TaxTMI 
TaxTMI 
2020 (8) TMI 300
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....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 47-A of the Major Port Trusts Act [MPT Act], 1963. 3. The facts of the case are summarised 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. The destuffed cargo occupied much larger space and was not promptly cleared by the consignees in view of the hurdles placed by the Customs stating that the cargo actually did not constitute old woollen rags as declared, but mostly were brand new clothes which could not have been cleared. The "modus operandi" of the consignees/importers attracted wide attention of all concerned and taking note of the probable extent of liability to be imposed by the Customs Department,....
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.... to the Port Trust by the steamer and the steamer agents have duly endorsed the bill of lading or issued the delivery order, their obligation to deliver the goods personally to the owner or the endorsee comes to an end. 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 23.6. 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. 24. 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: 24.1. W....
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....ts involved in these appeals and writ petition were briefly stated in paragraphs 4 and 5 of the impugned High Court judgment as follows: "4. Goods involved in all the cases, imported as 'FCL' (Full Container Loads) mainly consist of 'synthetic woollen rags', except in W.P. (C) No. 32191 of 2004, where it is VCD players. The period of import is during August 1998 to March 1999. All the Containers now stand returned after destuffing, pursuant to common judgment in the Original Petitions and the interim orders passed in the Appeals. 5. Some of the goods imported earlier in the Cochin Port, titled as "woollen rags" were actually found to be "brand new clothes" on inspection by the Customs Department, which attracted heavy duty, penalty and such other charges. The dispute between the Consignees and the Customs went on for an indefinite period and in the said circumstances, the consignees did not turn up to clear the goods in respect of the subsequent transactions as well, presumably knowing the probable outcome and the huge liability to be satisfied under different heads including the Port charges and other dues because of the delay. So also, no action was taken by the Port Trust t....
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....and were being made "to pay through their nose". This being the case, the impugned judgment went on to construe sections 61 and 62 of the MPT Act, by which a Board "may", after the expiry of two months from the time when any goods passed into its custody, sell such goods under certain circumstances. The impugned judgment went on to hold that the expression "may" in the said provisions must be read as "shall", as a duty is cast on the Port Trust to get rid of the goods as soon as possible in a fact situation where the consignee does not lift such goods. Ultimately, the impugned judgment concluded: "44. In the above facts and circumstances, this Court finds that, there is no rationale on the part of the Port Trust in contending that they are entitled to collect 'Ground Rent' charges in respect of containers indefinitely. The course pursued by them without causing the goods to be destuffed, despite the specific request, on the failure of the Consignee/Importer to have it cleared and by proceeding against such goods for causing the same to be sold in the public auction, realising the funds, to be apportioned in the manner specified under Section 63, cannot but be deprecated. This Cou....
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..../shipper. Analogously, therefore, the Port Trust (sub-bailee) would be entitled to payment for its services from the shipping agent (bailee). He was at pains to argue that the passing of title to the goods is immaterial when it comes to the Port Trust collecting its dues, as the Port Trust has no means of ascertaining when such title has passed. In any event, Shri Rai contended that the correct reading of the MPT Act leads to the conclusion that the passing of title is in any case wholly irrelevant. He stressed the fact that containers belonging to the shipping agents are required to be returned to them upon destuffing, as a result of which they are liable for ground rent. He strongly supported the decision in Rasiklal (supra) which laid this proposition down as a matter of law. He also strongly deprecated the impugned judgment of the Kerala High Court, stating that the discretion that has been given under sections 61 and 62 of the MPT Act to the Port Trust cannot be converted into a mandatory obligation, and that "may" must be read as "may", and not "shall". 9. Shri Prashant S. Pratap, learned Senior Advocate appearing on behalf of Respondent No.1, a shipping/steamer agent, was a....
