AI Structured Summary
Not yet generated for this judgment
Judgment
J.N. Bhatt, J.—Whether the Regulation 52 of the Kandla Port Regulations, 1967 (Regulation) is ultra vires the provisions of the Major Port
Trusts Act, 1963 and the Constitution of India is the sole, but substantial question, which has emerged for consideration and adjudication in this
petition under Article 226 of the Constitution of India.
With a view to appreciating the merits of the plea of adjudication that Regulation 52 of the Regulations empowering the respondents to demand
only a conditional security, subject to the liability and quantum of damages being ascertained/determined by a Court of competent jurisdiction in
encashing the bank guarantee of Rs. 6,50,000/-, on the ground of damage caused to the property of the Board of Trustees of the Port of Kandla.
Let us have first, a short conspectus spectrum and factual profile leading to the rise of this petition on hand.
The petitioners are a registered partnership firm and carrying the business as shipping agents. The petitioners were, at the relevant time agents of
a foreign flag vessel M. V. Hoe Ann (the vessel). The respondents are the statutory body constituted under the Major Port Trusts Act, 1963, and
inter alia are the owners of the Docks, Wharfs, Cranes, Jetties etc. of the Port of Kandla. The respondent-authority by the letter dated 17-7-1988
addressed to the Master of Hoe Ann alleged that Hoe Ann dragged anchor and came along side their dragger Kutch Vallab, and thereby, held the
master of Hoe Ann liable under Kandla Port Regulations for the damages amounting to Rs. 10 lakhs. Subsequently, by a letter dated 18-7-1988,
reduced the demand from Rs. 10 lakhs to Rs. 6.50 lakhs stating that it was towards the cost of the replacement of the life boat of Vessel Kutch
Vallab together with expenditure incurred. Therefore, the petitioners came to be directed to deposit the same amount on or before 21-7-1988.
The respondents had till then not given the clearance for sail M. V. Asean Express from the Port of Kandla. It appears that since the petitioners
have to sail from the Port of Kandla, they furnished a bank guarantee for Rs. 6.50 lakhs of the State Bank of India, Overseas Branch, World-
Trade Centre, Bombay in favour of the respondents along with the letter dated 25-7-1988, without accepting the liability for the alleged
loss/damage, The said Bank guarantee was later on encashed by the respondent-authorities. The main contention, therefore, of the petitioners is
that the action of the respondents-authorities in demanding unilaterally assessed damages and encashment of the bank guarantee purported under
the exercise of powers of Regulation 52 of the Kandla Port Regulations, 1967, and contended that the said Regulation is ultra vires the provisions
of the Major Port Trusts Act, 1963 and the Constitution of India.
The respondents-authorities inter alia contended that u/s 116 of the Major Port Trusts Act, 1963, the vessel Hoe Ann could have detained
pending the outcome of the proceedings, but upon request of the petitioners, demanded the deposit or bank guarantee of amount of damages
assessed by them, to which the petitioners agreed and tendered bank guarantee, and that they are entitled to encash the bank guarantee for the
damages in terms of the provisions of the Regulation 52 and the provisions of the Major Port Trusts Act, 1963. In short, it is the case of the
respondents-authorities that the Regulation 52 is not ultra vires or unconstitutional and that they are statutorily authorised to assess damages in the
situation unifaterally and recover the damages for the effective and efficient management and safety of Port and its property.
It would be appropriate at this juncture to consider the legislative design and mechanism of the Major Port Trusts Act, 1963, insofar as the
dispute in the present petition is concerned. Section 163 of the Act empowers the Board to make Regulation pursuant to general power of Board
to make Regulations u/s 123 of the Act. The impugned action and the resultant encashment of the bank guarantee has been taken resorting to
Regulation 52, Kandla Port Regulations, 1967. The provision of Regulation 52 reads as under :-
52 : Master etc. of vessels responsible for damage :
Master and owners of vessels shall be held liable for any damage whatsoever that shall have been caused by their vessels or servants to any of the
works or property of the Board and the Board reserves the right to detain their vessels in Port until compensation claimed by the Board is paid or
security has been given for the amount of damage caused.
