Ananthakrishnan and Company vs The Board of Trustees of the Port of Madras and Another

V. Ratnam, J.—The unsuccessful second defendant in the Courts below is the appellant in this Second Appeal which arises out of a suit

instituted by the first respondent herein for the recovery of demurrage charges to the tune of Rs. 1,765.46 as against the appellant and Anr. in

respect of a consignment unloaded on 21st December, 1966, from S.S.Indian Traders of which the appellant was the steamer agent. The Port

Trust which has been statutorily interposed to do various services in respect of goods and cargo passing through the Madras Port claimed charges

for such services for the period from 9th April, 1967 to 25th October, 1967. The consignee was impleaded as the first defendant and the

appellant, the steamer agent, was impleaded as the second defendant. The consignment in question was 27 bags of muriate of potash. The first

respondent claimed that on landing of the consignment in the Port. It had rendered the usual services and the consignment had been detailed as

excess landed in the statement dated 1st April, 1967 to the appellant. It is the further case of the first respondent that since none filed import

application with the delivery order of the appellant, the goods which were lying in the first respondent''s transit area uncleared for a sufficiently long

time, were removed to the (uncleared) Goods Warehouse. On 12th April, 1967 and 19th May, 1967, notices were issued by the first respondent

to the appellant and on 8th June, 1967 another notice was given by the first respondent to the second respondent with reference to the intended

sale of the goods in public auction to be held on 28th June, 1967. As there were no bidders, the sale was being postponed from time to time and

ultimately on 25th October, 1967, the consignment of 27 bags of muriate of potash was sold for a sum of Rs. 275 and after adjusting the sale

proceeds towards the cost of services rendered to the goods, a balance of Rs. 1,765.44 was claimed by the first defendant to be due to it in

respect of which the suit was filed against the appellant and the second respondent.

The second respondent who figured as the first defendant in the suit, remained ex parte. The appellant resisted the suit contending that there was

no privity of contract between the appellant and the first respondent and the appellant by its letter dated 23rd May, 1967, had advised the second

respondent to take delivery of the goods and the second respondent having obtained the delivery order, ought to have cleared the cargo and that

for the fault of the second respondent in not having done so, the appellant cannot be held liable. In any event, the appellant pleaded that the first

respondent had failed to sell the goods in public auction within a time which can be considered to be reasonable so that the demurrage charges

could have been avoided or minimised. A further plea was also raised that the suit was barred by limitation.

3 The learned VII Assistant Judge, City Civil Court, Madras, who tried the suit held that the appellant is also liable for the services rendered by the

Port Trust in respect of the consignment in question and that the suit instituted on 20th October, 1970, within three years from the date of sale viz,,

25th October, 1967, would be well within time. On these findings, the suit was decreed as prayed for. Aggrieved by that, only the appellant

preferred an appeal in A.S. No. 414 of 1974 before the learned Second Additional Judge, City Civil Court, Madras. The learned Second

Additional Judge upheld the liability of the appellant and overruled the plea of limitation raised by it and dismissed the appeal.

In support of this appeal three contentions have been urged by Mr. S. Sampath Kumar, learned Counsel for the appellant. Firstly, he contends

that the Port Trust, as a statutory functionary, interposed to do various services in respect of goods and cargo passing through the Port and

empowered to effect any sale of uncleared goods should do so as early as possible, preferably before such time when the goods might be

rendered totally useless. In other words, while conceding the right of the Port Trust to effect a sale u/s 56 of the Madras Port Trust Act, 1905, the

learned Counsel for the appellant would, urge that any such sale ought to be in the interest of both the Port Trust as well as the consignee and that

therefore, the sale should be effected as quickly as possible in order that a person placed in the position of the appellant may not be mulcted with

liability in respect of services stated to have been rendered. Mr. R.G. Rajan, on the contrary invited my attention to the provisions of the Port Trust

Act and pointed out that the sale, in the instant case, had been effected in strict conformity with the strodary requirements and that there has been

no undue or unnecesssary delay in the matter of the sale of the uncleared and unclaimed consignment of muriate of potash of 27 bags. Section

5(12) of the Madras Port Trust Act, 1905 defines ""Rate"" was including any toll, due, met, rate or charge leviable under that Act. u/s 39(1) the

nature of the services and facilities which can be rendered by the Board are enumerated. Section 39(1)(a) provides that such services might consist

of provision of reasonable facilities for landing, shipping or transhipping passengers and goods between vessels in the port and the wharves piers,

quays or docks in possession of the Board and u/s 39(1)(b) provision is made for receiving, removing, shifting, transporting, storing or delivering

goods brought within the Board''s premises. u/s 39(3) the Board is also empowered to take charge of the goods for the purpose of performing the

service against a receipt. Section 42 of the Act provides for the framing of the scale of rates for the services rendered by the Port Trust,

particularly under Sub-sections (d) and (e), which relate to wharfage, storage or demurrage of goods on any such place and other service in

