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REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION CIVIL APPEAL  NO. 2134 OF 2006

FORBES FORBES CAMPBELL & CO. LTD.        ...APPELLANT (S)

VERSUS

BOARD OF TRUSTEES, PORT OF BOMBAY   ...RESPONDENT (S)

       WITH

CIVIL APPEAL NO.7088 OF 2002,

CIVIL APPEAL NO. 7092 OF 2002,   

CIVIL APPEAL NO. 7094 OF 2002

CIVIL APPEAL NO. 802 OF 2005

CIVIL APPEAL NO. 10719 OF 2014 (ARISING OUT OF S.L.P.(C) NO.4221 OF 2012)

J U D G M E N T RANJAN GOGOI, J.

1. Leave granted in SLP(C) No. 4221 of 2012.

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2. The  common  question  of  law  that  arises  in  these  

appeals, though in different facts and circumstances, is with  

regard  to  the  liability  of  the  agent  of  a  ship  owner  

(hereinafter  referred  to  as  the  “Steamer  Agent”)  to  pay  

demurrage and port charges to the Board of Trustees of a  

Port (hereinafter referred to as “the Port Trust Authority”) in  

respect of goods brought into the port and warehoused by  

the  said  authority.   Before  proceeding  to  answer  the  

aforesaid question it will be convenient to take note of the  

core facts in each of the appeals under consideration.   

Civil  Appeal No. 2134/2006 and Civil  Appeal arising out of  SLP(C) No. 4221/2012

3. The consignee of the goods not having either cleared  

the same or having responded to any of the notices issued,  

the  goods  were  sold  by  public  auction  by  the  Port  Trust  

authority  after  almost  four  years  of  receipt  thereof.   The  

amount fetched in the auction fell short of the total charges  

payable which led the said authority to file a suit against the  

Steamer  Agent  for  the  balance  amount.   The  suit  was  

dismissed.  In appeal,  the High Court reversed the decree  

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holding the Steamer Agent to be liable.  In doing so, the High  

Court held that the ratio of the law laid down by this Court in  

Trustees of the Port of Madras Through Its Chairman  

Vs.  K.P.V. Sheikh Mohd. Rowther & Co. Pvt. Ltd. and  

Another1 (hereinafter  for  convenience referred  to  as  ‘the  

1997 judgment’)  to be not  applicable to the present case  

inasmuch  as  in  the  1997  case  the  Steamer  Agent  had  

endorsed the bill of lading in favour of the consignee thereby  

transferring  the  property  in  the  goods  to  the  consignee  

whereas  in  the  present  case  the  consignee  had  not  

attempted  to  clear  the  bill  of  lading  and  had  also  not  

responded to the notices issued.

4. The  facts  in  Civil  Appeal  arising  out  of  SLP(C)  No.  

4221/2012 are largely identical with what has been stated  

above.   

Civil  Appeal  Nos.  7088/2002,  7092/2002,  7094/2002  and  802/2005

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(1997) 10 SCC 285 = AIR  1995 SC 1922

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5. In all these cases a Resolution of the Board of Trustees  

for the Port of Calcutta dated 21.10.1982 was challenged by  

which  it  was,  inter  alia,  resolved  that  rent  on  cargo  

transported in containers may be recovered from the marine  

account of the Steamer Agent from the 16th day from the  

date of landing of the container if de-stuffing thereof is not  

done within the free time of 15 days.  The challenge to the  

aforesaid Resolution by the Steamer Agent before the High  

Court having been negatived the appeals in question have  

been preferred before this Court.   