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...., on a consideration of section 1 of the Indian Bills of Lading Act, 1856, and submitted that Forbes-II (supra) is wholly incorrect and deserves to be overruled. He dealt with the judgment in Rowther-I (supra) in great detail, and distinguished it from the present case, stating that the judgment does not concern demurrage or storage charges post landing of the goods, and after the Port Trust takes custody of the goods and issues the receipt, and is thus not applicable to the facts of the present case. Further, according to him, Rasiklal (supra), insofar as it agrees with Forbes-II (supra) is incorrect. Insofar as Rasiklal (supra) notes the legal position that the Port Trust is a sub-bailee of the goods bailed by the consignor (bailor) to the ship-owner (bailee), it is absolutely correct and must be followed. So far as Rowther-II (supra) is concerned, the learned Senior Advocate stated that the portion of Rowther-II (supra), which mixes up endorsement by the steamer agent with the endorsement by the consignor, cannot be said to be good law. He also contended that the issuance of a delivery order to the consignee is irrelevant, and has no bearing on the liability to pay storage charg....
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....ty on a steamer agent, but only with respect to land that is taken on lease from the Port Trust by the steamer agent. He relied heavily upon sections 61 to 63 of the MPT Act to argue that when the goods are sold by the public auction, a steamer agent has to be notified only because the vessel owner may have a lien on such goods, which can be enforced in its favour under section 60 of the MPT Act. Further, he argued that it is made clear that if there is a surplus from the sale proceeds, such surplus shall be paid only to the importer, owner or consignee of the goods or their agent, from which list of persons the ship-owner and its agent are conspicuously absent, making it clear that it is the owner of the goods alone, or persons entitled to the goods, that the Port Trust must chase for demurrage charges incurred after landing. He then argued that the passing of title under section 1 of the Indian Bills of Lading Act, 1856 makes it clear that it is either the consignor (before title passes) or the consignee (after title passes) that can alone be made liable for payment of such charges. He also argued that the obligation to clear goods imported which have been stored in a warehouse a....
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....rge leviable under this Act; xxx xxx xxx (z) "vessel" includes anything made for the conveyance, mainly by water, of human beings or of goods and a caisson;" "42. Performance of services by Board or other person.-(1) A Board shall have power to undertake the following services:- (a) landing, shipping or transhipping passengers and goods between vessels in the port and the wharves, piers, quays or docks belonging to or in the possession of the Board; (b) receiving, removing, shifting, transporting, storing or delivering goods brought within the Board's premises; (c) carrying passengers by rail or by other means within the limits of the port or port approaches, subject to such restrictions and conditions as the Central Government may think fit to impose; (d) receiving and delivering, transporting and booking and despatching goods originating in the vessels in the port and intended for carriage by the neighbouring railways, or vice versa, as a railway administration under the Indian Railways Act, 1890 ( 9 of 1890); (e) piloting, hauling, mooring, remooring, hooking, or measuring of vessels or any other service in respect of vessels; and (f) developing and pr....
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....ons 151, 152 and 161 of the Indian Contract Act, 1872 (9 of 1872), omitting the words "in the absence of any special contract" in section 152 of that Act: Provided that no responsibility under this section shall attach to the Board- (a) until a receipt mentioned in sub-section (2) of section 42 is given by the Board; and (b) after the expiry of such period as may be prescribed by regulations from the date of taking charge of such goods by the Board. (2) A Board shall not be in any way responsible for the loss, destruction or deterioration of, or damage to, goods of which it has taken charge, unless notice of such loss or damage has been given within such period as may be prescribed by regulations made in this behalf from the date of taking charge of such goods by the Board under sub-section (2) of section 42." "48. Scales of rates for services performed by Board or other person.- (1) The Authority shall from time to time, by notification in the Official Gazette, frame a scale of rates at which, and a statement of conditions under which, any of the services specified hereunder shall be performed by a Board or any other person authorised under section 42 at or in relation....
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....y the Board in that behalf of a document purporting to be a receipt for, or release from, the amount of such lien, executed by the person by whom or on whose behalf such notice has been given, the Board may permit such goods to be removed without regard to such lien, provided that the Board shall have used reasonable care in respect to the authenticity of such document. 61. Sale of goods after two months if rates or rent are not paid or lien for freight is not discharged.-(1) A Board may, after the expiry of two months from the time when any goods have passed into its custody, or in the case of animals and perishable or hazardous goods after the expiry of such shorter period not being less than twenty-four hours after the landing of the animals or goods as the Board may think fit, sell by public auction or in such cases as the Board considers it necessary so to do, for reasons to be recorded in writing, sell by tender, private agreement or in any other manner such goods or so much thereof as, in the opinion of the Board, may be necessary- (a) if any rates payable to the Board in respect of such goods have not been paid, or (b) if any rent payable to the Board in respect of ....
