M/S NKD MARITIME LIMITED Versus THE BOARD OF TRUSTEES OF THE PORT OF MUMBAI & ORS.

M/S NKD MARITIME LIMITED Versus THE BOARD OF TRUSTEES OF THE PORT OF MUMBAI & ORS.

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले



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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2022
(Arising out of SLP (C) NO. 4550 OF 2021)
M/S NKD MARITIME LIMITED ... Appellant
Versus
THE BOARD OF TRUSTEES OF
THE PORT OF MUMBAI & ORS. ... Respondents
J U D G M E N T
Indira Banerjee, J.
Leave granted.
2. This appeal is against a judgment and order dated 12th February 2021
passed by the Commercial Appeal Division of the Bombay High Court (Division
Bench) allowing Commercial Appeal (L) No. 1557 of 2021 filed by the
Respondent No.1, hereinafter referred to as the “Port Trust” and setting aside
an interim order dated 6th January 2021 passed by the Commercial Division
(Single Bench) of the same High Court disposing of Interim Application No.
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6531 of 2020 filed by the Appellant M/s NKD Maritime Limited, hereinafter
referred to as “NKD”.
3. The Vessel M.V. Karnika, hereinafter referred to as the “Vessel” was
owned by Jalesh Cruises Mauritius Limited, hereinafter referred to as “Jalesh”
and had been sailing under the flag of the Bahamas.
4. At the request of Jalesh, Glander International Bunkering DMCC,
hereinafter referred to as “Glander”, had supplied bunkers to the Vessel. The
charges for the bunkers supplied by Glander to the Vessel were not paid.
5. On 24th September, 2020, Glander filed an Admiralty Suit being
Commercial Admiralty (L) Suit No. 3579 of 2020 against the owners and parties
interested in the Vessel for recovery of USD $2,213,320, being the charges for
the bunkers along with accrued interest before the Commercial Division of the
Bombay High Court.
6. By an order dated 7th October 2020, the Commercial Division of the High
Court directed the Sheriff of Mumbai to sell the Vessel through public auction
by issuing newspaper advertisements.
7. Pursuant to auction notices published in newspapers on 28th October
2020, on the directions of the High Court, 13 bidders including NKD submitted
their bids. NKD’s bid of Rs.11.65 million was the highest and the same was
accordingly accepted.
8. On or about 7th November 2020, NKD paid the purchase price for the
Vessel after which a Bill of Sale was drawn in favour of NKD on 9th November
3
2020 by the Prothonotary and Senior Master of the High Court. The Bill of Sale
clearly states that the Vessel was sold free from all encumbrances. On 11th
November 2020, delivery of the Vessel was given to NKD.
9. The Vessel had initially arrived at the Port of Mumbai on 23rd March 2020.
When NKD was going to remove the Vessel, the Respondent No.1 raised bills in
respect of Anchorage charges and Respondent No.4 raised bills in respect of
Light Dues Charges.
10. It is the case of NKD that NKD has purchased the Vessel in an auction
conducted through Sheriff Report No. 53 of 2020 in Commercial Admiralty Suit
(L) No. 3579 of 2020 for the purpose of demolition of the Vessel. The terms
and conditions of sale are set out in the order of the High Court, dated 28th
October 2020 on Sheriff Report No. 53 of 2020 in Commercial Admiralty Suit (L)
No. 3579 of 2020 are, inter alia, set out hereinbelow for convenience :-
“10. Needless to clarify that the sale of the defendant vessel
having confirmed in favour of M/s. NKD Maritime Limited, it shall be
handed over to the said M/s. NKD Maritime Limited, free from all
encumbrances. This, of course is subject to the entire sale
consideration being received by the office of the Sheriff of Mumbai
within the stipulated time as mentioned earlier.”
11. It is not in dispute that the Bill of Sale also mentions that the bill was
being sold free of all encumbrances. However, the successful bidder would be
liable to pay the costs, charges, fees and expenses of any kind involved in
removing the Vessel. According to NKD, the Respondent No.4, i.e., the Customs
Authorities raised a bill on NKD levying Light Dues Charges for the period from
23rd March 2020, i.e., the time when the Vessel arrived at Mumbai Port till the
date of its removal.
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12. NKD contends that physical delivery of the Vessel was made over to the
Appellant on 11th November 2020. General Light Dues charges were payable
on and from 11th November 2020. NKD also disputed its liability to pay
Anchorage Charges as claimed by the Respondent No.1, hereinafter referred to
as the “Port Trust”.
13. In exercise of powers under Sections 48, 49 and 50 of the Major Port
Trusts Act, 1963, hereinafter referred to as Port Trusts Act, the Tariff Authority
for Major Port, hereinafter referred to as the “TAMP” issued a notification
notifying the scales of rate for major ports. Clause 2.15 of this notification
provides a schedule of anchorage fees.
