# THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S AREBEE STAR MARITIME AGENCIES PVT. LTD. & ORS

- **Citation:** [2020] 11 S.C.R. 706
- **Court:** Supreme Court of India
- **Decided:** 2020-08-05
- **Case number:** Civil Appeal No. 2525 of 2018
- **Bench:** R. F. Nariman, Navin Sinha, Indira Banerjee
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-chairman-board-of-trustees-cochin-port-trust-v-m-s-arebee-star-maritime-34527
- **Pages:** 80

## Headnote

Major Port Trusts Act, 1963 - Scheme of the Act - ss.2, 42,
43, 48, 59-65, 123, 131 - Goods not cleared by consignee -
Payment of storage/demurrage charges - Liability of - High Court
while deciding on limited question as to extent of liability of shipping
agents beyond 75 days mentioned in relevant TAMP (Tariff Authority
for Major Ports) Orders inter alia held that Port Trust can demand
Ground Rent only to a maximum period of 75 days -Liability for
payment of charges to Port Trust - Inconsistency in judgments
(Rowther-II, Sriyanesh Knitters, Forbes-II and Rasiklal) delivered after
Constitution Bench judgment in Rowther-I - Reference to larger
bench - Held: Point of time at which title to the goods passes to the
consignee is not relevant to determine the liability of the consignee
or steamer agent in respect of charges to be paid to the Port Trust -
Bill of lading endorsed by the steamer agent is different from the
bill of lading endorsed by the owner of the goods - Both stages are
irrelevant in determining who is to pay storage charges -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
w.r.t services rendered qua unloading of goods, but thereafter, the
importer, owner, consignee or their agent is liable to pay demurrage
charges for storage of goods - Until the stage of landing and
removal to a place of storage, the steamer's agent or the vessel
itself may be made liable for rates payable by the vessel - 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 u/s.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
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look to for payment of storage or demurrage charges - Further, it
would be the duty of Port Trust to destuff every container entrusted
to it, and return destuffed containers to any such person within as
short a period as feasible where the owner/person entitled to the
goods does not come forward to take delivery of the goods and
destuff such containers - On facts, steamer agents themselves did
not dispute liability to pay ground rent upto 75 days and paid the
same - They even paid it beyond 75 days - Further, expression
"may" in ss.61, 62 cannot be read as "shall", subject to the caveat
that as the "State" u/Art.12, a Port Trust must act reasonably, and
attempt to sell the goods within a reasonable period from the date
on which it assumed custody of them - Impugned judgment set aside
only on aforesaid question of law - Customs Act, 1962 - ss.2(23),
(26); 29, 30, 33, 45(1), 46(1), (2), 48, 49, 150 - Maxims - noscitur
a sociis - Bill of Entry (Forms) Regulations, 1976 - Customs
Valuation (Determination of Value of Imported Goods) Rules, 2007
- rr.2(1)(d), (f), 4, 5, 10(1)(a)(ii) - Customs Tariff Act, 1975 - s.2 -
Indian Bills of Lading Act, 1856 - s.1 - Contract Act, 1872 - s.148,
151, 152, 158, 161 - Constitution of India - Arts.12, 14.
Major Port Trusts Act, 1963 - s.2(o) - "owner" - Held: When
s.2(o) defines "owner", it defines owner in relation to goods
separately from owner in relation to any vessel - In s.2(o)(i), when
owner is defined in relation to "goods", the definition is an inclusive
one - Secondly, it includes persons who are owners of the goods,
or persons beneficially entitled to the goods, such as the consignor,
consignee and the shipper and then also includes agents for sale,
custody, loading or unloading of such goods.
Maxims - noscitur a sociis - When not applicable- Held: As
the definition of "owner" is inclusive, the non-mention of the shipowner in the first part of the definition makes no difference - It
would be incongruous that the shipowner's agent is included in the
latter part of the definition, but not the ship-owner itself, which
would indicate that the maxim noscitur a sociis cannot

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THE CHAIRMAN, BOARD OF TRUSTEES,
COCHIN PORT TRUST
v.