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....rt Gazette, in the Official Gazette and also in at least one of the principal local daily newspapers, requiring him to remove the goods forthwith and stating that in default of compliance therewith the goods are liable to be sold by public auction or by tender, private agreement or in any other manner: Provided that where all the rates and charges payable under this Act in respect of any such goods have been paid, no notice of removal shall be so served or published under this sub-section unless two months have expired from the date on which the goods were placed in the custody of the Board. (2) The notice referred to in sub-section (1) may also be served on the agents of the vessel by which such goods were landed. (3) If such owner or person does not comply with the requisition in the notice served upon him or published under sub-section (1), the Board may, at any time after the expiration of two months from the date on which such goods were placed in its custody, sell the goods by public auction or in such cases as the Board considers it necessary so to do, for reason to be recorded in writing sell by tender, private agreement or in any other manner after giving notice o....
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.... furniture belonging thereto, or any part thereof, and detain the same until the amount so due to the Board, together with such further amount as may accrue for any period during which the vessel is under distraint or arrest, is paid. (2) In case any part of the said rates or penalties, or of the cost of the distress or arrest, or of the keeping of the same, remains unpaid for the space of five days next after any such distress or arrest has been so made, the Board may cause the vessel or other things so distrained or arrested to be sold, and, with the proceeds of such sale, shall satisfy such rates or penalties and costs, including the costs of sale remaining unpaid, rendering the surplus (if any) to the master of such vessel on demand. 65. Grant of port-clearance after payment of rates and realisation of damages, etc.-If a Board gives to the officer of the Central Government whose duty it is to grant the port-clearance to any vessel at the port, a notice stating,- (i) that an amount specified therein is due in respect of rates, fines, penalties or expenses chargeable under this Act or under any regulations or orders made in pursuance thereof, against such vessel, or by t....
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....l manifest or import manifest or import report.-(1) The person-in-charge of - (i) a vessel; or (ii) an aircraft; or (iii) a vehicle, carrying imported goods or export goods or any other person as may be specified by the Central Government, by notification in the Official Gazette, in this behalf shall, in the case of a vessel or an aircraft, deliver to the proper officer an arrival manifest or import manifest by presenting electronically prior to the arrival of the vessel or the aircraft, as the case may be, and in the case of a vehicle, an import report within twelve hours after its arrival in the customs station, in such form and manner as may be prescribed and if the arrival manifest or import manifest or the import report or any part thereof, is not delivered to the proper officer within the time specified in this sub-section and if the proper officer is satisfied that there was no sufficient cause for such delay, the person-in-charge or any other person referred to in this sub-section, who caused such delay, shall be liable to a penalty not exceeding fifty thousand rupees: Provided that the Principal Commissioner of Customs or Commissioner of Customs may, in case....
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....thout warehousing the same. (2) Save as otherwise permitted by the proper officer, a bill of entry shall include all the goods mentioned in the bill of lading or other receipt given by the carrier to the consignor. (3) The importer shall present the bill of entry under sub-section (1) before the end of the next day following the day (excluding holidays) on which the aircraft or vessel or vehicle carrying the goods arrives at a customs station at which such goods are to be cleared for home consumption or warehousing: Provided that a bill of entry may be presented at any time not exceeding thirty days prior to the expected arrival of the aircraft or vessel or vehicle by which the goods have been shipped for importation into India: Provided further that where the bill of entry is not presented within the time so specified and the proper officer is satisfied that there was no sufficient cause for such delay, the importer shall pay such charges for late presentation of the bill of entry as may be prescribed. (4) The importer while presenting a bill of entry shall make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in suppor....
