TaxTMI 
TaxTMI 
2020 (11) TMI 729
X X X X Extracts X X X X
X X X X Extracts X X X X
....p;Short facts leading to the filing of instant appeals are that,- appellant in W.A. No. 870 of 2020 is a partnership firm registered under the Partnership Act, 1932, and engaged in the business of importing and subsequently distributing and selling of varied materials, including Galvanized Steel Coils, to entities in and around the State of Kerala, having PAN AASFG7146HFT001. 3. Appellant in W.A. No. 885 of 2020 is engaged in the business of importing and subsequently distributing and selling of varied materials, including grade LLD Polythene, to entities in and around the State of Kerala, having PAN ABJFS5503JFT001. 4. In the appeals, both the appellants are represented by their Managing Partners. Respondent No. 1 is the Ministry of Shipping under the Government of India and the apex body for formulation and administration of rules, regulations and laws relating to shipping. Respondent No. 2 is the statutory Maritime authority, appointed by Government of India and it exercises the powers and functions conferred under the Merchant Shipping Act, 1958 and responsible for implementation of the provisions of Act, 1958. Respondent No. 3 in W.A. No. 870/2020 is an Indian ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Exhibit-P3 order dated 29-3-2020 advising shipping lines not to impose any container detention charge on import and export shipments for the period from 22-3-2020 to 14-4-2020 (both days inclusive) over and above any free time arrangement that was agreed upon inter se the parties. The 1st respondent-Union of India, thereafter issued Exhibits-P4 and P5 orders dated 31-3-2020 and 21-4-2020, which mandate that each major port shall ensure that no penalties, demurrage, charges, fees, rentals are levied on any port user, including Shipping Lines, in order to facilitate a smooth transition into the end of lockdown, the implication being that the said exemptions and remissions would be passed along the chain of transactions to importers like the appellants. 9. Appellants have further contended that due to the nationwide lockdown and the force majeure situation, services critical to the supply chain logistics industry like courier of original documents required to secure the release of imported cargo were unavailable and it resulted in deadlocks/inordinate delays for clearance of import cargo. 10. While matter stood thus, appellant in W.A. No. 870/2020 approached respondent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ports covered by Exhibit-P1 series Bills of Lading by extending the benefit of Exhibit-P6 and to reimburse any amounts already paid thereto. 14. Before the writ court, the 3rd respondent in W.A. No. 870 of 2020, viz., MSC Agency (India) Pvt. Ltd., Cochin, represented by its Managing Director, has filed a counter affidavit refuting all the allegations raised by the appellant. In the counter affidavit, 3rd respondent has contended, inter alia, that granting the reliefs sought for in W.P. (C) No. 11958/2020 would result in arbitrariness/inequalities and unreasonableness, as it would protect the importer i.e., the petitioner, but not take into account the losses faced by the shipping lines such as the 3rd respondent's Principal, which are much higher compared to the importer. The subject matter of the writ petition in essence is a private lis between the importer and the shipping lines and there is no compelling reasons for this Court to exercise its jurisdiction under Article 226 of the Constitution of India. 15. Respondent No. 3 has further contended that the genesis of the writ petition is that the petitioner was unable to take delivery of the containers discharged a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the ground of misjoinder of necessary parties. Respondent No. 3 has referred to two advisories viz., (i) advisory dated March 29, 2020 i.e. Order No. 7/2020 issued by Director General of Shipping, whereby shipping lines were advised not to impose any container detention charges on import and export shipments for the period between March 22, 2020 and April 14, 2020; and (ii) advisory dated April 22, 2020 i.e. Order No. 11/2020, extending the validity of its First and Second Advisory till May, 2020. In order to appreciate the controversy raised in the writ petition, it is necessary to first set out the manner in which container shipping business is conducted and detention charges are collected from clients (which includes importers/consignees such as the petitioner). The same is extracted hereunder : (a) The respondent No. 3's Principal are inter alia engaged in the business of carriage of containerized cargo by sea; (b) Clients (shipper/exporter/consignee/importer) (hereinafter referred to as "Client") approach shipping lines, such as the respondent No. 3's Principal for the carriage of containerized cargo by sea (i.