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M/s Rasiklal Kantilal & Co. v. Board of Trustee of Port of Bombay & Ors.

Civil Appeal · 2017 INSC 189Decided 28 Feb 2017
Civil Appeal No. 5968 of 2011
Justice J. Chelameswar · Justice Abhay Manohar Sapre

Background

A trading company purchased several import consignments of zinc and copper that had been lying unclaimed at Bombay Port after the original importers failed to take delivery. The Port Trust levied heavy demurrage (storage) charges, granted only partial remission, and refused to remit the balance, holding the purchaser liable from the date the goods first arrived rather than from when it acquired title. The company's writ petition challenging this was dismissed by the Bombay High Court, leading to this appeal.

Decision Breakdown

The Supreme Court held that the Port Trust's power to grant or decline remission of demurrage must be exercised on a rational basis and sound policy, since it is a statutory body discharging public functions. It found that the Port Trust had failed to produce any reasoned policy or justification for declining full remission to the appellant, even though it could not be treated identically to another importer ("Gilt Pack") whose facts were materially different. The Court set aside the Port Trust's 1995 order declining remission and directed it to take a fresh, reasoned decision on the remission application. The appeal was thus allowed in part, with no order as to costs.

Lesson Learnt

A public statutory authority exercising discretionary power, such as deciding whether to waive port/storage charges, cannot refuse relief without recording clear, rational reasons; an unreasoned refusal can be struck down and sent back for a fresh, accountable decision.

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

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