Priyanka Overseas Ltd vs KANDLA PORT TRUST

COMPLAINT was filed on 28.3.2000, inter alia, alleging that the Government of India has been sponsoring various schemes for promoting exports. Complainant concluded a contract with Govt. of Bangladesh for supply of 10,000 MTs of rice against contract No. IPR-03/04/99 dated 23rd March, 1999. Towards fulfilment of this contract, the complainant gave a guarantee/bond of US $1,35,066.75 in favour of the purchaser. The complainant procured the rice and brought it at the Port of Kandla. M/s. Geochem Laboratories Pvt. Ltd.--Surveyors inspected 36466 bags weighing 2738.170 MTs of rice at the godowns of M/s. Cargo Conveyers, Gandhidham, clearing agents. The Surveyor found the rice fit and issued a certificate dated 4.4.1999. Opposite party has the facilities of transit sheds at the Port of Kandla for loading the goods directly to the vessel. M/s. Vilas Transport Company, appointed by the complainant made a request by means of letter dated 5.4.1999 for allotment of area in transit shed Nos. 1 and 3. Two shipping bill Nos. 5907 for a quantity of 6000 MTs & 5908 for a quantity of 4000 MTs of rice, both dated 1.4.1999 were submitted by the complainant for permission to load the rice on the vessel as required by Sections 50/51 of the Customs Act, 1962. Said 2738.170 MTs of rice was shifted to transit shed-3 (for short TS-3) containing 37466 bags from 6.4.1999 to 13.4.1999. It was further alleged that on 15.4.1999 the said Surveyor again inspected the rice for pre-shipment sampling and analysis and found that the bags were badly damaged with infestation and needed immediate fumigation. In the same shed, non edible cargo was also stored. It was pleaded that infestation had taken place on account of negligence on the part of opposite party. It was also alleged that there was a notice of heavy cyclone by the opposite party and as such effort to ship the said bags could not be completed and the rain took place. There was leakage of rain water and the water seeped into the bags as a result whereof the bags were effected and bad smell started coming and the rice became unfit for shipment. After inspection the said Surveyor issued a certificate dated 22.5.1999 to that effect. Complainant had paid charges/demurrage of Rs. 63,340 up to 6.5.1999. Opposite party issued notice of demand of further demurrage. By the letter dated 3.8.1999, the opposite party threatened the complainant to put the rice on auction in case the demurrage charges were not paid. By the letter dated 4.8.1999, the complainant asked the opposite party for waiver of demurrage charges as it had suffered heavy losses. Representation was again made on 11.8.1999 and 31.8.1999 for that purpose. On 4.9.1999, the opposite party permitted the removal of said rice bags to the rental warehouse within the port premises. By the letter dated 13/15.10.1999, opposite party again threatened to put the rice bags to auction without any further notice as per Section 2 of Kandla Port Trust Act. Aggrieved by this threat, the complainant filed a Writ Petition under Articles 226 and 227 of the Constitution of India in the High Court of Gujarat seeking to restrain the opposite party to go ahead with the auction. High Court finally disposed of the Writ Petition vide order dated 18.11.1999 with certain directions. Pursuant to this order, the Chairman of the opposite party after hearing the parties rejected the representations made by the complainant by the order dated 2.2.2000 declining to waive the demand of demurrage charges which at that point of time was of Rs. 85,76,260. It was stated that the order dated 2.2.2000 is bad in law as said reports of the Surveyor dated 4.4.1999, 15.4.1999 and 22.5.1999 were misread. The value of the said rice was around Rs. 2.92 crores. Direction was sought to made in para No. 32 of the complaint which being material, is re-produced below: "Claim of the complainant is to the following: (i) to grant decree/pass appropriate order for payment of Rs. 2,01,32,340 to the complainants by the opposite party with interest at the banking rate of interest till the payment is made, (ii) place at the disposal of the complainants the above referred amount with interest upto date, (iii) cost be awarded in favour of the complainants, (iv) to restrain the respondent from selling/auctioning the subject consignment weighing 2737 MTs of rice and otherwise the subject matter of the dispute between the parties and shown at item No. 39 in the Schedule ''A'' attached to the tender documents, (v) to direct for appointment of Surveyor and let the goods be jointly surveyed by the competent/capable Surveyor to certify the goods and immediately on surveying the goods the complainants be permitted to lift the goods and deal with it as its owner in the manner it deems fit and proper."