Section 116 of the Act provides legislative prescription for recovery of value of damage to the property of the Board, which reads as under :-
If through the negligence of any person having the guidance or command of any vessel, or of any of the mariners or persons employed on such
vessel, any damage is caused to any dock, whraf, quay, mooring, stage, jetty, pier of other work in the possession of any Board, (or any movable
property belonging to any Board), the amount of such damage shall, on the application of the Board be recoverable together with the cost of such
recovery, by distress and sale, under a Magistrate''s warrant of a sufficient portion of the boats, masts, spares, ropes, cables, anchors or stores
belonging to such vessel.
Provided that no Magistrate shall, issue such a warrant until the master of the vessel has been duty summoned to appear before him, and if he
appears until he has been heard and provided also that no such warrant shall issue if the vessel was at the time under the orders of a duly
authorised employee of the Board and the damage caused was attributable to the order, act or improper omission of such employee.
It will be interesting to refer the provisions of Section 48, at the relevant time, which provides for scales of rates for services performed by the
Board by itself or any person authorized.
Section 49 provides for scale of rates and statement of conditions for use of property belonging to the Board.
Whereas Section 50 empowers the Board for consolidated rates for combination of services.
It would also be interesting to refer the provision of Section 65 of the Act, which provides for the grant of post-clearance after payment of rates
and realisation of damages etc., which reads as under :-
Section 65 : Grant of post clearance after payment of rates and realisation of damages etc. - If a Board gives to the officer of the Central
Government whose duty is to grant the post-clearance to any vessel at the port, a notice stating :-
(i) that an amount specified therein is due in respect of rates, fines, penalties or expenses chargeable under this Act or under any regulations or
orders made in pursuance thereof, against such vessel, or by the owner or master of such vessel in respect thereof, or against or in respect of any
goods on board with vessel or :
(ii) that an amount specified therein is due in respect of any damage referred to in Section 116 and such amount together with the cost of the
proceedings for the recovery thereof before a Magistrate under that Section has not been realised;
such officer shall not grant such port-clearance until the amount to be chargeable or due has been paid or as the case may be, the damage and cost
have been realised.
It is very clear from the aforesaid statutory provisions of the Act that the respondents-authorities have been empowered to make Regulations
and to monitor, manage the activities on the Port including making assessment of damages and resultant recovery before the vessel leaves the Port.
The Parliament in its wisdom has evolved a statutory scheme, considering the necessities to determine and assessed damages and recovery thereof,
so as to ensure that the offending vessel does not go away or leave the Port without complying with permissible direction of the Board. It must also
be remembered that considering the urgency, the public interest, safety and security, effective management of the Port, such powers are not only
expedient but imperative. They are also sufficient safeguards. It cannot be contended in the light of the aforesaid statutory frame and the design and
desideratum that the same violates the principles of natural justice. In such a situation, pre-decisional hearing would not only be impracticable, but
also inexpedient, since again it is subject to the civil action available to the party. Thus, the master or the owner of the vessels, if so desired or so
advised, can question the action in assessing and fixing the quantum of damages fixed by the Board, and it could be revised in a process, if post-
decisional hearing.
Section 123 provides empowerment for making Regulations. Regulations of 1967 are made in exercise of the powers u/s 123 of the Act.
Nothing has been successfully shown that the Regulation of 52, is in any way ultra vires, unconstitutional or violative of any provision of the Act of
1963.
The attention of the Court is also invited by the learned Advocate Mr. S.R. Brahmbhatt, appearing for respondent No. 2 to a decision of the
Hon''ble Apex Court rendered in the case of Luga Bay Shipping Corporation and Anr. v. Board of Trustees of the Port of Cochin and Anr.,
reported in AIR 1997 SC .544. After having dispassionately examined the proposition and ratio propounded and expounded in the said judgment,
there is no any manner of doubt that the challenge against the statutory provisions of the Regulations of 52 of the Regulations of 1967 in exercise of
the statutory powers u/s 163 has been quite, consistent and compatible and intra vires. It would be very interesting to mention that the provision of
Regulation 52 are pari-passu to Regulation 43 of the Cochin Port Trust Regulation, which can be very well seen from Para 8 of the said decision of
the Hon''ble Supreme Court. The view taken by this Court, is, therefore, reinforced. The said decision is fully attracted to the facts of the present
case. Therefore, the challenge against the impugned action of the respondents-authorities, therefore, must fail. Therefore, the petition requires to be
dismissed. Accordingly, the petition is dismissed without any order as to costs.