TaxTMI 
TaxTMI 
2018 (3) TMI 358
X X X X Extracts X X X X
X X X X Extracts X X X X
....ggar, Adv. JUDGMENT 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 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 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 (TAMP), a statutory body constituted under Section 47A of the Major Port Trust Act (MPT Act), 1963. 4 The facts of the case are summarized in the following extract 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 examination and to return the empty containers to the Steamer Agents.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 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 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 other charges. (Section 60(1) provides: (1) "if the master or owner of any vessel or his agent, at or 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 shi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ptly 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: (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 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'. 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 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ignee 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 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." 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: "Section 40 [of Port Trust Act 1905] 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 perso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nstrued 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. 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 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 Knitters (1999) 7 SCC 359 , it was 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 endors....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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." 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 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom the steamer agent or the consignee". However, the Court held that 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 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 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 result in a situation that the Board would incur expenses w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith the consignee." The Bench came to the conclusion that: "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 between the consignor or person claiming delivery of the goods 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 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 "to recover its dues by bailing the goods under bailment, in those....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd. 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 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; 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 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 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 ....