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Chairman, Board of Trustees, Cochin Port Trust v. M/s Arebee Star Maritime Agencies Pvt. Ltd. & Ors.

Civil Appeal · 2020 INSC 476Decided 5 Aug 2020
Civil Appeal No. 2525 of 2018
Justice Rohinton Fali Nariman · Justice Navin Sinha · Justice Indira Banerjee

Background

In 1998, containers of imported synthetic woollen rags arrived at Cochin Port but were not cleared by the consignees, partly because Customs disputed the declared contents, leaving the goods stuck in the port's limited storage space for years. The Tariff Authority for Major Ports had fixed 75 days as the period after which ground rent/demurrage on uncleared containers could shift from the Port Trust to the shipping agents, but a dispute arose over how far that liability could legally extend and whether the Port Trust itself was obliged to destuff (empty) containers and return them. The Kerala High Court ruled on this and the Cochin Port Trust, along with several shipping agents, appealed to the Supreme Court; a reference order in 2018 asked a larger bench to settle the underlying legal questions, and this batch of appeals was the final hearing.

Decision Breakdown

The Supreme Court held that only the owner of the goods (or whoever is actually entitled to them) can ultimately be made liable for demurrage/ground rent, not the shipping agent indefinitely. It also held that the Port Trust has a legal duty to destuff every container entrusted to it and return the empty container to whichever party is entitled to it, within as short a period as is practically feasible given the port's own storage capacity and workload: this period is to be assessed case-by-case rather than fixed rigidly. The Court read the word "may" in Sections 61 and 62 of the Major Port Trusts Act as not meaning "shall," while cautioning that a Port Trust, being "State" under Article 12 of the Constitution, must still act reasonably and try to sell uncleared goods within a reasonable time. On the facts, since the steamer agents had already paid ground rent (including beyond 75 days) and the High Court had already directed recomputation and refund, the Court declined to disturb the outcome and disposed of the appeals.

Lesson Learnt

When goods or containers get stuck at a port due to a dispute with customs or clearing parties, liability for storage/demurrage charges is not automatically open-ended for the carrier: ports have their own legal duty to act within a reasonable time, and ultimate responsibility tracks back to whoever actually owns or is entitled to the goods.

Official source (sci.gov.in)View Judgment (PDF)

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