trust being
the consignee (sic bailee).”
12. In Forbes-I, the Bench of two learned Judges of this Court
doubted the correctness of the decision rendered in Rowther- II and
G referred it for consideration to a larger Bench. By an order dated 13
August 2014, a Bench of three judges did not see any inconsistency in
Rowther- II and thus referred the matter back to the regular Bench for
further hearing with the following observations:
9
H (1999) 7 SCC 359
THE CHAIRMAN, BOARD OF TRUSTEES COCHIN PORT TRUST v. 207
M/S AREBEE STAR MARITIME AGENCIES [DR. D.Y. CHANDRACHUD, J.]
“We have gone through the order whereby the matter has been A
referred to this Bench.
We have noted the fact that no reason for not agreeing with the
Judgment delivered by a three-Judge Bench has been assigned in
the said order.
Moreover, upon going through the Judgment delivered in 1997 B
(10) SCC 285, we see no reason to disagree with the ratio laid
down in the said Judgment.
In these circumstances, we refer the matter back to the regular
bench for further hearing as we do not see any inconsistency in
the said Judgment.”
C
A Bench of two Judges of this Court thereafter heard the matter
and in Forbes Forbes Campbell & Co. Ltd. v Board of Trustees,
Port of Bombay10 [Forbes-II] dealt with the liability of the Steamer
Agent to pay demurrage and port charges to the Port Trust in respect of
goods brought into the port and warehoused by the Port Trust Authority.
This Court opined that: D
“[W]hile 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 really
E
does not hinge on the meaning of the expression “Owner” as
appearing in Section 2(o) of the Act of 1963, as has been sought
to be urged on behalf of the appellant though going by the language
of Section 2(o) and the other provisions of the Act especially
Section 42, an owner would include a ship owner or his agent.
Otherwise it is difficult to reconcile how custody of the goods for F
the purpose of rendering services under Section 42 can be
entrusted to the Port Trust authority by the 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
G
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 of 1963.”
10
(2015) 1 SCC 228 H
208 SUPREME COURT REPORTS [2018] 3 S.C.R.
A After examining the provisions of the MPT Act and the judgment
of the Constitution Bench in Rowther- I and of a Bench of two Judges
in Sriyanesh Knitters, the decision in Forbes-II concluded that:
“[T]he position of law which appears to emerge is that once the
bill of lading is endorsed or the delivery order is issued it is the
B consignee or endorsee who would be liable to pay the demurrage
charges and other dues of the Port Trust authority. In all other
situations the contract of bailment 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
C that the bill of lading is endorsed or delivery order is issued by the
Steamer Agent.”
The decision in Sriyanesh Knitters with regard to existence of
a relationship of bailor and bailee between the consignee and the Port
Trust instead of the Steamer Agent and the Port Trust authority was
D held to be a “mere conclusion” reached in the facts of the case.
13. In Rasiklal Kantilal & Co v Board of Trustee of Port of
Bombay11 [Rasiklal] while considering the scheme of the MPT Act, a
Bench of two Judges of this Court observed that the Act is silent with
regard to the persons from whom demurrage and other charges could
E be collected. Since services under Sections 49A to 50B are rendered
only to the vessel, the Bench found it “reasonable to interpret that only
the ship and its agents are liable to pay the rates for such services”.
However, for services rendered to the goods, a lien is created under
Section 59 (1) in favour of the Port Trust, and the Port Trust is entitled to
F seize and detain the goods until its charges are fully paid. While contrasting
Section 42(2) which contemplates “taking charge” (not possession) of
the goods by the Port Trust, and Section 59(1), which confers authority
on the Port Trust to seize and detain goods of which charge is taken of,
the Court identified a lack of clarity in the twin declarations in Section
59, but refused to “express any final opinion in this regard”.
G
While addressing the issue about whom the Port Trust is entitled
to collect charges from, the Court discussed Rowther-I, Rowther- II
and Forbes-II. With reference to Rowther- I, this Court held:
11
(2017) 11 SCC 1
H
THE CHAIRMAN, BOARD OF TRUSTEES COCHIN PORT TRUST v. 209
M/S AREBEE STAR MARITIME AGENCIES [DR. D.Y. CHANDRACHUD, J.]