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s the respondent No. 3's Principal may be unable to accept future orders thereby resulting in the sailing of empty vessels from India causing immense losses. (f) In fact, the heads of all charges payable to shipping lines such as the respondent No. 3's Principal, including the above detention charge, are conveyed to and accepted by the Client prior to the issuance of the Bill of Lading. Pertinently, at the time of booking offering quotation, the shipping lines make these charges involved in the transportation of the containerized cargo available to their Client. The tariff detailing the rates of such charges can also be verified on the shipping line's website. Therefore, the rates of all such charges are fixed and agreed to/accepted by the Client. Thus, the terms of contract are negotiated and accepted prior to issuance of Bill of Lading which evidences the contract between the parties. Pertinently, Clients/ importers are contractually bound to the pay all the aforesaid charges to shipping lines, including detention charges. (g) It is pertinent to note that such detention charges are in addition to and separate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hant Shipping Act, 1958 ("MS Act"). The MS Act, inter alia, governs the powers and functions of Director General of Shipping and does not grant the Director General any power or authority to direct shipping lines to waive any of their charges, including detention charges. Accordingly, for the sake of argument, if the advisories are treated to be mandatory, they would be ex-facie ultra vires the provisions of MS Act. Therefore, these orders consciously omit to mention the source of power under which, the advisories have been issued. In effect, respondent No. 3 has sought for unilateral modification of a private contract, agreed to between shipping lines and importers, which is illegal and involves several disputed questions of fact, and is therefore, beyond the scope of Article 226 of the Constitution of India. 20. Respondent No. 3 has further contended that by seeking extension of the advisories (Ext. P6 order) beyond 3rd May, 2020, the petitioner has sought for a direction against respondents 1 and 2 to legislate. According to the 3rd respondent, the above is a policy matter and it is trite law that the petitioner cannot seek a writ of mandamus against Legislature or execu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enforcement/extension of advisories that are neither mandatory nor binding: (ii) enforcement and continuance of order/circulars of DG Shipping, which lacks legislative competence or has no authority to issue such advisories qua Shipping lines like respondent No. 3; (iii) directions against respondent Nos. 1 and 2 to issue orders/circulars sans any authority in law (like delegated legislation); (iv) mandamus against respondent Nos. 1 and 2, where there is neither any statutory nor any public duty empowering them to exercise such executive and administrative discretion; (v) mandamus (Writ) against private parties with whom the petitioner therein admittedly has a contractual relationship; (vi) directions which would tantamount a direct interference in a privately negotiated contract between parties, (vii) fails to establish violation of any fundamental rights of the Petitioner; (viii) it seeks enforcement of Writ in contractual matters which is not maintainable as the Petitioner has alternative remedies such as filing a Suit; (ix) involves disputed questions of fact; and (x) has been filed against the agents of shipping lines who are not even signatories to the contract with the petit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o work from home, to ensure that the import process continued seamlessly. (c) Respondent No. 4 has further contended that perusal of the writ petition reveals that the real purpose of filing it is a mala fide intention of an importer avoiding business losses at the cost of the Shipping Lines. Under the guise of violation of fundamental rights, the petitioner is attempting to renege on its binding contractual obligations with private parties. (d) Respondent No. 4 is the agent of its Principal (WAN HAI Lines Singapore Pvt. Ltd.) in India. It is pertinent to note that respondent No. 4 is not even a contractual party to the present dispute. The Shipping Lines are not arrayed as parties to the present writ petition. Therefore, the present writ petition ought to be dismissed in limine on the ground of misjoinder as well non-joinder of necessary parties. In the above circumstances, the 4th respondent prayed for dismissal of the writ petition with costs." 24. A Learned Single Judge of this Court passed the impugned order declining the interim relief of provisional release of containers, which according to the appella....