M/S AREBEE STAR MARITIME AGENCIES
PVT. LTD. & ORS.
(Civil Appeal No. 2525 of 2018)
AUGUST 05, 2020
[R. F. NARIMAN, NAVIN SINHA AND
INDIRA BANERJEE, JJ.]
Major Port Trusts Act, 1963 - Scheme of the Act - ss.2, 42,
43, 48, 59-65, 123, 131 - Goods not cleared by consignee -
Payment of storage/demurrage charges - Liability of - High Court
while deciding on limited question as to extent of liability of shipping
agents beyond 75 days mentioned in relevant TAMP (Tariff Authority
for Major Ports) Orders inter alia held that Port Trust can demand
Ground Rent only to a maximum period of 75 days -Liability for
payment of charges to Port Trust - Inconsistency in judgments
(Rowther-II, Sriyanesh Knitters, Forbes-II and Rasiklal) delivered after
Constitution Bench judgment in Rowther-I - Reference to larger
bench - Held: Point of time at which title to the goods passes to the
consignee is not relevant to determine the liability of the consignee
or steamer agent in respect of charges to be paid to the Port Trust -
Bill of lading endorsed by the steamer agent is different from the
bill of lading endorsed by the owner of the goods - Both stages are
irrelevant in determining who is to pay storage charges -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
w.r.t services rendered qua unloading of goods, but thereafter, the
importer, owner, consignee or their agent is liable to pay demurrage
charges for storage of goods - Until the stage of landing and
removal to a place of storage, the steamer's agent or the vessel
itself may be made liable for rates payable by the vessel - 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 u/s.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
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look to for payment of storage or demurrage charges - Further, it
would be the duty of Port Trust to destuff every container entrusted
to it, and return destuffed containers to any such person within as
short a period as feasible where the owner/person entitled to the
goods does not come forward to take delivery of the goods and
destuff such containers - On facts, steamer agents themselves did
not dispute liability to pay ground rent upto 75 days and paid the
same - They even paid it beyond 75 days - Further, expression
"may" in ss.61, 62 cannot be read as "shall", subject to the caveat
that as the "State" u/Art.12, a Port Trust must act reasonably, and
attempt to sell the goods within a reasonable period from the date
on which it assumed custody of them - Impugned judgment set aside
only on aforesaid question of law - Customs Act, 1962 - ss.2(23),
(26); 29, 30, 33, 45(1), 46(1), (2), 48, 49, 150 - Maxims - noscitur
a sociis - Bill of Entry (Forms) Regulations, 1976 - Customs
Valuation (Determination of Value of Imported Goods) Rules, 2007
- rr.2(1)(d), (f), 4, 5, 10(1)(a)(ii) - Customs Tariff Act, 1975 - s.2 -
Indian Bills of Lading Act, 1856 - s.1 - Contract Act, 1872 - s.148,
151, 152, 158, 161 - Constitution of India - Arts.12, 14.
Major Port Trusts Act, 1963 - s.2(o) - "owner" - Held: When
s.2(o) defines "owner", it defines owner in relation to goods
separately from owner in relation to any vessel - In s.2(o)(i), when
owner is defined in relation to "goods", the definition is an inclusive
one - Secondly, it includes persons who are owners of the goods,
or persons beneficially entitled to the goods, such as the consignor,
consignee and the shipper and then also includes agents for sale,
custody, loading or unloading of such goods.
Maxims - noscitur a sociis - When not applicable- Held: As
the definition of "owner" is inclusive, the non-mention of the shipowner in the first part of the definition makes no difference - It
would be incongruous that the shipowner's agent is included in the
latter part of the definition, but not the ship-owner itself, which
would indicate that the maxim noscitur a sociis cannot apply - Major
Port Trusts Act, 1963 - s.2(o).
Major Port Trusts Act, 1963 - ss.42(3), (5), (6) - Held:
ss.42(5) and (6) have no application to the Board, as they apply
only to the "person" authorised u/s.42(3) by the Board to perform
services mentioned in sub-section (1).