“Rowther-I is not an authority for the proposition that a Board A
could collect rates due for the services rendered to goods only
from the steamer agent. Nor did this Court deal with the question
whether the title in the goods is a relevant factor for determining
a Board’s right to collect the rates... Rowther-I is no authority for
the proposition that until the title in goods passed to the consignee
B
the liability to pay various rates payable to a Board for the services
rendered in respect of goods falls exclusively on the steamer
agent.”
The Court opined that it agreed with the conclusions laid down in
Rowther-II and Forbes-II, that “a Boardcould recover rates due, either
from the steamer agent or the consignee”. However, the Court held that C
the question of title of the goods and the point of time at which the title
passes to the consignee is irrelevant for determining the authority of a
Board to recover the amounts due to it. The Court held:
“As rightly opined in Forbes [II] case, there is no bailor and bailee
relationship between the Board (the 1st respondent) and the D
consignee (the appellant); either voluntarily or statutorily compelled
but such a relationship exists between the 1st respondent and the
owner of the ship (through the steamer agent). It is possible in a
given case where the consignee or any other person (such as the
appellant herein) claiming through the consignor, eventually may E
not come forward to take delivery of the goods for a variety of
reasons - considerations of economy or supervening disability
imposed by law etc. Therefore, in such cases to say that merely
because the bill of lading is endorsed or the delivery order is issued,
the consignor or his agent is absolved of the responsibility for
payment (of rates or rent for services rendered w.r.t goods) would F
result in a situation that the Board would incur expenses without
any legal right to recover such amount from the consignor and be
driven to litigation for recovering the same from the consignee
who did not take delivery of the goods with whom the Board had
no contract of bailment and consequently no contractual obligation G
to pay the ‘rates or rent’.”
It was further held that:
“Title to the goods is irrelevant even in the cases of a bailment
arising under a contract. Any person who is capable of giving
H
210 SUPREME COURT REPORTS [2018] 3 S.C.R.
A physical possession of goods can enter into a contract of bailment
and create bailment… The obligation of the bailee to return the
bailed goods when the purpose of bailment is accomplished and
the obligation of the bailor to pay the bailee “the necessary expenses
incurred by him for the purpose of the bailment” in our opinion
would attend not only a bailment by contract but every kind of
B
bailment… If the bailor has such an obligation to pay the bailee,
any person claiming through the bailor must necessarily be bound
by such an obligation unless the bailee releases such person from
such an obligation. A consignee is a person claiming through the
consignor (bailor).”
C Dealing with the import of goods into India by ship, the Bench
referred to Section 1 of the Indian Bills of Lading Act, 1856 and held
thus:
“... the 1856 Act enacts a fiction that the consignee to whom the
property in the goods shall pass shall be “subject to the same
D liabilities in respect of such goods as if the contract contained in
the bill of lading had been made with himself”. Bill of lading is
evidence of a contract between the shipper (consignor) and the
owner of the ship by which the owner of the ship agrees to transport
the goods delivered by the consignor to a specified destination
E and deliver it to the consignee. Delivery of goods pursuant to a bill
of lading creates a bailment between the shipper and the owner
of the ship. Obviously the legislature knew that a consignee under
a bill of lading is a 3rd party to the contract but intrinsically
connected with the transaction and thought it necessary to specify
the rights and obligations of the consignee. Hence, the fiction under
F the 1856 Act, that the moment the property in goods passes to the
consignee, the liabilities of the consignee in respect of such goods
would be the same as those of the consignor, as if the contract
contained in the bill of lading had been made with the consignee.”
The Bench came to the conclusion that:
G
“The consequence is that the 1st respondent (sub-bailee) would
be entitled to enforce its rights flowing from the Bailment between
the shipowner and the 1st respondent against the consignee and
recover expenses incurred by it in connection with the bailment
from the consignee. The terms and conditions of the contract
H
THE CHAIRMAN, BOARD OF TRUSTEES COCHIN PORT TRUST v. 211
M/S AREBEE STAR MARITIME AGENCIES [DR. D.Y. CHANDRACHUD, J.]
between the consignor or person claiming delivery of the goods A
are irrelevant for determining the right of the 1st respondent to
recover its dues. The obligations/liability of the consignee is
determined by the statute. But the said obligation is not exclusive
to the consignee. The consignor (bailor) is not relieved of the
obligation to pay by virtue of Section 158 of the Contract Act the
B
expenses incurred by the 1st respondent... At this juncture, we
must point out that the declaration under Section 42(7) absolving
the owner of the ship and his agents is limited only to the obligations
owed by the bailor to the consignee not to the sub bailor like the
1st respondent.”