14. As per Clause 2.15 of the notification, issued by the TAMP, the anchorage
fees is calculated as per the formula depending on the period of stay of the
Vessel at the harbour. The rates vary depending on the duration for which the
Vessel remains at the anchorage, herein anchorage points V-1 and Y. The rate
of anchorage for a foreign going vessel is USD $ 0.0047 GRT (Gross Registered
Tonnage) per hour or any part thereof from the first day on wards till the 30th
day. If the Vessel is docked at the anchorage for over 30 days, the applicable
rate beyond the 30th day is USD $ 0.0118. In this case, the vessel was at V-1
anchorage with effect from 13th June 2020. It is not in dispute that more than
30 days had elapsed since the Vessel had been brought to the anchorage. At
the time of sale, the Vessel was paying anchorage fees at the rate applicable
when a vessel is docked for more than 30 days.
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15. Disputes arose between NKD and the Port Trust with regard to the
anchorage charges claimed by the Port Trust. The Port Trust charged
approximately Rs.15,00,000/- per day on the basis that the Vessel had been
docked at the anchorage for more than 30 days. If the vessel were to be
docked for less than 30 days, the anchorage charges would be approximately
Rs.5,00,000/- per day.
16. NKD filed an application in Commercial Admiralty Suit (L) No. 3579 of
2020 in the Commercial Division of the High Court seeking directions on the
Customs Authorities and the Mumbai Port Trust to raise revised bills, levying
Light Dues Charges and/or Anchorage Charges from the date on which physical
possession of the vessel was made over to NKD, i.e., 11th November 2020.
17. The main thrust of the arguments of NKD is based on the terms and
conditions of the Sale of the Vessel which is set out hereinbelow for
convenience :
“5. The above Vessel M.V. Kamika (IMG No.8521220) is being sold
on as is where is, what is there basis, free and clear of all existing liens
encumbrances and claims and no Purchasers) shall be to raise any
objection in respect of or on account of any damage thereto or defect
therein. All the costs, charges, fees and expenses of any kind of nature
involved in removing M.A. Karnika (IMO No.8521220) from her present
position will be solely to the account of the successful purchaser. The
successful bidder should take over the safety of the Vessel M/V. Karnika
(IMO No.8521220) within 24 hours of being declared the
highest/successful bidder and payment of the entire sale consideration
to be made in this Hon’ble Court.
xxx xxx xxx
10. The sale is subject to the sanction of the Hon’ble High Court
of Judicature at Bombay.
11. The offerer(s) or bidder(s) whose offer or bid will be accepted
by the Hon’ble High Court. Bombay (hereinafter referred to as “The
purchaser”) shall give an undertaking in the form annexed hereto and
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complete the purchase according to these conditions and shall also pay
the purchase price in accordance with Term No.8 hereinabove,
otherwise, the said vessel shall be again put up for sale and re-sold and
Earnest Money Deposit of Rs.2,00,00,000/- (Rupees Two Crores only) or
equivalent US Dollars and any amount paid towards purchase price
shall be forfeited and the defaulting purchases, shall be liable for any
deficiency upon such resale together with costs, charges and expenses
attending the resale, but shall not be entitled to the benefit of any
increase in the purchase money on such resale. The Purchaser(s) shall
also subscribe his/their address including e-mail & fax to the said
Undertaking at the foot of these conditions. All communications shall
be deemed to have been served, upon such communication being sent
to the Purchaser(s) by e-mail and/or fax and/or post or upon such
communication left for the Purchaser(s) at such address, unless such
Purchaser(s) is/are to the knowledge of the Sheriff of Mumbai
represented by an Advocate or Advocates, in which case service on
such Advocate or Advocates shall be deemed to be sufficient.
12. Upon payment of the full purchase money in the manner
aforesaid, and on the sale being sanctioned by the Hon’ble High Court
of Judicature at Bombay, the Purchaser(s) shall take immediate steps
to take possession of the vessel purchased by him/them. The
Purchaser(s) shall at his/their expense take such steps as may be
necessary for the purpose of obtaining possession thereof and the
Sheriff of Mumbai shall not be responsible in that behalf.
xxx xxx xxx
14. The Purchaser(s) shall take delivery of the said vessel
forthwith after making payment of the full purchase price of the vessel
and with the sanction of the sale by the Hon’ble High Court of
Judicature at Bombay. The said vessel shall remain at the risk and
expense of such purchaser(s) from the date of sanction of sale by the
Hon’ble High Court of Judicature at Bombay in respect of the said
vessel.
xxx xxx xxx
16. The Purchaser(s) shall submit to the Sheriff of Mumbai for
approval a draft of the Certificate of Sale of the vessel immediately
from the date of confirmation of the file and the same will be approved
by and on behalf of the Sheriff of Mumbai and will be forwarded to the
Admiralty Registrar / Prothonotary and Senior Master High Court,
Bombay for issuance of the same. The costs of certificate of sale to be
issued by the Hon’ble High Court including stamp duty, registration
charges etc. Payable in respect thereof shall be borne and paid by the
Purchaser(s).