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
AREBEE STAR MARITIME AGENCIES PVT. LTD.
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Contract Act, 1872 - Bailor-bailee relationship - Held:
Observations made in paragraphs 23 and 25 of Port of Bombay v.
Sriyanesh Knitters (1999) 7 SCC 228 that the consignee is the bailor
of the goods, with the Port Trust being the bailee thereof, are not
correct law and are overruled - Major Port Trusts Act, 1963.
Answering the reference, the Court
HELD: 1. Questions framed in the reference order are-
(1) 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 liability of the consignee or steamer agent in respect
of charges to be paid to the Port Trust;
(2) Whether a consignor or a steamer agent is absolved of
the responsibility to pay charges due to a Port Trust, for its
services in respect of goods which are not cleared by the
consignee, once the bill of lading is endorsed or the delivery
order is issued;
(3) Whether a steamer agent can be made liable for payment
of storage charges/demurrage, etc. in respect of goods which are
not cleared by the consignee, where the steamer agent has not
issued a delivery order; if so, to what extent;
(4) What are the principles which determine whether a Port
Trust is entitled to recover its dues, from the steamer agent or
the consignee; and
(5) While the Port Trust does have certain statutory
obligations with regard to the goods entrusted to it, whether there
is any obligation, either statutory or contractual, that obliges the
Port Trust to destuff every container that is entrusted to it and
return the empty containers to the shipping agent. [Para 2]726F-H; 727-A-C]
2.1 A perusal of the relevant provisions of the MPT Act
would show that when section 2(o) defines "owner", it defines
owner in relation to goods separately from owner in relation to
any vessel. In sub-clause (i) of section 2(o), when owner is defined
in relation to "goods", the definition is an inclusive one. Secondly,
it includes persons who are owners of the goods, or persons
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beneficially entitled to the goods, such as the consignor, consignee
and the shipper and then also includes agents for sale, custody,
loading or unloading of such goods. Ordinarily, agents for the
sale or custody of goods would relate only to agents of the owner
or persons beneficially entitled to such goods, which would
certainly exclude the ship-owner and the ship-owner's agent.
However, considering the fact that the definition is an inclusive
definition, and that loading or unloading of goods can take place
by the steamer's agent, as was held in Rowther-I (supra), it is
difficult to accept the contention on behalf of the steamer's agent
that such persons would not be included within the definition of
"owner" under the MPT Act. the definition of "owner" under
the MPT Act. In the present case, there is no lack of clarity in
the expression "agent for the...loading or unloading of such
goods", as including persons who may be the vessel's agent
involved in unloading goods. As the definition of "owner" is
inclusive, the non-mention of the ship-owner in the first part of
the definition makes no difference, as it would be incongruous to
hold that the ship owner's agent is included in the latter part of
the definition, but not the ship-owner itself, which would indicate
that the maxim noscitur a sociis cannot apply. This becomes even
clearer when section 42 is perused. Under section 42(1), a Board
shall have power to undertake services insofar as landing, shipping
or transhipping goods between vessels in the port and the
wharves, piers, quays or docks belonging to or in the possession
of the Board, referring clearly, therefore, to services rendered
to the vessel (see section 42(1)(a)). Insofar as receiving, removing,
shifting, or transporting goods is concerned, these could be
services to both the vessel as well as the owner/person entitled
to the goods. The moot question is, when it comes to "storing"
goods brought within the Board's premises, whether such service
could be said to be a service rendered to the vessel or its agent
(see section 42(1)(b)). Some of the pivotal provisions of the MPT
Act, insofar as the present questions are involved, are contained
in sections 42(2), 42(7) and 43 of the Act. Under section 42(2), a
Board may, if so requested by the "owner", take charge of the
goods for the purpose of performing services, and shall give a
receipt in such form as the Board may specify. It is obvious that
if the ship-owner or its agent are not "owners", the Board cannot
THE CHAIRMAN, BOARD OF TRUSTEES, COCHIN PORT TRUST v. M/S
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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 of the
Port Trust for loss, destruction or deterioration of goods of which
it has taken charge from this point of time onwards now becomes
that of a bailee under sections 151, 152 and 161 of the Indian
Contract Act, 1872, omitting the words "in the absence of any