COMPLAINT was contested by filing reply on the affidavit of R.T. Revankar, Traffic Manager. It was alleged that the complaint is not maintainable as the complainant had filed Writ Petition bearing No. SCA 8591 of 1999 before the Hon''ble High Court of Gujarat claiming similar reliefs. Order dated 18.11.1999 passed by the High Court directing the opposite party to decide the representation(s) made by the complainant after hearing the complaint. The opposite party heard the representation(s) of the complainant and by the order dated 2.2.2000 rejected the same. Thereafter, the complainant filed the present complaint as also Special Civil Suit No. 37 of 2000 in the Court of Subordinate Judge (SD), Gandhidham, Kutch praying for an interim relief in terms of grant of injunction against the opposite party from disposing of the rice to recover the demurrage charges. Application for interim relief was dismissed by the order dated 30.6.2000. Against that order, the complainant filed appeal being No. 375 of 2000 before the High Court of Gujarat and the same was dismissed by the order dated 14.12.2000 directing the opposite party to auction the rice in two lots etc. Against the order of High Court, the complainant filed SLP No. 165 of 2001 which was also dismissed by the Supreme Court. Complainant is not a consumer nor did the opposite party provide any service within the meaning of Consumer Protection Act, 1986 to the complainant. It was alleged that the scale of rates for the services provided by the opposite party under Section 42 of the Major Port Trust Act, 1963 is governed by the provisions of Section 48 of the Act. The scale of rates comes into force after being sanctioned by a notification in the Official Gazette by the Central Government. In terms of Section 54 of the Act, the Central Government alone has the power to modify or cancel the rates determined and charged by the opposite party. Under Section 61 of the Act the opposite party has the power to sell by auction the goods which are not removed from the opposite party''s premises within two months from the date of keeping such goods in the custody of opposite party. Under Section 63 of the Act, opposite party has the power to apply the sale proceeds towards payment of the expenses of the sale and the claim according to the priorities mentioned in Section 59. It was stated that the answering opposite party is not aware that the rice bags were kept in the godowns of M/s. Cargo Conveyors which is outside the custom area and survey was done by M/s. Geochem Laboratories Pvt. Ltd. on 4.4.1999 as alleged. Opposite party provides transit sheds which are utilized for the purpose of easy loading as the sheds are very close to the jetty. Normally, transit sheds are allotted to the exporters for a maximum period of 15 days. It was admitted that M/s. Vilas Transport Co. on behalf of the complainant applied to the opposite party on 5.4.1999 for allotment of transit shed in regard to consignment of 2738.17 MTs par-boiled rice. Complainant was allotted transit shed in covered block No. 1 to 12 of TS-3. Vessel M.V. Victory Jupiter Light was to arrive at opposite party''s port during the second week of April, 1999. It was denied that on 15.4.1999 the said Surveyor inspected the rice bags for pre-shipment sampling and analysis and found that the rice was badly affected with infestation and needed immediate fumigation as alleged. TS-3 was used only for storing edible oil/ agricultural products. At that time, block Nos. 1 to 12 were allotted to the complainant, 1470 MTs of rice was stored in covered block Nos. 13 to 16 and 155 MTs of soya extractions in bags was stored in block Nos. 17 and 18. It was denied that any infestation took place or there was any negligence on the part of opposite party as alleged. It was admitted that there was a cyclone threat. However, cyclone did not eventually strike and the shipping remained normal during that period. It was denied that the answering opposite party was negligent in maintaining the sheds due to which water seeped into the cargo stored. Opposite party was not aware of any Surveyor being appointed and the report, if any, submitted by the Surveyor is collusive. It was admitted that demurrage charges of Rs. 63,340 was paid up to 6.5.1999 by the complainant. It had not paid demurrage charges thereafter. Rice was not loaded in the vessel MV Jupiter Light as informed by the complainant and the same continued to remain the transit