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.... reasonable time, the goods may pending clearance or removal, as the case may be, be permitted to be stored in a public warehouse for a period not exceeding thirty days: Provided that the provisions of Chapter IX shall not apply to goods permitted to be stored in a public warehouse under this section: Provided further that the Principal Commissioner of Customs or Commissioner of Customs may extend the period of storage for a further period not exceeding thirty days at a time." "150. Procedure for sale of goods and application of sale proceeds.-(1) Where any goods not being confiscated goods are to be sold under any provisions of this Act, they shall, after notice to the owner thereof, be sold by public auction or by tender or with the consent of the owner in any other manner. (2) The proceeds of any such sale shall be applied- (a) firstly to the payment of the expenses of the sale, (b) next to the payment of the freight and other charges, if any, payable in respect of the goods sold, to the carrier, if notice of such charges has been given to the person having custody of the goods, (c) next to the payment of the duty, if any, on the goods sold, (d) next t....
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....tly held that the said rule of construction has no application to the facts and circumstances of the case. This Court in State of Bombay v. Hospital Mazdoor Sabha [AIR 1960 SC 610] has considered in detail the rule of construction noscitur à sociis and in para 9, it is observed thus: "We are not impressed by this argument. It must be borne in mind that noscitur à sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. It is only where the intention of the legislature in associating wider words with words of narrower significance is doubtful, or otherwise not clear that the present rule of construction can be usefully applied. It can also be applied where the meaning of the words of wider import is doubtful; but, where the object of the legislature in using wider words is clear and free of ambiguity, the rule of construction in question cannot be pressed into service." 8. As stated earlier on reading Entry 30 and Entry 54, we have no manner of doubt that there is neither any ambiguity nor do they lack any clarity.....
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....uch form as the Board may specify. It is obvious that if the ship-owner or its agent are not "owners", the Board cannot take the charge of the goods from the ship-owner or its agent for the purpose of performing services, a result which would lead to startling consequences. Secondly, under sub-section (7), once goods have been taken charge of and a receipt given for them, no liability for any loss or damage which may occur to them shall attach to any person to whom a receipt has been given (this would include any of the persons mentioned in section 2(o)(i), including the vessel's agents), or to the master or owner of the vessel from which the goods have been landed or transhipped. This would again make it clear that the master or owner of the vessel and their agents, from this point on, have been absolved from liability for loss or damage to the goods, as the Board has now taken over the custody of the goods from such master or owner of the vessel. From this point on, therefore, the master or owner of the vessel and their agents cease to have any liability qua the goods, inasmuch as the Port Trust has now taken them over. Concomitantly, under section 43(1)(ii), the responsibility o....
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....titled to such goods, which can never be the ship-owner or the ship-owner's agent after the goods have been landed, and the vessel has sailed away from the port. Further, under section 61, after two months from the time goods have passed into the Board's custody, the Board may, if it thinks fit, sell - by the modalities laid down - such goods or so much thereof as may be necessary to recover the rates payable to the Board which remain unpaid. Sub-section (3) of section 61 is very important, in that before making such sale, if the address of the "owner of the goods" which has been stated on the manifest, or in other documents that have come into the hands of the Board, or is otherwise known, notice of such sale must be given to such owner. 22. Section 62 speaks of the disposal of goods that have not been removed from the premises of the Board within time, and speaks of their removal by the "owner or other person entitled thereto". Under sub-section (2) of section 62, where such goods are proposed to be removed or sold, a notice may also be served on the "agents of the vessel by which such goods were landed". This is for the reason that the vessel's agents may have indicated that th....
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....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. 25. At this juncture, the Customs Act, 1962 also becomes relevant. Under section 2(26), "importer" is defined as including any owner, beneficial owner or any person holding himself out to be the importer. Though this definition does not ipso facto apply to the MPT Act, it is important that the two Acts be read together, as both Acts deal with goods that are imported into the country from abroad, and their storage and disposal thereafter. In any event, the expression "importer" that occurs in section 63(2) of the MPT Act would certainly include a beneficial owner ....
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....ing destuffed, and the container belongs to the ship-owner's agent and has to be returned to the ship-owner's agent, for the duration that the container takes up storage space, storage charges will have to be paid by the ship-owner's agent. Let us examine whether this argument is sound in law. 29. Under the Customs Act, 1962, customs duties are levied on goods imported into India. "Import" has been defined in section 2(23) of the Customs Act as the "bringing into India from a place outside India". Thus, import of goods can only be said to be complete after they cross into the territorial waters of India, and become part of the mass of goods within India. This is the law laid down by this Court in Garden Silk Mills Ltd. and Anr v. Union of India and Ors. (1999) 8 SCC 744, as follows: "17. It was further submitted that in the case of Apar (P) Ltd. [(1999) 6 SCC 117] this Court was concerned with Sections 14 and 15 but here we have to construe the word "imported" occurring in Section 12 and this can only mean that the moment goods have entered the territorial waters the import is complete. We do not agree with the submission. This Court in its opinion in Bill to Amend Section 20 of....
