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Lighthouse - March, 2015.

Forbes Forbes Campbell & Co. Ltd. VS. Board of Trustees, Port of Bombay

THE DECISION OF THE INDIAN SUPREME COURT IN “FORBES FORBES CAMPBELL & CO. LTD. VS. BOARD OF TRUSTEES, PORT OF BOMBAY” IS WORTH PONDERING UPON.

A review of the order and its implications on the vessel owners and steamer agents

Facts of the Case

In the case at hand the consignee of the goods had not taken steps to clear the consignment. Hence the Port Authorities issued notices to the consignee and then resorted to their remedy to publicly auction off the goods. However despite provisions in the Port Trust Authorities Act, 1963, wherein the auction may take place after a lapse of 60 days of landing the Port Authorities finally auctioned the consignment only after the expiry of four years; On auction of the goods the amount received was less than the amount towards the total charges payable to the port authority, which consequently led to the institution of the suit, whereby the Port Authorities sought to recover the balance cost from the Steamer Agents as the consignees could not be traced. At first instance, the suit was in fact dismissed however; on appeal the Hon’ble High Court reversed the decree holding the steamer agent liable.

Interpretation of the law

The steamer agent’s argument was that the provisions of the Major Post Trust Act of 1963, impose no statutory liability on them to pay the said charges to the Port Trust Authorities. They further argued that they did not fall within the definition of “Owners” under Section 2 (o) of the Act.  As the said definition has no mention of the owner of the vessel or the steamer agent, thus the liability imposed by the Port Authorities was illegal and unjust.

The Port Trust Authority however took the contention that there existed a relationship that of a bailor and bailee between themselves and the agent from when the goods are delivered to the Authority till the point when the said goods are duly endorsed to the consignee by way of transfer of the bill of lading.  The Port Authorities further argued that existence of this relationship has been established under Section 42 of the Act along with the basic principles of bailment as laid down under The Indian Contract Act.

The Supreme court after considering the arguments and the decision of the High Court took a more understanding view towards, the contention of the Port Authority. They relied on the decision in the case of the Trustees of the Port of Madras v. K.P.V. Sheik Mohamed Rowther & Co ,which held that once the bill of lading is endorsed or the delivery order is issued to the consignee or endorsee, it is then that the consignee would be liable to pay the demurrage charges and other dues of the Port Trust authority. In all other situations the contract of bailment is one between the Steamer Agent (bailor) and the Port Trust Authority (bailee). This would then impose liability on the Steamer Agent for such charges, till such time that the bill of lading is indorsed or delivery order is issued by the Steamer Agent

Implications of the Decision

The Decision of the SC to quash the appeal preferred by the Steamer agents will undoubtedly have several significant implications on the future of consignment shipping and storage transactions, in similar circumstances. As per the interpretation should a vessel owner or their steamer agent fail to endorse the consignment to the consignee or a consignee fail to clear their consignments across the various ports of India, the Steamer agent /vessel owner will be liable for cost incurred due to non clearance of the same. Thus the decision now in fact poses as a dagger hanging over the heads of the owners of vessels and their steamer agents in the form of unlimited liability should a consignee not comply with his duty toward the cargo.

This unlimited and unbridled liability placed upon the vessel owners and steamer agents unfairly stretches beyond the extent of their services. Owing to the decision held by the SC, the owners/steamer agents must ensure that all the consignments unloaded onto a Port premises must be cleared by the consignee in time or else they could face arrest of their vessels /sister vessels be the Port Authorities to recover their outstanding . Thereby Ship owners who are often faced with a number of expenses in relation to maintenance and running of their vessels will have to factor in this additional responsibility of clearance of consignments as well.

For now thought the decision by the SC has finally put the question of liability of the steamer agent for demurrage and other charges to port authorities, to rest; only time can tell of the impact of this decision on the maritime industry.

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