Interpretation Of Provisions Of Major Port Trusts Act: SC Answers Reference [Read Judgment]

A Three Judge Bench of the Supreme Court has answered the reference made to it regarding the interpretation of various provisions of the Major Port Trusts Act, 1963.

Reference was made to the larger bench by a bench Justices RK Agrawal and  DY Chandrachud while considering a  batch of appeals against division bench order of the High Court of Kerala. The issue in this case 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 the ground of inadequate storage space, can be imposed on the owners of the 3 vessel/steamer agents beyond the period of 75 days, fixed by the Tariff Authority of Major Ports, a statutory body constituted under Section 47A of the Major Port Trust Act, 1963

Following are the questions referred and answers given by the three judge bench comprising of Justices RF Nariman, Navin Sinha and Indira Banerjee.

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?

The point of time at which title to the goods passes to the consignee is not relevant to determine the liability of the 85 consignee or steamer agent in respect of charges to be paid to the Port Trust; Whether a consignor or a steamer agent is absolved of the responsibility to pay charges due to a Port Trust, for its services in respect of goods which are not cleared by the consignee, once the Bill of lading is endorsed or the delivery order is issued?

Whether a consignor or a steamer agent is absolved of the responsibility to pay charges due to a Port Trust, for its services in respect of goods which are not cleared by the consignee, once the bill of lading is endorsed or the delivery order is issued; Whether a steamer agent can be made liable for payment of 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; 

The bill of lading being endorsed by the steamer agent is different from the bill of lading being endorsed by the owner of the goods. In the first case, the endorsement leads to delivery; in the second case, the endorsement leads to passing of title. For the reasons mentioned in the judgment, both stages are irrelevant in determining who is to pay storage charges – we have held that upto the point that the Port Trust takes charge of the goods, and gives receipt therefor, the steamer agent may be held liable for Port Trust dues in connection with services rendered qua unloading of goods, but that thereafter, the importer, owner, consignee or their agent is liable to pay demurrage charges for storage of goods;

 What are the principles which determine whether a Port Trust is entitled to recover its dues, from the steamer agent or the consignee?

Until the stage of landing and removal to a place of storage, the steamer's agent or the vessel itself may be made liable for rates payable by the vessel for services performed to the vessel. Post landing and removal to a place of storage, detention charges for goods that are stored, and demurrage payable thereon from this point on, i.e. when the Port Trust takes charge of the goods from the vessel, or from any other person who can be said to be owner as defined under section 2(o), it is only the owner of the goods or other persons entitled to the goods (who may be beneficially entitled as well) that the Port Trust has to look to for payment of storage or demurrage charges.

While the Port Trust does have certain statutory obligations with regard to the goods entrusted to it, whether there is any obligation, either statutory or contractual, that obliges the Port Trust to destuff every container that is entrusted to it and return the empty containers to the shipping agent.

The Court has answered this question in two parts.

Whether carrying goods in a container would make any difference to the position that only the owner of the goods or person entitled to the goods is liable to pay for demurrage? In this regard, the court said that the containers "suitable for repetitive use" type cannot be classified with the goods contained therein for payment of customs duty

Whether the Port Trust is obliged to destuff containers that are entrusted to it and return empty containers? Answering this issue, it held: "A container which has to be returned is only a receptacle by which goods that are imported into India are transported. Considering that the container may belong either to the consignor, shipping agent, ship-owner, or to some person who has leased out the same, it would be the duty of the Port Trust to destuff every container that is entrusted to it, and return destuffed containers to any such person within as short a period as is feasible in cases where the owner/person entitled to the goods does not come forward to take delivery of the goods and destuff such containers. What should be this period is to be determined on the facts of each case, given the activities of the port, the number of vessels which berth at it, together with the volume of goods that are imported. While it does not lie in the mouth of the Port Trust to state that it has no place in which to keep goods after they are destuffed – as in the facts in the present case – yet a court may, in the facts of an individual case, look into practical difficulties faced by the Port Trust. This may lead to the "short period" in the facts of a particular case being slightly longer than in a case where a port is less frequented, and goods that are stored are lesser in number, given the amount of space in which the goods can be stored."

The Court has also held that the expression "may" in sections 61 and 62 of the MPT Act cannot be read as "shall", subject 88 to the caveat that as the "State" under Article 12 of the Constitution, a Port Trust must act reasonably, and attempt to sell the goods within a reasonable period from the date on which it has assumed custody of them.

Case Details

Case no.: CIVIL APPEAL NO. 2525 OF 2018

Case name: THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST Vs. M/S AREBEE STAR MARITIME AGENCIES PVT. LTD. & ORS.

Coram: Justices RF Nariman, Navin Sinha and Indira Banerjee.

Counsel: Senior Advocates Prashant S. Pratap, Rahul Narichania, Kavin Gulati

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