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.... for home consumption or for deposit in a warehouse. Further, as per Section 47 of the Customs Act, the importer has to pay import duty only on goods that are entered for home consumption. Obviously, the quantity of goods imported will be the quantity of goods at the time they are entered for home consumption. xxx xxx xxx 14. We are afraid that each one of the reasons given by the Tribunal is incorrect in law. The Tribunal has lost sight of the following first principles when it arrived at the aforesaid conclusion. First, it has lost sight of the fact that a levy in the context of import duty can only be on imported goods, that is, on goods brought into India from a place outside of India. Till that is done, there is no charge to tax. This Court in Garden Silk Mills Ltd. v. Union of India, stated that this takes place, as follows: "17. It was further submitted that in Apar (P) Ltd. [Union of India v. Apar (P) Ltd., (1999) 6 SCC 117] this Court was concerned with Sections 14 and 15 but here we have to construe the word "imported" occurring in Section 12 and this can only mean that the moment goods have entered the territorial waters the import is complete. We do not agree w....
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.... "impost or duty".]. 32. This doctrine has been the subject-matter of comment in a variety of different situations. Thus, in the Province of Madras v. Boddu Paidanna & sons, A.I.R. (29) 1942 Federal Court 33 (at page 37), in the context of sales tax legislation by the States, the Federal Court referred to Chief Justice Marshall's judgment, and distinguished the same, saying that it would apply to the Commerce clause in the US Constitution, and would not apply by analogy to the legislative entries under the Seventh Schedule of the Government of India Act (1935). Likewise, in State of Bombay and Anr. v. F.N. Balsara 1951 SCR 682, in the context of a law passed by the Legislature of the Province of Bombay relating to prohibition of intoxicating liquors, an argument based on Chief Justice Marshall's dictum in Brown (supra) was made, stating that in pith and substance such law would relate to import and export of intoxicating liquors, and therefore be void. This was turned down, referring to Boddu Paidanna (supra), stating that in the American judgment the widest meaning could be given to the Commerce clause as there was no question of reconciling that clause with another clause contai....
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....relating to customs in paragraphs 97 to 103. As a matter of fact in paragraph 103, the law laid down in Garden Silk Mills Ltd. (supra) was extracted with approval as follows: 103. Similar view was expressed in the case of Garden Silk Mills Ltd. v. Union of India, (1999) 8 SCC 744, in paragraph 18, which is to the following effect:- "18. It would appear to us that the import of goods into India would commence when the same cross into the territorial waters but continues and is completed when the goods become part of the mass of goods within the country; the taxable event being reached at the time when the goods reach the customs barriers and the bill of entry for home consumption is filed." 37. These judgments were then distinguished by the Court as follows: "104. The law relating to customs has been consolidated by the Customs Act, 1962. The definitions of "import", "imported goods" and "importer" have already been noticed above. The definition of imported goods as given in Section 2(25) is-any goods brought into India from the place outside India but does not include goods, which have been cleared for home consumption. The provision clearly contemplates that once the goods....
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....d as it does not become part of the mass of goods within the country on the facts of these cases. Thus, once destuffing takes place, the container has to be returned either to the ship-owner's agent, or to the person who owns such container. 40. In fact, the Bill of Entry (Forms) Regulations, 1976 (as amended up to date) contain forms in which a Bill of Entry is to be presented by an importer of goods for home consumption, or for warehousing, or for ex-bond clearance for home consumption. Regulation 3 of the aforesaid Regulations reads as follows: "3. Form of Bill of Entry.- The Bill of Entry to be presented by an importer of any goods for home consumption or for warehousing or for ex-bond clearance for home consumption shall be in Form I or Form II or Form III as the case may be. Explanation - In this regulation, "goods" does not include those goods which are intended for transit or transshipment." 41. Form I, which speaks of a Bill of Entry for home consumption, contains a declaration to be signed by an importer, clause 6(b) of which is important and is set out hereunder: "6(b) I/We declare that there are the following payments actually paid or payable for the imported goods ....