6. On behalf  of  the  appellants  it  has  been argued that  

under  the  provisions  of  the  Major  Port  Trust  Act,  1963  

(hereinafter referred to as “the Act of 1963”); the byelaws of  

the Port Trust authority and the schedule of rates framed by  

such authority no liability is cast either on the ship owner or  

his agent for payment of demurrage and port charges.  The  

liability to pay all rates/rents/port charges being statutory, in  

the absence of a statutory empowerment, the liability sought  

to be fastened on the Steamer Agents is without authority of  

law.  Referring to the definition of “Owner” in Section 2(o) of  

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the Act of 1963 it is contended that neither the ship owner  

nor his agent comes within the ambit of the said definition of  

“Owner”.   Specifically,  it  is  contended  that  the  “Shipper”  

mentioned in Section 2(o) is not a “Ship Owner”; a Shipper is  

a mere courier to whom the consignor hands over his goods  

for dispatch and delivery to the consignee.  A “Shipper” is  

also known as a slot charterer/slot hirer.  The agent referred  

to in the first part of definition of “Owner” in Section 2(o) (i)  

is an agent of the shipper and not that of the ship owner.  

The provisions of Section 42 of the Act of 1963 have also  

been relied upon to contend that once the goods come in to  

the custody of the Port Trust authority, there is a relationship  

of  bailor  and  bailee  between  the  consignee  and  the  Port  

Trust authority and there is no such relationship between the  

ship owner or his agent on the one hand and the Port Trust  

on  the  other.    The  decision  of  this  Court  in  Board  of  

Trustees  of  the  Port  of  Bombay  and  Others  Vs.  

Sriyanesh Knitters2 is referred to and relied upon for the  

above proposition.   It is further contended that the remedy  

of a ship owner or his agent by way of lien against the goods  2 (1999) 7 SCC 359

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is of a limited operation; it is only qua the freight charges  

and other charges payable to the ship owner.  The said lien  

under  Section  60  of  the  Act  of  1963  will  not  extend  to  

demurrage or port charges.   Section 60 of the Act of 1963  

therefore does not provide for recompense of demurrage or  

port charges in the event the same are to be paid by the  

Steamer Agent to the Port Trust authority,  as held by the  

High Court.

7. It has been specifically argued that the liability of a ship  

owner or his agent for payment of demurrage charges and  

port  rent  etc.  stands  concluded  by  the  1997  judgment.  

There is no such liability in law. It is submitted that the fact  

of  endorsement  of  the  bill  of  lading  in  favour  of  the  

consignee  in  the  above  case,  as  distinguished  from  the  

present case, would not have the effect of confining the ratio  

of the judgment only to situations where the bill  of lading  

has been endorsed or the delivery order has been issued by  

the Steamer Agent.  This is because by operation of Section  

2(o) of the Act of 1963 “Owner” includes a consignee but not  

a  Steamer  Agent.   Therefore,  endorsement  of  the  bill  of  

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lading  or  delivery  order  is  not  determinative.   The above  

stand has been further sought to be fortified by referring to  

the approval by this Court of the view expressed by the High  

Court  of  Madras  that  making  a  Steamer  Agent  liable  for  

demurrage  charges/port  rent  would  be  “imposing  a  too  

onerous and unexpected responsibility on the steamer which  

is  only a carrier”  and further  that  if  Steamer Agents “are  

submitted 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  

agent have to pay towards storage or demurrage charges  

amounts quite disproportionate to the freight they collect for  

the carriage of the goods.”  It is, therefore, submitted that  

the  absence  of  liability  of  Steamer  Agents  for  demurrage  

charges/port rent was decided on certain broader principles  

and  propositions  and  not  on  the  basis  of  the  mere  

endorsement of the bill  of lading or issuance of a delivery  

order by the Steamer Agent.   

8. Learned counsel for the appellants has also referred to  

the decision of the Constitution Bench in  The Trustees of  

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the Port of Madras by Its Chairman Vs.  K.P.V. Sheik  

Mohamed Rowther & Co.  and Others3 (hereinafter  for  

convenience referred to as ‘the Constitution Bench decision’)  

and has sought to explain the seemingly contradictory views  

with regard to liability of the Steamer Agents on the basis  

that the said liability was on account of charges incurred by  

the Port Trust authority for engagement of labour made at  

the request of the Steamer Agent and the service rendered  

was before the goods had come into the custody of the Port  

Trust  authority.   The  view  expressed  with  regard  to  the  

liability  of  a  Steamer  Agent,  therefore,  is  in  a  different  

context, it is contended.