special contract" in section 152 of the Contract Act. This
responsibility attaches only after a receipt is given by the Board,
and notice of loss or damage has been given, after expiry of such
period (as may be prescribed) from the crucial date on which the
Port Trust takes charge of the goods. [Paras 14, 16 and 17][748C-E; 749-G; 750-A-H]
2.2 At this juncture, it is important to state that arguments
have been made based on observations contained in various
judgments in which sections 42 (5) and (6) of the MPT Act have
been referred. Sections 42(5) and (6) have no application to the
Board, as they apply only to the "person" authorised under
section 42(3) by the Board to perform services mentioned in subsection (1). Again, under section 48, a distinction is made between
landing of goods from a vessel, and storage or demurrage charges
in respect of goods - see section 48(1)(b), as contrasted with
section 48(1)(d). When it comes to services performed on vessels,
sections 49A, 49B, 50, 50A and 50B make it clear that the services
rendered to vessels for which dues have to be paid by vessels
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are entirely separate and distinct from services rendered insofar
as goods that are landed are concerned. Coming to section 59, it
becomes clear that for all rates leviable under the MPT Act, which
includes rates leviable for storage of goods, the Board shall have
a lien on such goods, and may, after custody of such goods is
taken by the Port Trust, then seize and detain the same until
such rates are fully paid. [Paras 18- 20][751-A-D]
2.3 Section 60 is also important, in that the ship-owner's
lien for freight and other charges is recognised if, at or before
the time of landing of any goods from such vessel, such freight or
other charges have not been paid. Under section 60(2), the goods
shall be retained in the custody of the Board at the risk and
expense of the owners of the goods until such lien is discharged.
Most importantly, godown or storage rent shall be payable by
"the party entitled to such goods" for the time during which they
may be so retained. This section is of crucial importance, as it
makes it clear that godown or storage rent is payable only by the
party entitled 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.
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 the ship-owner has a lien for freight and other charges, which
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must be satisfied out of the sale of such goods. The important
point to be noted is that a clear distinction is made between an
"owner or other person entitled" to goods, and agents of the
vessel. Further, under sub-section (3) of section 62, it is only if
the owner or person entitled to goods does not comply with the
requisition in the notice, that the Board may, at any time after the
expiration of two months from the date on which such goods were
placed in its custody, then sell the goods in the manner indicated.
The scheme of section 62, therefore, is that when it comes to
sale of goods which are lying stored in the premises of the Board,
notice is to be given only to the owner, or other persons who are
beneficially entitled to the goods, who must then comply with the
requisition given and remove the goods. At this juncture, the
ship-owner or its agents are not persons who have to comply
with such requisition, as they are neither persons who are the
owner, or other persons entitled to the goods. The notice issued
to the agent of the vessel is only for the limited purpose as
aforesaid. This again indicates that goods that are stored on the
premises of the Board have a nexus only with the owner or other
persons entitled to those goods, and not with the agent of the
vessel or the vessel itself. Section 63 is again very important.
When goods have been sold and a surplus exists, the surplus
shall be paid to only three persons or their agents, namely, the
"importer", "owner" or "consignee" of the goods. In this subsection, namely, 63(2), as in the case of "owner' under section
61(3), the owner of the goods is obviously not the "owner" as
defined under section 2(o), as the context of section 63(2)
indicates otherwise. There would have been no need to add
"importer" or "consignee" in this sub-section, as they are already
subsumed within the wider definition of "owner" in relation to
goods under section 2(o). Secondly, what is conspicuous by its
absence is mention of the vessel or any agent for loading or
unloading goods. As a matter of fact, when it comes to recovery
of rates and charges against the vessel, a separate remedy is
provided for in sections 64 and 65 of the MPT Act. [Paras 2123][751-D-H; 752-A-H]
2.4 The statutory scheme of the MPT Act now becomes
crystal clear. Until the stage of landing and removal to a place of
storage, the steamer's agent or the vessel itself may be made
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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.