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....cially interchangeable with the goods being valued having regard to the quality, reputation and the existence of trade mark; (ii) produced in the country in which the goods being valued were produced; and (iii) produced by the same person who produced the goods being valued, or where no such goods are available, goods produced by a different person, but shall not include imported goods where engineering, development work, art work, design work, plan or sketch undertaken in India were completed directly or indirectly by the buyer on these imported goods free of charge or at a reduced cost for use in connection with the production and sale for export of these imported goods;" 44. Rule 4 deals with the transaction value of "identical goods", and Rule 5 deals with the transaction value of "similar goods", and are set out hereinbelow: "4. Transaction value of identical goods.- (1)(a) Subject to the provisions of rule 3, the value of imported goods shall be the transaction value of identical goods sold for export to India and imported at or about the same time as the goods being valued; Provided that such transaction value shall not be the value of the goods provisionally assessed ....
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.... when it comes to "computed value", Rule 8 states as follows: "8. Computed value.- Subject to the provisions of rule 3, the value of imported goods shall be based on a computed value, which shall consist of the sum of:- (a) the cost or value of materials and fabrication or other processing employed in producing the imported goods; (b) an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to India; (c) the cost or value of all other expenses under sub-rule (2) of rule 10." 46. Rule 10, which deals with "costs and services" then states: "10. Costs and services.- (1) In determining the transaction value, there shall be added to the price actually paid or payable for the imported goods, - (a) the following to the extent they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods, namely:- xxx xxx xxx (ii) the cost of containers which are treated as being one for customs purposes with the goods in question;" 47. A reading of Rule 10(1)(a)(ii) would lea....
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....uch further period, as he may deem fit." A clarification by the Central Board of Indirect Taxes and Customs dated 25th October, 2002 [Circular No.69/2002-Customs. ], clarified as to what is meant by "containers of durable nature" as follows: "Notification No.104/94-Cus., exempts containers which are of durable nature from the whole of the duty of customs and additional duty subject to the condition that such containers are re-exported within 6 months from the date of importation and documentary evidence is furnished to the satisfaction of the Assistant Commissioner. As per the meanings assigned to the words "durable" and "container" in various Dictionaries, it would appear that any goods (containers) used for packaging or transporting other goods, and capable of being used several times, would fall in the category of "containers of durable nature". A reading of the aforesaid also goes to buttress the conclusion reached in the previous paragraph of this judgment. 49. The Customs Tariff Act, 1975 also throws considerable light on containers fit for repetitive use. Section 2 of the said Act states as follows: "2. Duties specified in the Schedules to be levied.-The rates at whic....
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....t, or on account of force majeure conditions such as rain. This is further fleshed out by a Circular dated 25.02.1958, referred to at pages 925 and 926. After setting out the relevant sections of the Madras Act, the by-laws, and the Manual of Instructions framed and issued by the Board, the first proposition of law laid down in the said judgment is that it is not obligatory on behalf of the Board to undertake the various services mentioned in section 39 of the Madras Act (which is pari materia with section 42 of the MPT Act). It is only if such services are required by the "owner" as defined that such services are undertaken by the Board. It was then held that it was the steamer agent who was in a position to require the Board to undertake such services in respect of the cargo that the ship is to unload (see pages 935 to 936). The question for determination was then set out as follows: "The question for determination, in the case, then is whether the law making the steamer-agent liable to pay these charges is good law." Page 937 53. "These charges", as has been stated earlier, were on account of payment of labour dues for labour remaining idle, such labour being of the Port Trus....
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....he consignee, but only from the ship-owners, it cannot possibly be said to be the bailee of the consignee. The observation that whatever services the Board performs at the time of landing of the goods, or "on their removal thereafter" are services rendered to the ship, must be understood in the context of the facts of that case. A perusal of the Board's counter affidavit, which is reflected at page no.921, would show that the Harbour dues on the import of cargo speaks, inter alia, of charges involved in moving the goods from the landing point to the storage point. The expression "on their removal thereafter", on the facts of this case, would therefore only mean services performed by the Board from landing point to storage point, and not thereafter. This is in fact made even clearer by the following passage in the said judgment: "The charges for labour rendered idle and for labour working more hooks simultaneously, are not charges for services rendered subsequent to the landing of the goods. These are charges which are incurred at the last stage of the process of landing of the goods and therefore prior to the actual landing of the goods. They are, even under the general law, for ....