9. On behalf of the respondent Port Trust authority it  is  

contended that the decision of this Court in the 1997 case  

has to be understood to be confined to situations where the  

bill of lading had been endorsed or delivery orders had been  

issued  by  the  Steamer  Agent.   In  all  other  situations  i.e.  

where the bill of lading has not been endorsed, a relationship  

of bailor and bailee between the Steamer Agent and the Port  

3 (1963) Supp. 2 SCR 915

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Trust authority would come into existence by virtue of the  

provisions of Section 42 of the Act of 1963 and continue till  

the bill of lading is duly endorsed. This is because the goods  

come into the custody of the Port Trust from the ship owner  

by operation of the provisions of Section 42 of the Act of  

1963.  It  is  further  contended that  the views expressed in  

Sriyanesh Knitters (supra) with regard to the relationship  

of  bailor  and  bailee  between  the  consignee  and  the  Port  

Trust authority was in a situation where the consignee had  

already appeared on the scene and taken delivery  of  the  

goods.   Distinguishing  the  aforesaid  two  judgments  it  is  

contended that the issue arising is squarely covered by the  

decision of the Constitution Bench holding a Steamer Agent  

to be liable under the Act to payment of demurrage charges  

and other port dues.   

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  

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of  the  aforesaid  question  really  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 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  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.   For the reasons already  

indicated the decision in  Sriyanesh Knitters (supra) with  

regard  to  existence  of  a  relationship  of  bailor  and  bailee  

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between the consignee and the Port Trust authority instead  

of the Steamer Agent and the Port Trust authority cannot be  

understood to be a restatement of a general principle of law  

but a mere conclusion reached in the facts of the case where  

the consignee had already appeared in the scene.   In all  

other  situations  where  the  bill  of  lading  has  not  been  

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 is the delivery of goods by   one person to another for some purpose, upon a   contract  that  they  shall,  when  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, and the Board’s   responsibility for the goods thereafter is that of a   bailee.  The Board does not get the goods from  

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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 ship- owner  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.”

11. From the above, the 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 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 that the bill of lading is endorsed or delivery order is  

issued by the Steamer Agent.   

12. In  the  orders  of  the  Calcutta  High  Court  under  

challenge, it is mentioned that Section 60 of the Act provides  

a remedy to the Steamer Agent to recover the dues from the  

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consignee.  Section 60 of the Act of 1963 confers a limited  

lien on the ship owner “for freight and other charges payable  

to  the  ship  owner”  which  expression  does  not  extend  to  

demurrage  and  other  port  charges.   The  High  Court,  

therefore, does not appear to be correct in its conclusions.  

However,  the said error  would not  be fundamental  to  the  

final conclusion reached by the High Court.  In this regard we  

cannot  help  noticing the special  provisions of  Sections 61  

and 62 of the Act which enable the Port Trust authority to  

proceed against the goods within its custody to recover the  

charges which may be payable to the Port Trust authority.  

Ordinarily and in the normal course if resort is made to the  

enabling provisions in the Act of 1963 to proceed against the  

goods for recovery of the charges payable to the Port Trust  

authority  there  may  not  be  any  occasion  for  the  said  

authority to sustain any loss or even suffer any shortfall of  

the dues payable to it so as to initiate recovery proceedings  

against the ship owners.    

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13. In view of the foregoing discussion, all the appeals are  

dismissed  and  the  impugned  orders  of  the  High  Court  of  

Bombay and Calcutta are affirmed.

      ..........………………………J. [RANJAN GOGOI]

…..........……………………J. [R.K. AGRAWAL]

NEW DELHI, DECEMBER 03, 2014.

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