respect of vessel, passengers or goods. Section 50 is an important provision which stipulated the time by which the rates in respect of services

rendered by the Port Trust become payable. As per that section, in respect of goods to be removed from the premises of the Board or to be

shipped for export, or transhipped rates shall be payable before the goods are removed or shipped or transhipped. It is at this point of removal or

shipment or transhippment from the premises of the Board, the rates get crystallised and become payable before the removal of goods or their

shipment or transhipment as the case may be. u/s 51 a statutory lien on such goods is created in favour of the Board in respect of rates leviable

under the Act. Section 56 empowers the Board at the expiry of two months from the time when any goods had passed into its custody or in the

case of perishable goods at the expiry of such shorter period not being less than 24 hours to sell by public auction so much as may be necessary of

such goods with a view to realise the rates payable to the Board in respect of such goods as have remained unpaid. For realisation of unpaid rent

and for the enforcement of the lien u/s 51, provision is made u/s 56(b) and (c). u/s 57, ten days notice shall be given before effecting a sale u/s 56

unless the goods are all so perishable in nature as, in the opinion of the Board to render their immediate sale necessary or advisable in which event,

notice shall be given, depending upon the urgency thereof. Section 58 provides for the giving of a notice of the proposed sale of the cargo to the

owner. Priorities with reference to the proceeds are provided u/s 59 of the Act. Such proceeds shall be applied first in payment of the expenses of

the sale, secondly in payment, according to their respective priorities of the liens and claims excepted in Section 52 from the priority of the lien of

the Board and thirdly in payment of the rates and expenses of landing, removing, storing or warehousing the same, and all other charges due to the

Board in respect thereof. Under Sub-section (2) of Section 59, the surplus, if any, shall be paid to the importer, owner or consignee of the goods,

or to his agents, on his applying for the same within one year from the date of the sale. If no such application is made or no reason is shown as to

why such application has not been made, the surplus shall be held by the Board upon trust for the purposes of the Act. These, in brief, are the

provisions which relate to the levy of rates, time for payment and also the rights of the Port Trust in the event of non-payment of the rates. In the

instant case notice has been given to the appellant on 12th April, 1967, 19th May, 1967 and on 8th June, 1967, to the second respondent that u/s

56, proceedings will be taken for the disposal of the consignment. Further after the issue of the notice on 1st April, 1967, the appellant had also

had the benefit of six more free days and the wharfage charges have been claimed by the first respondent herein between 9th April, 1967, and the

date of sale viz., 25th October, 1967. The learned Counsel for the respondent therefore submits that only after making available to the appellant

the total period of two months and 10 days, proceedings have been taken for the sale of the unclaimed and uncleared consignment. The sale in the

instant case as stated already, had been held on 25th October, 1967. Even when the first respondent was making attempts to effect the sale of the

consignment, letters have been sent by the second respondent herein to the first respondent praying for postponing the sale on the basis that

arrangement will be made for clearing the goods. It was in response to these requests of the second respondent and in the bona fide belief that the

second respondent will take all requisite steps for the speedy clearance of the consignment, the sale had also been postponed. In addition, it also

appears that want of bidder was another reason which necessitated the postponement of the sale. Having regard to these circumstances and the

statutory provisions referred to above, it cannot at all be stated in the instant case that there has been any undue or unreasonable delay on the part

of the first respondent of having advertised and brought to sale the consignment landed on 2lst December, 1966. Indeed, the learned Counsel for

the appellant himself admitted that the sales effected u/s 56 of the Madras Port Trust Act have been conducted expeditiously with the result that

neither the consignee nor the Port Trust authorities sustained any unnecessary damage or loss. The complaint voiced by the learned Counsel for the

appellant that in the instant case there has been avoidable delay cannot therefore be countenanced. It must also be stated that in the instant case the

first respondent had acted reasonably quickly and accommodating and respecting the requests and wishes of the second respondent. Under these

circumstances, the first contention of the learned Counsel for the appellant has to be rejected.

The learned Counsel for the appellant next contended that the steamer agent cannot be made liable because a letter had been sent by the

appellant to the second respondent herein to take delivery of the goods. In paragraph 4 of the written statement filed by the appellant, it is clearly

stated by the appellant that by its letter dated 23rd May, 1967, the apellant advised the second respondent to clear the excess landed cargo

against the survey shortage. It is therefore clear that the consignment in question was an excess landed one. The letter referred to by the appellant

in its written statement dated 23rd May, 1967, is Exhibit B-2. A perusal of that letter shows that it enquires whether the second respondent would

require the excess landed cargo to enable the appellant to issue entry letter and delivery order. This letter cannot be in any manner construed to be

a delivery order as such issued to the consignee, the second respondent herein Exhibit B-4 is another letter dated 1st September, 1967, from the

appellant to the second respondent. Even that cannot assist the appellant to claim that a delivery order had been issued to the consignee. It must be

remembered that the cargo was an excess landed one and that in respect of it, no import application had been filed by any one and there is also no

further proof that any delivery order as such had been issued to any consignee, much less to the second (respondent herein. Under these

circumstances, the reliance placed by the learned Counsel for the appellant on the decision reported in K.P.V. Sheik Mohamed Rowthar, Madras

v. The Trustees of Port of Madras and Anr. ILR (1975) Mad. 59, to the effect that once the cargo is discharged by the ship and delivery order

has been made to the consignee, the liability of the steamer agent terminates and the liability is only that of the consignee, for the charges for the

services rendered by the Port, cannot help the appellant to avoid its liability in respect of the claim made by the first respondent.