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....omes to an end. The subsequent detention of the goods by the Port Trust as a result of the intervention by the Customs authorities cannot be said to be on behalf of or for the benefit of the steamer agents. Generally, if there is a delay in taking delivery of the goods by the consignee within a reasonable time, the steamer or its agent can warehouse the goods. In such an event the warehouseman has an independent claim against the consignee or endorsee for the demurrage charges. The position cannot be different merely because the Customs authorities have intervened. The position of the Port Trust is the same as that of a warehouseman whose responsibility to the goods is also said to be a bailee. It cannot be said that the steamer or its agents have undertaken any responsibility for the custody of the goods after the transit has come to an end and after the bill of lading has been duly endorsed or a delivery order issued. By the endorsement of the bill of lading or the issue of a delivery order by the steamer agents, the property in the goods vests on such consignee or endorsee, and thus it appears to be clear that the steamer or the steamer agents are not responsible for the custody....
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....dy, and those charges were taken to be for the benefit of the steamer. It is for this reason that the Court took the view that the Port Trust is entitled to collect the service charges from the steamer or its agent. We are, however, satisfied that the above decision cannot be taken to lay down that the Port Trust can at no time proceed against the consignee for demurrage charges and can only look to the steamer agent. We are, here, concerned with the demurrage charges after the goods have been 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. As already stated, the goods have remained in the custody of the Port Trust on the default of the consignee to satisfy the Customs authorities that the import was authorised. "Even though the consignee is not a party to the contract of carriage once the property in the goods had passed to him, he becomes liable to pay the storage or demurrage charges as owner of the goods to the shipowner." Page 287 58. Rowther-II (supra) has made it clear that Rowther-I (supra) concern....
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....he steamer", which is only a carrier, and not owner, of the goods. 60. At this juncture, it is important to understand the legal effect of a bill of lading. This has been set out by a five Judge Bench of this Court in J.V. Gokal and Co. (Pvt.) Ltd. v. Asst. Collector of Sales-Tax (Inspection) and Ors. (1960) 2 SCR 852, as follows: "A bill of lading is "a writing, signed on behalf of the owner of the ship in which goods are embarked, acknowledging the receipt of the goods, and undertaking to deliver them at the end of the voyage subject to such conditions as may be mentioned in the bill of lading". It is well-settled in commercial world that a bill of lading represents the goods and the transfer of it operates as a transfer of the goods. The legal effect of the transfer of a bill of lading has been enunciated by Bowen, L.J., in Sanders Brothers v. Maclean & Co. [(1883) II QBD 327] thus at p. 341: "The law as to the indorsement of bills of lading is as clear as in my opinion the practice of all European merchants is thoroughly understood. A cargo at sea while in the hands of the carrier is necessarily incapable of physical delivery. During this period of transit and voyage, the....
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....e judgment of the High Court, this Court in Rowther-II (supra) then went on to extract a passage from International Airport Authority of India v. Grand Slam International (1995) 3 SCC 151, by which it was made clear that demurrage charges are to be paid by the importer or consignee liable for the same (and not the vessel or the steamer agent thereof). 64. Sriyanesh Knitters (supra) is the next judgment that has to be dealt with in chronological sequence. This was a judgment of two learned judges of this Court, in which the question that arose before the Court was stated thus: "1. The common question involved in these appeals is whether the appellant Board of Trustees of the Port Trust constituted under the Major Port Trusts Act, 1963 (for short "the MPT Act") have a general lien for their dues over the present or future consignments imported by the importers at the Bombay Port when the said dues are in respect of the past imports made by the said importers." 65. The Court first found that a reading of sections 59 and 61(1) of the MPT Act made it clear that the lien spoken of is a lien qua the particular goods that are imported, and cannot extend to previous imports of similar g....