[Para 24][753-A-C]
3. 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 of the
goods. Under section 29 of the Customs Act, the person-in-charge
of a vessel when it carries cargo can land only at a "customs
port" (as defined), unless otherwise permitted by the Central
Board of Excise. Under section 30, the person-in-charge of a
vessel carrying imported goods shall deliver to the "proper
officer", i.e. a customs officer, an import manifest of the vessel
within the time prescribed, which would indicate the nature of
the goods carried by the vessel, and the consignee or other owner
of the goods. Under section 33, no such imported goods can be
unloaded at any place other than the place approved for unloading
of such goods in the customs port, customs airport or coastal
port. Under section 45(1), all imported goods unloaded in a
customs area shall remain in the custody of such person as
approved by the Principal Commissioner of Customs or
Commissioner of Customs until they are cleared for home
consumption or are warehoused or transhipped. Section 46(1) is
extremely important in that it speaks of a bill of entry for home
consumption or warehousing in such form and manner as may be
prescribed. Section 46(2) then states that a bill of entry shall
include all the goods mentioned in the bill of lading or other receipt
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given by the carrier to the consignor. Under section 48, if any
goods brought into India from a place outside India are not cleared
for home consumption or warehoused or transhipped within 30
days from the date of the unloading, such goods may, after notice
to the "importer" and with permission of the proper officer, be
sold by the person having the custody thereof. Under section 49,
imported goods may, pending clearance or removal, be permitted
to be stored in a public warehouse for a period not exceeding 30
days, or such other extended period that the Principal
Commissioner or Commissioner of Customs may permit. The
Customs Act, therefore, also contains parallel provisions for
authorities under that Act to take charge of, store, and sell
imported goods, in the circumstances mentioned therein. 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. A container, being a
receptacle in which goods are imported, cannot be said to be
"goods" that are imported 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. [Paras 25-27, 29 and 39][753-C-H; 754-A-C; 754-EF; 760-D-E]
Garden Silk Mills Ltd. and Anr v. Union of India and
Ors. (1999) 8 SCC 744 : [1999] 3 Suppl. SCR 295 -
relied on.
4. 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.
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. The same declaration is contained in Forms
II and III. A perusal of the aforesaid Forms prescribed under the
said Regulations would show the difference between "goods"
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that are imported, which have reference to the bill of lading/invoice
presented by the importer which contains the number and value
of the goods imported, and payments by way of costs and services
other than those declared in the invoice, which includes costs of
containers under Rule 10(1)(a)(ii) of the Customs Valuation
(Determination of Value of Imported Goods) Rules, 2007, and
packing costs under Rule 10(1)(a)(iii) of these Rules. Rules 2(1)(d)
and (f) of these Rules are relevant. Rule 4 deals with the
transaction value of "identical goods", and Rule 5 deals with the
transaction value of "similar goods". A perusal of these Rules
would show that the value of imported goods shall be the
transaction value of identical goods, as defined, or similar goods,
as defined - whichever rule applies to the facts of each particular
case. It is clear that whether identical goods or similar goods are
taken into account, the price of the container never enters, as
the only "goods" that are to be looked at are the goods that are
"imported", i.e. goods that are stuffed in the containers. Likewise,
when it comes to "computed value".Rule 10 deals with "costs
and services. A reading of Rule 10(1)(a)(ii) would lead to the same
result, as "imported goods" are differentiated from "containers".