Lastly, the learned Counsel for the appellant contended that the claim for wharfage made by the first respondent is really in the nature of rent

accruing from day to day and therefore, the cause of action for recovery of the charges made also arises de die in diem On the other hand, the

learned Counsel for the respondent contends that u/s 62 of the Madras Port Trust Act, the cause of action for recovering rates arises only on the

ascertainment of the sale proceeds of a sale conducted u/s 56 and only then it can be known with certainty whether there has been any balance to

be recovered in respect of the rates for the services rendered and therefore, according to him, the date of sale affords the starting point. Section 62

of the Madras Port Trust Act, 1905 is relevant in this connection which runs thus:

Notwithstanding anything contained in the twelve sections last preceding and in Section 48, the Board may recover by suit any rates, damages,

expenses, costs or in case of sale the balance thereof, when the proceeds of sale are insufficient, or any penalties or fines payable to, or

recoverable by, the Board under this Act or under any by-laws made in pursuance thereof.

This section empowers the Board to recover by suit any rates, damages, expenses, costs etc., notwithstanding anything contained in the preceding

twelve sections and also Section 48 of that Act. Provision is also made in Section 62 for the recovery of the balance of rates, damages, expenses,

costs etc., still remaining unrealised despite a sale and the realisation of proceeds of such a sale u/s 56. Whether the Board should at all proceed by

way of a suit for recovery of the balance of rates, damages, expenses, costs etc., when the proceeds of sale are insufficient, will be known, only

when the sale takes place and it results in an insufficiency. Till such time, it is not possible to predict whether the sale would result in a deficiency or

surplus. The construction to be put upon Section 62 must accord with the two types of situations that might arise. The proceeds of a sale u/s 56

may not be sufficient to cover the rates and charges claimed by the Port Trust, in which case u/s 62, the insufficiency is known only on the date of

sale and thereafter, proceedings have to be taken by the Port Trust for the recovery of the balance, Likewise, if the sale u/s 56 results in surplus,

then that sale had resulted in surplus and there is no need to further institute proceedings, for the recovery of the balance, which becomes known

only on the date of the sale. It is thus clear that the date of the sale affords the cause of action or the starting point for enforcing the remedy by way

of a suit u/s 62 of the Madras Port Trust Act. Dealing with a comparable provision viz., Section 67-A of the Bombay Port Trust Act, a Division

Bench of the Bombay High Court in The Trustees of the Port of Bombay Vs. Jayantilal L. Gandhi, observed thus:

Thus, u/s 67-A of the Act the cause of action to recover the balance of the amount, after giving credit for the sale proceeds accrues, for the first

time, when the sale took place and the deficit of the balance of the amount recoverable is ascertained. Thus, clearly u/s 67-A of the Act to recover

the amount, the cause of action accrues when such deficit or balance of the amount to be recovered is ascertained.

The contention raised by the learned Counsel for the appellant that the cause of action accrues from day to day has been repelled in the following

terms at page 14:

.. The deficit or the balance of the amount claimable can only be ascertained after the auction sale is held and therefore, it is not possible for us to

accept the contention that the amount claimed in the demurrage charges should be regarded as one for which the cause action accrues from day to

day.

In, addition, Section 62 confers a special statutory right for the recovery of the unrecovered balance by a sale u/s 56 and in the absence of any

specific Article applicable for the enforcement of that right, Article 113 of the Limitation Act, 1963 would apply. In the instant case, the suit was

instituted on 20th October, 1970. Within three years after ascertainment following the judgment of the Bombay High Court referred to above in

(Board of Trustees of the Port of Madars represented by the Secretary v. P. Devarajulu Naidu & Son''s S.A. No. 62 of 1976 in almost identical

circumstances, it has been held that Article 113 would be the appropriate Article that would apply. It has therefore to be held that there is no

substance in the plea of limitation raised by the learned Counsel for the appellant.

In cases where the Port Trust authorities have to resort to a sale u/s 56 of the Madras Port Trust Act, it is desirable that such sales are

conducted quickly and with all convenient speed in order that the parties as well as the Port Trust may minimise their loss and further claims, if any,

could also be processed and pursued expeditiously. The Second Appeal, therefore, fails, and is dismissed; but in the circumstances, each party is

directed to bear its costs throughout.