shed. By the letter dated 3.8.1999, the opposite party informed the said transporter that the rice was lying on transit terms for more than 90 days and no effort had been taken to shift the rice or remove it from the port area and the transporter, therefore, should make necessary arrangement for shipment/removal thereof within a week failing which the cargo will be put to auction without notice as per the provisions of the Act. It was denied that the rice was rendered unfit as alleged. By the letter dated 4.8.1999, the complainant informed that on pre-shipment analysis on 15.4.1999 the rice bags were found infested and needed fumigation. Letter dated 4.8.1999 was followed by the letter dated 11.8.1999 wherein the complainant pointed out that the rice bags were affected by rain water. Complainant sought waiver of transit shed demurrage charges and permission to take the rice bags out of the port premises. Complainant''s said representation(s) could not be allowed as it had failed to pay the demurrage charges levied in terms of the scale of rates approved by the Central Government. Complainant was allowed to shift the rice bags to rental warehouse from 4.9.1999 to avoid further accumulation of demurrage charges. Issuance of notice dated 22.9.1999 demanding amount of Rs. 85,76,260 towards transit shed demurrage charges was not denied. Complainant''s case for waiver of demurrage charges was not covered by the guidelines approved by the Central Government. It was denied that the order dated 2.2.2000 passed by the Chairman of the opposite party is bad in law and on facts as alleged. Opposite party on 15.10.1999 issued a notice for auction of uncleared/unshipped cargo lying in the transit shed to the complainant under Section 62 of the Act. 50% of the cargo i.e. 1350 MTs was put to auction and sold pursuant to the order dated 14.11.2000 of the High Court. Plea regarding infestation of rice stored in the transit shed was raised only after a period of 9 months and that too after receiving notice on 3.8.1999 by the complainant. Opposite party had auctioned the rice in two lots on 3.1.2001 and 10.1.2001 and recovered an amount of Rs. 1,28,25,284 provisionally. Complainant is still liable to pay the balance amount of Rs. 68,71,176 towards the demurrage charges payable plus interest. Denying deficiency in service/negligence, the reliefs claimed in the complaint were refuted.

COMPLAINANT filed application seeking amendment of the complaint for incorporating subsequent events by way of addition/renumbering of the paras which though was contested by the opposite party, was allowed by the order dated 19.3.2009. To be only noted that after amendment the complainant has improved the claim over the claim made in the complaint initially, to Rs. 5,96,96,193 with interest.

WE have heard Mr. Kuljeet Rawal for the complainant and Mr. Ajay Kumar Jha for the opposite party and considered the written arguments and the decisions relied upon.

IN short, the case of the complainant attributing deficiency in service/negligence on the part of opposite party is that while the rice weighing 2738.170 MTs contained in bags was lying in TS-3, it was badly infested and also damaged as a result of leakage of rain water into the said transit shed rendering it unfit for shipment. In support of the case, heavy reliance has been placed on three reports of M/s. Geochem Laboratories Pvt. Ltd.- Surveyors dated 4.4.1999, 15.4.1999 and 22.5.1999. These reports being material, omitting immaterial portion, read as under: 4.4.1999 WE CERTIFY THAT WE HAVE DRAWN SAMPLES FROM STOCK OF 36466 bags ( 2738.170 M. TONS) OF PARBOILED RICE PACKED IN 75 KG JUTE BAGS WAS LYING IN CARGO CONVEYORS GODOWN AT GANDHIDHAM A/C PRIYANKA OVERSEAS LTD., DELHI AND ACCORDING TO OUR ANALYSIS CARGO IS FIT FOR SHIPMENT AND MEET THE CONTRACTUAL OBLIGATION." 15.4.1999 "Dear Sir, Kind Attn: Mr. Rajkumar Jain This has reference to the above, we wish to inform you that on the basis of our preshipment sampling and analysis we found that the cargo of parboiled rice of 36466 bags (2738.170 m. Tons) is badly affected with infestation and need immediate fumigation, failing which cargo will not be permitted to load on board the vessel." 22.5.1999 "Dear Sir, Kind Attn: Mr. Rajkumar Jain This has reference to the above, we wish to inform you that cargo is affected with rain water, and due to that Rancid/bad smell is coming from the cargo. Hence, the cargo is rejected and not fit for shipment."

