FORBES FORBES CAMPBELL & CO. LTD. Vs. BOARD OF TRUSTEES, PORT OF BOMBAY - Supreme Court- Section 2(o),42,60 of THE MAJOR PORT TRUSTS ACT, 1963
Supreme Court of India
CIVIL APPEAL NO. 2134 OF 2006, CIVIL APPEAL NO.7088 OF 2002, CIVIL APPEAL NO. 7092 OF 2002, CIVI Judgment Date: Dec 03, 2014
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.
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 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 Another[1] (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
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 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 Knitters[2] 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 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 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 the Port of Madras by Its
Chairman Vs. K.P.V. Sheik Mohamed Rowther & Co. and Others[3] (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
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 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 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 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 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.
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.