The Bench opined that if the MPT Act authorises the Port Trust C
“to recover its dues by bailing the goods under bailment, in those cases
where the consignee does not turn up to take the delivery of the goods
within the time stipulated under Sections 61 or 62 of the Act, to deny the
right to demand and recover the amounts due from the consignee when
he seeks delivery of the goods under bailment would be illogical and D
inconsistent with the scheme of the Act” (sic):
“Such right, in our view, undoubtedly enables the 1st respondent
to claim various amounts due to it, from any person claiming
delivery of the goods either the bailor or a person claiming through
the bailor for the services rendered w.r.t. the goods. (sic)” E
14. Analysing the above judgments, the following position emerges:
(i) The decisions in Rowther- I, Rowther- II, Sriyanesh Knitters,
Forbes-II and Rasiklal do not seem to follow a consistent
line about whom the Port Trust has to fasten the liability for
payment of its charges; F
(ii) The Constitution Bench judgment in Rowther-I holds that
when Port Trust takes charge of the goods from the ship-
owner, the ship-owner is the bailor and the Port Trust is the
bailee. While the Bench of two Judges in Sriyanesh Knitters
holds that there comes into existence the relationship of bailor G
and bailee between the consignee and the Port Trust, the
decision in Forbes-II disagrees with this view of Sriyanesh
Knitters. Rasiklal opines that enquiry into such relationship
is irrelevant in determining the right of a Port Trust to recover
its dues;
H
212 SUPREME COURT REPORTS [2018] 3 S.C.R.
A (iii) While the decision in Sriyanesh Knitters was based on the
interpretation of the term “owner” under Section 2(o) of the
MPT Act, the judgment in Forbes-II and Rasiklal do not
find the question of interpretation of the term “owner” to be
relevant;
B (iv) While Forbes-II relies upon the Constitution Bench decision
in Rowther-I to come to its conclusions, Rasiklal does not
find Rowther-I to be an authority for the proposition that until
the title in goods is passed to the consignee, the liability to pay
various charges payable to a Port Trust, for its services in
respect of goods, falls exclusively on the steamer agent;
C
(v) In Rowther-II, it washeld 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, their obligation to deliver the goods personally to the
owner or the endorsee comes to an end. The decision in
D Rasiklal, which has been delivered after the reference of
Forbes-I was disposed of, takes a contrary view that in cases
where the consignee does not come to take delivery of goods,
the position of law laid down by Rowther-II would result in a
situation that the Port Trust would incur expenses without any
E legal right to recover such amount from the consignor, with
whom there was no contractual obligation; and
(vi) The Bench of two Judges in Rasiklal opined that it agrees
with the conclusions recorded in Rowther-II and Forbes-II
that a Port Trust could recover the rates due, either from the
F steamer agent or the consignee. However, the holding in
Rowther-II finds only the consignee to be liable.
15. Taking note of the above inconsistencies in the judgments
which have been delivered after the pronouncement by the Constitution
Bench in Rowther-I, we are inclined to the view that the following
G issues need to be resolved by a larger Bench:
a) 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;
H
THE CHAIRMAN, BOARD OF TRUSTEES COCHIN PORT TRUST v. 213
M/S AREBEE STAR MARITIME AGENCIES [DR. D.Y. CHANDRACHUD, J.]
b) Whether a consignor or a steamer agent is absolved of the A
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;
c) Whether a steamer agent can be made liable for payment of B
storage charges/demurrage, etc. in respect of goods which
are not cleared by the consignee, where the steamer agent
has not issued a delivery order; if so, to what extent;
d) What are the principles which determine whether a Port Trust
is entitled to recover its dues, from the steamer agent or the C
consignee; and
e) 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 de-stuff every container that is entrusted to it and D
return the empty containers to the shipping agent.
The larger Bench may deal with any additional issues relevant to
the context, as it deems necessary.
16. We request the Registry to place the papers before the Hon’ble
Chief Justice of India for such administrative directions as may be E
considered appropriate.
Kalpana K. Tripathy Matter referred to larger Bench.
F
G
H
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