Reports dated 4.4.1999 and 15.4.1999 seem to have been signed on behalf of the said Surveyor by the same person. Report dated 22.5.1999 appears to be not signed by the person signing the reports dated 4.4.1999 and 15.4.1999.

AFORESAID writ petition filed under Articles 226 and 227 filed by the complainant against the opposite party challenging the action of sale by auction of the rice bags in their custody by the opposite party -Authority was disposed of by the High Court of Gujarat by the order dated 18.11.1999 with direction to the opposite party (respondent No. 2 therein) to pass specific order expeditiously on all the representations made by the complainant after giving opportunity of hearing to it and in the event of any adverse order being passed against the complainant, not to subject rice bags to public auction for a period of 10 days. Pursuant to this order, the Chairman of the opposite party passed the order dated 2.2.2000 which being material, omitting immaterial portion, runs as under: "I have heard Shri M.S. Bagga, General Manager, M/s. Priyanka Overseas Ltd. during the personal hearing scheduled and held at 1200 hours on 20th January, 2000 in detail and have to state as under: M/s. Vilas Transport Co.- Custom House Agent of M/s. Priyanka Overseas Ltd., had applied for storage space in Transit Shed No. 3/1 vide their application dated 5.4.1999. The application was for storage of rice under shipping bill No. 5907 and 5908 dated 1.4.1999 meant for shipment on vessel MV JUPITER LIGHT, which was expected to arrive at this Port during 2nd week of April, 1999. The stock position of cargo lying in Transit shed No. 3 as on 5.4.1999 was as under: Covered Block Vacant No. 1 to 12 Covered Block 1470 MT of rice No. 13 to 16 in bags Covered Block 155 MT of Soya No. 17 and 18 Ext. in bags. As the block Nos. 1 to 12 were vacant, permission for storage for above cargo was granted by allotting space in transit shed No. 3 (Block Nos. 1 to 12). The date-wise cargo stored by M/s. Vilas Transport Co. is given as under- Date No. of bags stored 6.4.99 4,520 bags 7.4.99 18,199 bags 8.4.99 10,530 bags 9.4.99 2,490 bags 16.4.99 300 bags Total 36.039 bags It can be seen from the above that only Agri. Products were stored in the entire shed. The cargo lying nearby the cargo of M/s. Priyanka Overseas Ltd. was also rice and the same was shipped from this Port. Secondly, soya ext. which is a Agri. Product and was lying near the rice in bags stored by some other party which did not have any problems as regards infestation of cargo etc. It has been stated by M/s. Priyanka Overseas Ltd. that the inspection done by the Surveyors in the godown of M/s. Cargo Conveyors on 4.4.1999 before bringing in the cargo to the Port wherein it was found that the cargo was fit for shipment and after shifting the cargo during the period from 6.4.1999 to 13.4.1999 inside the port area the goods were again inspected on 15.4.1999 and it was found that cargo was badly affected with infestation and needed fumigation. In this connection, it is stated that the cargo was stored till 16.4.1999 in the Kandla Port and not till 13.4.1999. Further, if the reports dated 15.4.1999 confirms that the cargo was affected with infestation how one can say that this was due to negligence on the part of the Port. In fact, it can be otherwise also as the cargo which was coming to the Port area for storage was already infected. The cargo does not get infected immediately upon storage it takes some time. In this particular case it has been stated that the cargo was unfit for shipment on 15th of April, 1999 and till then even the storage was not completed. On the other side, the rice which was already lying in the same shed before the storage of the rice on account of M/s. Priyanka Overseas Ltd. was safe as regards infestation is concerned because it was finally shipped from the Port as stated earlier. Further, if this was true this should have brought to the notice of the Port during that time itself so that Port could have looked into it and had brought out the facts of the case. In view of the above, the allegation of negligence on the part of Port Trust leading to infestation of cargo is not acceptable and is, found to be baseless. MV JUPITER LIGHT