Further, for the purposes of customs valuation, addition to the
transaction value of the imported goods is made only when the
cost of containers is treated as being one with the goods in
question. Even in such a situation, what is then imported is the
"goods" and the container - the container not having to be
destuffed, and therefore being cleared along with the goods
contained therein for home consumption. In such a case, where
containers do not have to be returned, but are imported along
with the goods contained within it, after the Board takes custody
of such container and the goods within it, the vessel or steamer
agent is no longer liable - even containers that do not need to be
destuffed will then incur demurrage along with the goods
contained within it, which are then payable by the importer, owner,
consignor or agent thereof. Further, to make matters clear beyond
doubt, General Exemption No. 170, speaks of 'Exemption to
containers of durable nature. A clarification by the Central Board
of Indirect Taxes and Customs dated 25th October, 2002, clarified
as to what is meant by "containers of durable nature". A reading
of the aforesaid also goes to buttress the conclusion reached in
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the previous paragraph of this judgment. The Customs Tariff Act,
1975 also throws considerable light on containers fit for repetitive
use. The First Schedule deals with general rules for interpretation
of "this Schedule". This again clearly differentiates between
containers which go along with the goods contained therein
"suitable for long-term use", from containers "suitable for
repetitive use", thus making it clear that the containers of the
latter type cannot be classified with the goods contained therein
for payment of customs duty. [Paras 40-51][760-E-F, G-H; 761D-F; 762-F-G; 764-A-B, G-H; 765-A-C; 766-D; 767-B-C]
5.1 Rowther-II has made it clear that Rowther-I concerned
itself with Port Trust dues at the time of landing of the goods, and
their removal thereafter to custody of the Port Trust. These were
charges wholly distinct from demurrage charges, which are
incurred only after the goods have been landed and have been
taken charge of by the Board. To the extent that the High Court
lays this down as a proposition of law, there can be no exception.
However, it goes on to state that when the steamer agent endorses
the bill of lading or issues a delivery order for effecting delivery
to the consignee, it is at this stage that the property in the goods
passes to the consignee. This part of Rowther-II is clearly contrary
to Rowther-I. Rowther-I clearly lays down that the endorsement
of the bill of lading by a steamer agent is for the purpose of delivery
of the goods, and, accordingly, cannot be for the transfer of title
to the goods. Rowther-II cannot, therefore, be said to be good in
law when it speaks of endorsement on the bill of lading and issuance
of delivery order by the steamer agent passing title of the goods
to the consignee. Once this is made clear, the ratio of Rowther-II
is to be understood thus: since charges for storage or demurrage
are after goods are removed and placed in the custody of the
Board, the steamer agent cannot be made to pay the same, as it
would impose "a too onerous and unexpected responsibility on
the steamer", which is only a carrier, and not owner, of the goods.
Section 1 of the Indian Bills of Lading Act, 1856 is also important.
Under this section, the "endorsement" referred to is the
endorsement made by the consignor or owner of the goods in
favour of such endorsee on the bill of lading, so that title to
property is then transferred to the endorsee. This endorsement
is very far removed, as has been correctly stated in Rowther-I,
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from the endorsement on the bill of lading by a steamer agent
indicating that the goods have been delivered. Therefore, shorn
of the confusion that has arisen as a result of mixing-up the two
types of endorsement, the ratio of Rowther-II that, after goods
are taken charge of by the Port Trust and stored in its premises
incurring demurrage charges thereon, the vessel or its agent
cannot be made responsible, is unexceptionable. [Paras 58, 59,
61, 62][772-E-G; 773-C-F; 774-E-F, G-H; 775-A-B]
Port of Madras v. K.P.V. Sheik Mohamed Rowther &
Co. [Rowther-I] [1963] 2 Suppl. SCR 915 - followed.
Port of Madras v. K.P.V. Sheik Mohd. Rowther & Co. P.
Ltd. [Rowther-II] (1997) 10 SCC 285 - explained.