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....three questions (referred to earlier in this judgment) to be answered by a larger Bench. On 13.08.2014, the larger Bench of three Judges held: "We have gone through the order whereby the matter has been referred to this Bench. We have noted the fact that no reason for not agreeing with the Judgment delivered by a three-Judge Bench has been assigned in the said order. Moreover, upon going through the Judgment delivered in 1997 (10) SCC 285, we see no reason to disagree with the ratio laid down in the said Judgment. In these circumstances, we refer the matter back to the regular bench for further hearing as we do not see any inconsistency in the said Judgment." 69. The matter then came back to a Bench of two Hon'ble Judges of this Court, which delivered the judgment in Forbes-II (supra). In Forbes-II, the Court set out the question of law that arose before it as follows: "1...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 shipowner (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 ....
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.... Co. [Port of Madras v. K.P.V. Sheik Mohamed Rowther & Co., 1963 Supp (2) SCR 915] will have to prevail: (SCR p. 940) "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 Sections 151, 152 and 161 of the Contract Act, 1872. 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 shipowner, the shipowner 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 liabi....
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....ed to this definition clause, both on its plain language, as also the fact that it is an inclusive definition clause, which shows that this statement of the law is correct. However, the statement in this paragraph that even de hors the above question, the liability to pay demurrage charges and port rent would accrue to the account of the steamer agent because of the statutory bailment that comes into existence under section 42(2) read with section 43(1)(ii), is plainly incorrect, in view of our finding that after the Port Trust takes charge of the goods and issues a receipt therefor (at which point of time the statutory bailment comes into force), the vessel or the steamer agent cannot be held liable. 72. Insofar as paragraph 11 is concerned, we have already made it clear that Sriyanesh Knitters (supra) cannot be said to reflect the correct position in law, insofar as a bailment between the consignee and the Port Trust is concerned, and thus Sriyanesh Knitters (supra) has been overruled by us to this extent. 73. Paragraph 12 of the said judgment contains the same confusion that is contained in Rowther-II (supra), and cannot therefore be said to lay down the law correctly. The cor....
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....he question that arose in this case was as to whether the Appellant 'Rasiklal Kantilal and Company', who was a person interested in purchasing goods, and did not at the time have title to the goods, would be liable to pay demurrage charges for a period of roughly six months, which began with the date on which he applied to the customs authorities to have bills of entries substituted in his name. On the facts in that case, during the period from November, 1991 to January, 1992, 78 shipments of goods were imported by 5 different consignees from a UK company, one M/s Metal Distributors (UK) Ltd; these consignments were landed at Bombay Port. The consignees filed bills of entry for 37 out of 78 consignments, but subsequently failed to lift the consignments, as a result of which they came to be stored at the Port of Bombay. The consignments were shipped on a "CAD basis", i.e. cash against documents, in which title would remain with the UK company till such time that an importer would retire the documents against payment. 76. This Court held that despite Rasiklal not being an owner of the goods, he was liable to pay demurrage for the aforesaid period. Strictly speaking, this judgment do....
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....d to the proposition that once the goods are placed in the charge of the Board, it would amount to delivery to the consignee, which proposition was turned down by the Court. The question whether section 158 of the Contract Act can apply to a statutory bailment under the MPT Act is left open, given that the Port Trust is not limited only to recovering "necessary expenses" to be payable by the bailor, but is statutorily is entitled to recover, by way of levy of rates and expenses incurred for storage of the goods, together with something more - the something more being rates of storage higher than warehousing rates as a deterrent against keeping these goods in the Port Trust premises. This Court in Board of Trustees of the Port of Bombay v. Jai Hind Oil Mills Co. and Ors. (1987) 1 SCC 648 has observed: "10. The power of a Port Trust to fix rates of demurrage and to recover the same from an importer or exporter (although the question of an exporter paying demurrage arises rarely) under law and to show concession as regards demurrage charges in certain specified cases is recognised by this Court in the Trustees of the Port of Madras v. Aminchand Pyarelal [(1976) 3 SCC 167] and in the....
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.... Trust; 2. and 3. 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; 4. As per paragraph 24 of our judgment; 5. The answer to question number 5 is really in two parts: first, as to 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; and second, as to whether the Port Trust is obliged to destuff containers that are entrusted to it and return empty containers to the shipping agent. The answer to the f....