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he directives issued to it and that the dispute between the petitioner and the shipping agents or the carrying and forwarding agents are strictly contractual in nature and that the Port has no authority to require the waiver of the container detention charges by the private entities, as sought for by the petitioners. 7. The 4th respondent has filed a counter affidavit to oppose the admission of the writ petitions and the grant of the interim relief contending that Exhibit P6 is an advisory, which is neither mandatory or obligatory, and lacks legislative competence, which cannot be extended to the detriment of the private respondents, who are also equally affected by the pandemic and the resultant lockdown. It is stated that if the interim prayer as sought for is issued against private respondents, it would amount to interference in a privately negotiated contract between the parties, which is impermissible in law. It is stated that all due deductions as can be granted in the circumstances had already been extended to the petitioners and that it was not on account of any inconvenience arising due to the lockdown that petitioners have refused to clear the cargo in time.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ject to further orders in this writ petition. Post on 30-7-2020." 25. Being aggrieved, instant writ appeals have been filed on the following grounds. (A) Writ court manifestly erred on law and facts, and ought to have found that upon the declaration of lockdowns successively, 1st respondent, in view of the extraordinary situation and upon a detailed examination of all factors and considering the representations from various stakeholders, had decided to issue directives for exemption and remission of container detention charges on import and export shipments. The 2nd respondent, being the authority to ensure implementation of directives of the 1st respondent, had issued mandates to all ports to ensure strict implementation of the directives. However, consequent to the third and fourth phases of extension of nationwide lockdown by Union of India, the state of affairs having remained the same as in the 1st and 2nd phases, the 2nd respondent ought to have been extended such exemptions and remissions till such date as [and] when the immediate and direct consequences of the national lockdown are no longer severely affecting the EXIM trade. In s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er without suffering a catastrophic meltdown. Writ court has failed to take into consideration the fact that Regulation 6(9) of the Handling of Cargo in Customs Areas Regulations, 2009 makes it mandatory for customs cargo service providers to abide by all the provisions of the Act and the Rules, Regulations, notifications and orders issued thereunder. Thus, respondents are duty bound in law to comply with the mandate of Exts. P2 to P7, failing which, their license itself may be suspended by the authorities. Respondents have clearly exhibited defiance to the directives issued and, therefore, the issuance of Exts. P8 series demands for detention during the national mandatory lockdown period is illegal and unsustainable. (D) It is further contended that even the Hon'ble Supreme Court has observed that the COVID-19 pandemic is a highly unfortunate situation where a large number of people have suffered and that no one should be permitted to profit off of this misery and that these difficult times require the understanding and compassion of every single person. Writ court has not taken into consideration that there was no bar on the 5th respondent in releasing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... P7. This fact has been completely ignored in the impugned order while considering the urgent need for interim relief. (G) It is most respectfully submitted that the writ court has erred in law and has failed to recognize that Ext. P2 effectively declares a force majeure situation in the country and clearly states that the COVID-19 pandemic is to be treated as a case of natural calamity on par with an act of God, as on 19-2-2020. This position is further reinforced in Ext. P4 on 31-3-2020 and in Ext. P5 on 21-4-2020. The free flow of goods in the country was severely disrupted and as unequivocally stated in Exts. P4 and P5, the force majeure situation would continue till such time as notified otherwise by the relevant authorities, which has not occurred as on the date of filing the writ petitions. In these continued extraordinary and unusual circumstances, appellants deferentially seek the just interdiction of this Court in setting aside the impugned order and directing respondents Nos. 1 and 2 to extend the validity of Ext. P6 order till such date as the prevailing situation has been deemed to come to end by the appropriate subordinate authority of the 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....od, and that there was intention on the part of the appellants to take delivery of the consignments. 