5.2 The judgment in Sriyanesh Knitters goes on to make
certain observations, in particular in paragraph 23, stating that a
relationship of bailor and bailee comes into existence, when the
Board is required to store goods that have been imported,
between the Board and the consignee of those goods. Apart from
the fact that this is directly contrary to Rowther-I, the consignee
cannot be considered to be a bailor if the definition of bailor under
the Indian Contract Act, 1872 is read. Under section 148 of the
Contract Act, a bailor is defined as a person who delivers the
goods to the bailee. In this case, the person who delivers the
goods to the bailee is the vessel and not the consignee, as has
been correctly stated in Rowther-I. Therefore, the observations
that the consignee is the bailor of the goods, with the Port Trust
being the bailee thereof, made in paragraphs 23 and 25 of
Sriyanesh Knitters cannot be said to state the law correctly, and
are accordingly overruled. However, since this Court is not going
into the point of sub-bailment, the question is left open as to
whether the Port Trust, as sub-bailee, is entitled to recover its
dues from the original bailor - the consignor, and persons claiming
through it, given the statutory scheme of the MPT Act. [Para
66][776-A-D]
Port of Bombay v. Sriyanesh Knitters (1999) 7 SCC
228 - partly overruled.
5.3 However, Rowther-I was correctly distinguished by the
Court in Sriyanesh Knitters in paragraph 24 thereof, and its ratio
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qua the MPT Act not being an exhaustive code has this Court's
concurrence. [Para 67][776-E]
Port of Bombay v. Sriyanesh Knitters (1999) 7 SCC
228 - partly concurred.
5.4 Paragraph 10 of the judgment in Forbes II does hold
that the language of section 2(o) read with other provisions of
the MPT Act, especially section 42, would include a ship-owner
or his agent. This Court has already pointed out that the principle
of noscitur a sociis cannot be applied 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 this Court's 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. Insofar as paragraph 11 is concerned,
this Court has already made it clear that Sriyanesh Knitters 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 has been overruled to this extent. Paragraph
12 of the said judgment contains the same confusion that is
contained in Rowther-II, and cannot therefore be said to lay down
the law correctly. The correct position in law is, as has been stated,
that after the Port Trust takes charge of the goods, and issues a
receipt therefor, and thereafter stores the goods in a place
belonging to it, such storage charge cannot be to the account of
the vessel or an agent of the vessel. Paragraph 13 refers to one
other aspect of the case that has been argued. The impugned
judgment of the Kerala High Court in the present case had held
that the word "may" occurring in sections 61 and 62 of the MPT
Act must be read as "shall". This is not the correct position in
law, as a discretion is vested in the Board to sell the goods in the
circumstances mentioned in sections 61 and 62. However, such
discretion cannot be exercised arbitrarily, as the Board is "State"
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within the meaning of Article 12 of the Constitution, and is
therefore bound by the constraints of Article 14 of the Constitution
of India. Therefore while it may not be correct to say that "may"
has to be read as "shall" in sections 61 and 62 of the MPT Act,
yet in all future cases the Board is under a constitutional duty to
sell the goods in its custody within a reasonable time from which
it takes custody of those goods. Ordinarily, the time of four months
from the date of landing of the goods mentioned in section 63(1)(c)
of the MPT Act should be the outer-limit within which such goods
should be put up for sale. If not put up for sale within such time,
the Board must explain as to why, in its opinion, this could not be
done, which explanation can then be tested by the Courts. If the
explanation is found to be reasonable, and the owner or person
entitled to the goods does not remove the goods thereafter, penal
demurrage may then be levied and collected by the Board. To
this extent, therefore, while overruling the impugned judgment
of the Kerala High Court on the aspect of "may" being read as
"shall" in sections 61 and 62 of the MPT Act, yet the hovering
omnipresence of Article 14 over the Board must always be given
effect to, and there must be a very good reason to continue
detention of goods beyond the period of four months before they
are sold. [Paras71-74][779-E-H; 780-A-H]
Forbes Forbes Campbell & Co. v. Port of Bombay
(Forbes-II) (2015) 1 SCC 228 : [2014] 12 SCR 337 -
held not correct law.
Dwarkadas Marfatia and Sons v. Board of Trustees of
the Port of Bombay (1989) 3 SCC 293 : [1989] 2 SCR
751 - relied on.
