FORBES FORBES CAMPBELL & CO. LTD. Vs BOARD OF TRUSTEES, PORT OF BOMBAY
Bench: RANJAN GOGOI,R.K. AGRAWAL
Case number: C.A. No.-002134-002134 / 2006
Diary number: 6448 / 2006
Advocates: VIKAS MEHTA Vs
A. V. RANGAM
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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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