27. In the light of the advisories and orders of the Director General of Shipping, Mumbai read with regulations issued under the Customs Regulations, 2009, respondents are bound to comply with the mandate of Exhibts P2 to P7, and therefore, the demand for detention and demurrage, and other charges is illegal and unsustainable. Referring to the force majeure situation in the country, taken note of in Exhibit-P2 dated 19-2-2020, issued by Ministry of Finance, Department of Expenditure, Government of Kerala, New Delhi, that COVID-19 pandemic has to be treated as a national calamity in part with an act of God, Learned Counsel for the appellants contended that the writ court has failed to advert to the same. Learned Counsel further contended that the advisories are issued with reference to major ports and that the same were considered with reference to the averments in the case decided by the Delhi High Court and thus, it is distinguishable with the case on hand. 28. Learned Counsel for the appellants further contended that the writ court has failed to consider the earlie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f India Ministry of finance Department of Expenditure Procurement Policy Division ************ Room No. 512, Lok Nayak Bhavan, New Delhi, dated the 19th February, 2020 OFFICE MEMORANDUM Subject : force Majeure Clause (FMC) Attention is invited to para 9.7.7 of the "Manual for Procurement of Goods, 2017" issued by the Department, which is reproduced as under : A Force Majeure (FM) means extraordinary event or circumstance beyond human control such as an event described as an act of God (like a natural calamity) or events such as a war, strike, riots, crimes (but not including negligence or wrong-doing, predictable/seasonal rain and any other events specifically excluded in the clause). An FM clause in the contract frees both parties from contractual liability or obligation when prevented by such events from fulfilling their obligations under the contract. An FM clause does not excuse a party's non-performance entirely, but only suspends it for the duration of the FM. The firm has to give notice of FM as soon as it occurs and it cannot be claimed ex-post facto. There may be a FM situation affecting the purchase organisation only. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... containers without their fault. 5. Whereas, some shipping lines have on their own volition, decided to suspend imposition of any container detention charges for a limited period to give relief to the importers and exporters. There is, however, a need for more clarity in this respect for smooth functioning of the trade and maintenance of supply chain in the country. 6. Now therefore, in order to maintain proper supply lines at the Indian seaports the shipping lines are advised not to impose any container detention charge on import and export shipments for the period from 22nd March, 2020 to 14th April, 2020 (both days inclusive) over and above free time arrangement that is currently agreed and availed as part of any negotiated contractual terms. During this period, the shipping lines are also advised not to impose any new contractual terms. During this period the shipping lines are also advised not impose any new or additional charge. This decision is purely a onetime measure to deal with the present disruptions caused by spread of COVID-19 epidemic. Sd/- (Amitabh Kumar) Director General of Shipping" 35. Orders dated 31-3-2020 (Exhibit-P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r Port shall exempt or remit demurrage, ground rent over and above the free period, penal anchorage/berth hire charges and any other performance related penalties that may be levied on port related activities including minimum performance guarantee, wherever applicable. Part B - Issues relating to Force Majeure 5. The Ministry of Finance vide OM No. 18/4/2020-PPD, dated 19th March, 2020 inter alia citing "A Force majeure (FM) means extraordinary events or circumstances beyond human control such as an event described as an Act of God (like natural calamity)" has clarified that spread of corona virus should be considered as a case of natural calamity and Force Majeure may be invoked. 6. The Ministry of Shipping, Government of India through Order No PD-13/33/2020-PPP/C-339106, dated 20-3-2020 and letter dated 24th March, 2020 has already intimated the Major Ports that the COVID-19 pandemic can be considered as a 'natural calamity' that would entitle invocation of force majeure' provisions inasmuch as obligations under various contracts (involving the Major Ports) are concerned. 