17. All charges, dues including Port dues, tariffs, taxes etc. in
respect of the vessel shall be borne and paid by the Purchaser(s) from
the date of the sanction of the sale by the Hon’ble High Court of
Judicature at Bombay.”
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18. By an order dated 6th January 2021, the Commercial Division of the High
Court (Single Bench) allowed the application filed by the NKD.
19. While the Port Trust filed Commercial Appeal (L) No. 1577 of 2021 against
the order of the Commercial Division, NKD filed a Cross Objection (L) Nos. 2057
of 2021 in the Commercial Appeal.
20. Mr. Siddharth Bhatnagar, learned senior counsel appearing on behalf of
the Appellant referred to the terms and conditions of sale of the Vessel and
argued that the Vessel had been sold free from all encumbrances. Mr.
Bhatnagar also referred to Section 8 of the Admiralty (Jurisdiction and
Settlement of Maritime Claims) Act, 2017 which reads as under :-
“8. Vesting of rights on sale of vessels— On the sale of a vessel
under this Act by the High Court in exercise of its admiralty jurisdiction,
the vessel shall vest in the purchaser free from all encumbrances,
liens, attachments, registered mortgages and charges of the same
nature on the vessel.”
21. Mr. Bhatnagar argued that the Vessel having been sold on “as is, where
is” basis, free from all encumbrances, any liability in respect of Anchorage
Charges or Light Dues Charges which accrued prior to the date of sale would
have to be met by the erstwhile owners of the Vessel and/or met by the
Prothonotary and Senior Master of the High Court from out of the sale proceeds
of the Vessel lying with him. Such charges cannot be foisted upon NKD.
22. Mr. Jayant Bhushan, learned senior counsel appearing on behalf of the
Respondents agreed that the Vessel had been sold on “as is, where is” basis,
free from all encumbrances. Mr. Bhushan submits that no pre-sale liabilities in
respect of the Vessel have been foisted on NKD. Referring to the terms and
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conditions of sale and in particular, the condition that all charges dues
including Port dues, tariffs, taxes, etc. in respect of the vessel, Mr. Jayant
Bhushan submits, that it would be borne and paid by the purchaser from the
date of sanction of the sale by the High Court. In this case, Mr. Bhushan
argued, NKD had only been charged anchorage charges from the date of
sanction of the sale till the date of removal of the vessel from the anchorage.
23. In our view, the Division Bench rightly held that the argument was
without merit. As held by the Division Bench, it is far-fetched to suggest that
prior anchorage was of the Vessel under sale and the rate that it attracts as a
result of such prior anchorage are in the nature of encumbrances for the
purposes of anchorage fees to be applied after the date of Bill of Sale and till
the Vessel sells at the instance of the purchaser. As held by the Division Bench,
NKD purchased the Vessel on ‘as is, where is’ basis free from encumbrances in
the instant case, anchorage charges have been levied from the date of the
sale. The rates were payable on the basis of the number of days for which the
Vessel was docked. NKD, in its cross objection, contended that anchorage
charges fall within the expression ‘port dues’ under Section 50-B of the Port
Trusts Act. Under Section 50-B, when a Vessel enters a port but does not
discharge or take in any cargo or passengers, she is charged with port dues at
a rate to be determined by the Authority, which, in any event, should not
exceed half the rate with which she otherwise would be chargeable. It is
submitted that the Port Trust could not have charged more than half the rate
under the Scale of Rates for anchorage charges.
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24. Mr. Bhatnagar submits that port dues not having been defined in the
Major Port Trust Act, all charges payable within the premises of the Port fall
within the broad expression ‘port dues’. Whether port dues within the meaning
of Section 50-B of the Major Port Trust Act include other charges leviable within
the port premises, i.e., charges other than Port Entry charges is not in issue in
this case as held by the Division Bench. The issue was whether the rate would
be approximately Rs.5,00,000/- per day or Rs.15,00,000/- per day.
25. In our view, the Division Bench rightly allowed the appeal and set aside
the order of the Single Bench. The appeal is, therefore, dismissed.
...................................,J.
 [ INDIRA BANERJEE ]
...................................,J.
 [ J.K. MAHESHWARI ]
NEW DELHI;
SEPTEMBER 22, 2022

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