5.5 Rowther-I did hold that the Port Trust is a sub-bailee of
goods bailed by the consignor to the ship-owner, but so held in
order to distinguish an English judgment - as has been pointed
out - which would then lead 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
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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. The importer, the consignee and the consignor, or their
agents, can all be held liable to pay demurrage charges. However,
since Rasiklal does not involve either the owner of the vessel or
its agent, the question is left open as to whether the Port Trust,
as sub-bailee, is entitled to recover its dues from the original
bailor - the consignor, and persons claiming through it, given
the statutory scheme of the MPT Act, as has already been
indicated in paragraph 66. [Paras 79, 81][782-D-F; 783-E-G]
Rasiklal Kantilal & Co. v. Port of Bombay (2017) 11
SCC 1 : [2017] 4 SCR 591 - held inapplicable.
Board of Trustees of the Port of Bombay v. Jai Hind Oil
Mills Co. and Ors. (1987) 1 SCC 648 : [1987] 1 SCR
932 - referred to.
6. Anwers to the questions framed in the reference order
are:
1. The point of time at which title to the goods passes to
the consignee is not relevant to determine the liability of the
consignee or steamer agent in respect of charges to be paid to
the Port 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 - it is
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;
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4. As per paragraph 24 of this 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 first question is contained
in paragraphs 45 to 51 of this judgment. The answer to the second
question is that a container which has to be returned is only a
receptacle by which goods that are imported into India are
transported. Considering that the container may belong either
to the consignor, shipping agent, ship-owner, or to some person
who has leased out the same, it would be the duty of the Port
Trust to destuff every container that is entrusted to it, and return
destuffed containers to any such person within as short a period
as is feasible in cases where the owner/person entitled to the
goods does not come forward to take delivery of the goods and
destuff such containers. What should be this period is to be
determined on the facts of each case, given the activities of the
port, the number of vessels which berth at it, together with the
volume of goods that are imported. While it does not lie in the
mouth of the Port Trust to state that it has no place in which to
keep goods after they are destuffed - as in the facts in the present
case - yet a court may, in the facts of an individual case, look into
practical difficulties faced by the Port Trust. This may lead to the
"short period" in the facts of a particular case being slightly longer
than in a case where a port is less frequented, and goods that are
stored are lesser in number, given the amount of space in which
the goods can be stored. [Para 82][783-G-H; 784-A-H]
7. This Court, does not, on the facts of this case, think that
the justice of the case demands that the impugned High Court
judgment should be interfered with. The steamer agents
themselves did not dispute liability to pay ground rent upto 75
days before the High Court, and have admittedly paid the said
charges long ago. As a matter of fact, the steamer agents paid
ground rent even beyond the period of 75 days - the High Court
having ordered the Appellant Port Trust to recompute the liability
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of the steamer agents, and return the balance to the parties
concerned within two months from the date of receipt of a copy of
the impugned judgment. The impugned judgment is set aside on
one question of law, namely, that the expression "may" in sections
61 and 62 of the MPT Act cannot be read as "shall", subject to
the caveat that as the "State" under Article 12 of the Constitution,
a Port Trust must act reasonably, and attempt to sell the goods
within a reasonable period from the date on which it has assumed
custody of them. [Paras 83, 84][785-A-D]
J.V. Gokal and Co. (Pvt.) Ltd. v. Asst. Collector of SalesTax (Inspection) and Ors. [1960] 2 SCR 852 - followed.
Forbes Forbes Campbell & Co. Ltd. v. Board of Trustees,
Port of Bombay [Forbes-I] (2008) 4 SCC 87; Brindavan
Bangle Stores and Ors. v. Asst. Commissioner of
Commercial Taxes and Anr. (2000) 1 SCC 674 : [2000]
1 SCR 97; Mangalore Refinery & Petrochemicals Ltd.v.
Commissioner of Customs (2016) 14 SCC 709 : [2015]
9 SCR 620; State of Bombay and Anr. v. F.N. Balsara
[1951] SCR 682; Central India Spinning and Weaving
and Manufacturing Company, Ltd. v. The Municipal
Committee, Wardha [1958] SCR 1102; Gramophone
Company of India Ltd. v. Birendra Bahadur Pandey &
Ors. [1984] 2 SCR 664; State of Kerala & Ors. v. Fr.
William Fernandez Etc.