did not arrive at Outer Tuna Buoy (OTB) as per the programme. As per the procedure, whenever cargo stored for particular vessel is not shipped on the vessel or if the vessel is cancelled then the same should be informed by the Custom House Agent (CHA)/exporter to the Port and they should take the permission for the next vessel of shipment. In this case, the CHA neither gave any programme or information nor took any efforts to shift the cargo from the transit shed. It is true that a notice was given by Port Authorities alerting the Users of impending cyclone which was expected to hit this Port on 18th/19th May, 1999. The Users were requested to take necessary precautions to safeguard their cargoes. However, no precautions were taken by the Exporters or their agents at that relevant time and now they are attempting to put the blame on Port Authorities to cover up their own negligence. There is no act of negligence on the part of the Port in maintaining the transit shed. It is pertinent to mention that these sheds are being used by one and all Users including M/s. Priyanka Overseas Ltd. till today in the same condition. Further, the details of the Agri. Product lying inside the Covered Transit Sheds at this Port on 18th May, 99 are given as under- Location Rice Soya Ext. (Figures in tones) Covered Transit Shed No. 1 1531 489 Covered Transit Shed No. 2 5500 0 Covered Transit Shed No. 3 3292 178 Total 10,323 667 It can be seen from the above that a total quantity of about 11,000 MT of Agri. Products were lying in the above sheds out of which 10,323 MT was rice. Further, in addition to the rice of M/s. Priyanka Overseas Ltd. (2703 MT) a quantity of 589 MT of rice was lying in the same shed. Port authorities have no reports or complaints from any other party whereas as per M/s. Priyanka Overseas Ltd. representation the entire consignment was affected with rain water and stated giving bad smell and became unfit for shipment as per the inspection report of 22.5.1999. In this connection, it is stated that if this was true that the entire consignment was unfit for shipment as it was affected with rain water and started giving bad smell than M/s. Priyanka Overseas Ltd. should in fact have removed the cargo from the Port area without any financial burdens on 22.5.1999. As regards their officials approaching to the Department to get redressal of their grievances, it is stated that the party made first representation only on 4th August, 1999 i.e. after a lapse about 4 months. The party had applied for allowing shifting the cargo from transit shed to rental area on 4.9.1999 which was granted on the same day. The reason for continued storage or cargo in transit shed under transit terms and not shifting to rental area is probably due to faulty planning by the shippers and due to their negligent attitude for which the Port Trust cannot be held responsible. Since the cargo remained uncleared, auction notices were issued as per the Section 63 of MPT Act. It is once again stated at the cost of repetition that there is no act or omission on the part of the Port Trust leading to the cargo becoming unfit for shipment. On the other hand, it is the negligence on the part of the shipper and his agent who had not taken care to shift the cargo out of the Port or at least to the Rental Godowns of Kandla Port Trust so as to avoid accumulation of demurrage charges. The Port Trust has prepared the Demurrage Bills as per the scale of rates and as per the terms and conditions for the period of storage in the transit shed. It is pertinent mention here that the party has paid an amount of Rs. 63,340 towards demurrage charges from 24.4.1999 to 6.5.1999 without any protest or whatsoever. In view of the position stated above, I pass on the following orders: 1. The representation of the petitioner to waive the demand of demurrage charges amounting to Rs. 85,76,260 for the period from 7.5.1999 to 11.9.1999 cannot be acceded to due to the following reasons: (a) No non edible cargo was stored in transit shed No. 3 where the cargo of M/s. Priyanka Overseas Ltd. was stored. (b) There is no act of negligence on the part of Port Trust leading to infestation of cargo. This was never brought to the notice of the Port till 4th August. The