7. The aforesaid orders do not impact or dilute the fact that e....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... No 40-3/2020-DM-1 (A), dated 24-3-2020 and subsequent order dated 15-4-2020 along with its amendments to impose lockdown from 22nd March to 3rd May, 2020 (hereafter "Lockdown Period") to contain COVID-19 pandemic in the country. The lockdown measures and associated disruptions in logistic chains have impacted the Indian ports and port users. There is an impact in the form of drop in imports & exports volumes, delays in evacuation of cargo, cash flow issues etc. resulting in inability of port users, concessionaires and other stakeholders to fulfil their obligations to port authorities and banks/lenders. In view of this extraordinary situation and after considering the representations received from various stakeholders, all Major Ports are directed that :- 3. Remission of charges to Port Users : (i) Storage Charges : Ports shall allow free storage time to all port users for the Lockdown Period. (ii) Lease rentals, licence fees related charges : Ports shall allow deferment of April, May and June months, annual lease rentals/licence fees on pro rata basis, without any interest, if requested by le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....If the cargo volume for the month of April, 20 is 6000 TEUs (i.e. drop of 40% by volume compared to last year's average monthly volume), the ports shall waive off 40% of lease rentals, licence fees and similar charges for the month of April, 2020. If such waived amount has already been received by port, adjustment of the same shall be provided in the forthcoming from concessionaire. (iii) Minimum Guaranteed Throughput (MGT) obligations : The MGT obligations (wherever existent in concessionaire agreements) shall be computed, for the respective year, without considering the Lockdown Period and cargo volume handled during said period. (iv) Performance standard related obligations : Ports shall not levy any penalty or charges for any shortfall in any performance standards such as gross berth output, transit storage dwell time, turnaround time for delivery store receipt operations, non-transhipment requirements etc. for the Lockdown Period plus 30 days recovery period. (v) Additional Land for storage : If requisite additional area is available within port, the port shall provide additional storage ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d point 3(i) and (ii) shall not be applicable to Mumbai Port Trust and Mormugao Port Trust. 8. All Major Port Trusts shall issue relevant applicable orders for both remission and Force Majeure in their respective ports and forward the copy of port's order to the Ministry of Shipping within 7 working days from the date of issue of this order. 9. The remissions/waivers/deferments stipulated in this order shall be extended to only port related activities, industries and commercial establishments. This order shall not be applicable on any captive user, Central or State Govt. entities, local bodies, PSUs, CPSEs. 10. Port shall ensure strict implementation of this order by port users including PPP concessioners, CFS, ICD, Shipping lines etc. If required, ports shall invoke relevant provisions of agreements and take appropriate action. 11. This order supersedes the Order No. PD-14300/4/2020-PD VII dated 31st March 2020. 12. This order is issued under Section 111 of Major Port Trusts Act, 1963 with the approval of Hon'ble Minister of State for Shipping (IC) and to be implemented with immediate effect. This order shall al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orce from 22nd March, 2020 to 14th April, 2020 (both days inclusive), over and above free time arrangements that is currently agreed and availed as part of any negotiated contractual terms. 7. It is now decided, that for the second lockdown period, the shipping companies or carriers (and their agents by whatever name called) shall not charge, levy or recover any penal charges, demurrage, ground rent, storage charges in the port, detention charges, dwell time charges, additional anchorage charges, penal berth hire charges, vessel demurrage or any performance related penalties on cargo owners/consignees of non-containerized cargo (i.e. bulk, brake bulk & liquid cargo) whether LCL or not for the period from 15th April, 2020 to 3rd May, 2020 (both days inclusive), due to delay in berthing, loading/unloading operations or evacuation/arrival of cargo. 8. The above exemptions/remissions shall be over and above free time arrangement that is currently agreed and availed as part of any negotiated contractual terms. During this period the shipping companies or carriers (and their agents) are also advised not to impose any new or additional charge. This decision is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....LCL or not for the lockdown period due to delay in evacuation of cargo caused by reasons attributed to lockdown measures. Ministry of Shipping has again in its order vide No. PD-14033/4/2020-PD VII dated 21st April, 2020 (copy enclosed), directed inter alia that no penal charges, demurrage, detention charges, dwell time charges etc. shall be levied and ports shall cause strict implementation by port users including ICDs, CFSs, Shipping Lines etc. 3. Accordingly, aforementioned orders issued by Ministry of Shipping and Director General of Shipping are brought to your attention for strict compliance by all the ICDs/CFSs of your zone. Enel : As Above. Yours Sincerely, Sd/- (Sharad Srivastava) Director (AS)" 38. At the risk of repetition, the prayers made in the writ petitions are as follows : (i) Issue a writ of mandamus or any other appropriate writ, direction or order, commanding respondents 1 and 2 to ensure strict compliance of Order No. PD-14033/4/2020-PD-VII, dated 21-4-2020 (Ext. P5) and DGS Order No. 11 of 2020, dated 22-4-2020 (Ext. P6). (ii) Extend the validity of DGS....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the status quo ante. But when the Court declined to decide on the rights of the parties and expressly held that they should be investigated more properly in a civil suit, it could not, for the purpose of facilitating the institution such suit, issue directions in the nature of temporary injunctions, under Art. 226 of the Constitution. In our opinion, the language of Art. 226 does not permit such an action. On that short ground, that judgment of the Orissa High Court under appeal cannot be upheld." (ii) In Dorab Cawasji Warden v. Coomi Sorab Warden & Ors (AIR 1990 SC 867), the Hon'ble Supreme Court held as follows : "The appellant before the Hon'ble Supreme Court was original plaintiff seeking interlocutory mandatory injunction to direct the respondent No. 4 (i.e. subsequent purchaser) to vacate the suit property of which the plaintiff was owner of an undivided half share. The plaintiff had filed the suit on the ground that the suit property is a dwelling house belonging to an undivided family and there had not been any division of the said property at any point of time. Taking an objection of Section 44 of the Transfer of Property Act, 1882, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CC 733, the Hon'ble Supreme Court held that final relief cannot be granted by way of interim relief. Paragraph 8 of the aforesaid decision is extracted hereunder :- "To say the least, approach of the Learned Single Judge and the Division Bench is judicially unsustainable and indefensible. The final relief sought for in the writ petition has been granted as an interim measure. There was no reason indicated by learned Single Judge as to why the Government Order dated 26-10-1998 was to be ignored. Whether the writ petitioner was entitled to any relief in the writ petition has to be adjudicated at the time of final disposal of the writ petition. This Court has on numerous occasions observed that the final relief sought for should not be granted at an interim stage. The position is worsened if the interim direction has been passed with stipulation that the applicable Government Order has to be ignored. Time and again this Court has deprecated the practice of granting interim orders which practically give the principal relief sought in the petition for no better reason than that of a prima facie case has been made out, without being concerned about the balance of convenience, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....letters/guidelines/advisories also cannot intervene or interfere in a private contract which respondent No. 3 to 6 have with their customers i.e. petitioner. Respondent No. 3 to 6 on their own have given considerable relaxation/waiver of ground rent and are sympathetically considering the request of cargo owners in view of the Covid-19. On careful examination of all the facts and submissions made by the Ld. Counsels for the parties, this Court is of the opinion that petitioner has failed to make out a prima facie case for grant of injunction. As discussed earlier, the circulars/guidelines and advisories issued by respondent No. 1 and 2 are not binding upon respondent No. 3 to 6. Some of the advisories only contemplate that authorities concerned should adopt sympathetic and humanitarian approach and has advised them not to charge ground rent or penal charges. In these circumstances, there is no material on record which prima facie suggests that any right of the petitioner has been violated by the respondents. This Court is further of the opinion that since respondent No. 3 to 6 are not bound by various guidelines/letters/advisories issued by respondent No. 1 & 2, the balance of conv....