demurrage charges upto 6.5.1999 were paid by the party without protest or whatsoever. (c) It cannot be ruled out that the cargo of rice for export brought inside the Port was already infested because as per the Surveyor''s report of the party dated 15.4.1999 it was found that cargo was unfit for export. (d) There are no reports or complaints or claims from any other party that the cargo was damaged due to rains during May, 1999. Further, notice was given to all the users whose cargo was stored inside the Port about the impending cyclone and requesting to take necessary precautions to safeguard their cargoes. It is important to note that the cyclone did not hit the Kandla Port during May, 1999. 2. There is no question for considering the compensation for the losses sustained by M/s. Priyanka Overseas Ltd. by the Kandla Port Trust and also there is no need to survey the goods at the time of removal to assess the damage to the goods. As mentioned above, Port is not at all responsible and the claims made by the Port towards the demurrage charges are found to be in order. Further, if the cargo is not removed by the party, the Port has to auction the same as per the provisions of MPT Act......"

INDISPUTABLY, the complainant had not challenged the correctness of the said order dated 2.2.2000 before the appropriate authority/Court of Law. Particularly, in para No. 27 of the complaint, the complainant has alleged that the order dated 2.2.2000 is bad in law and on facts. In our view, the validity of this order cannot be assailed in these proceedings. It was contended by Mr. Rawal, Advocates that the said order is relevant only as regards the right of opposite party to claim the demanded demurrage charges for putting to public auction the rice bags to recover these charges. Bare reading of the order would show that the representation(s) referred to therein made by the complainant for waiver of charges were based on 2738.170 MTs of rice having been infested and damaged because of leakage of rain water into TS-3 thereby damaging the rice bags which also is alleged to be negligence/deficiency in service on the part of opposite party in the present complaint. Submission is, therefore, repelled being without any merit. It is pertinent to mention that the complainant has not filed the affidavits of two authors of said survey reports dated 4.4.1999, 15.4.1999 and 22.5.1999 or examined them as witnesses in support of the reports. It is significant to mention that the contents of the report dated 15.4.1999 was made known for the first time to the opposite party through the letter dated 4.8.1999 which were sent in response to the opposite party''s notice dated 3.8.1999 whereby complainant through M/s. Vilas Transport Co., clearing agent was asked to make arrangement for shipment/removal of the rice bags within a week failing which those were threatened to be auctioned without any further notice. Further, the contents of another report dated 22.5.1999 were brought to the notice of the opposite party for the first time by the another letter dated 11.8.1999 by the complainant. In both these letters dated 4.8.1999 and 11.8.1999, the request made was for waiver of demurrage charges. Complainant has not furnished any explanation whatsoever why it waited for about 4 months in bringing the contents of report dated 15.4.1999 and for about 3 months in bringing the contents of report dated 22.5.1999 to the opposite party. In ordinary course of human conduct, the complainant would have brought to the notice of the opposite party the alleged damage immediately after it had occurred. It is not the case of the complainant that three inspections to which the said reports relate, were conducted in the presence of any official of the opposite party. Also considering the reasons recorded in the said order dated 2.2.2000, we found sufficient force in the defence taken by the opposite party in regard to the said reports being collusive. Opposite party was not negligent/deficient in service as alleged by the complainant. Complaint seem to have been filed to evade the payment of balance demurrage charges due from the complainant. Accordingly, the complaint is dismissed with Rs. 20,000 as cost to the opposite party. Complaint dismissed.