Holding

Anchorage fees are governed by the Tariff Authority’s schedule, and the purchaser is liable for the higher rate applicable for stays exceeding 30 days from the date of sale, which are not considered pre‑sale encumbrances.

Summary

NKD Maritime Ltd purchased the vessel M.V. Karnika at a public auction ordered by the Bombay High Court in a commercial admiralty suit, with a bill of sale stating the vessel was sold free of all encumbrances. After taking possession, the Mumbai Port Trust demanded anchorage charges, calculating a rate of Rs.15 lakh per day on the basis that the vessel had been at anchorage for more than 30 days, whereas NKD argued the rate should be Rs.5 lakh per day and that such charges were prior encumbrances. The dispute turned on the interpretation of the Major Port Trusts Act, 1963, particularly whether anchorage fees fall within “port dues” under s.50‑B and which tariff rate applies after the date of sale. The Supreme Court held that the Tariff Authority’s notification governs the calculation of anchorage fees, that the vessel was subject to the higher rate for stays beyond 30 days, and that the charges are payable from the date of sale, not prior to it. Consequently, the Division Bench’s decision setting aside the Single Bench order was affirmed and the appeal was dismissed.

Issues considered

Whether anchorage charges claimed by the Port Trust are payable by the purchaser under the Major Port Trusts Act, 1963, and whether they fall within the expression “port dues” under s.50‑B.
What rate of anchorage fees is applicable – the lower rate for stays less than 30 days or the higher rate for stays exceeding 30 days – as per the Tariff Authority’s notification.
Whether prior anchorage charges incurred before the sale constitute encumbrances that the purchaser is not liable for under s.8 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017.

Legislation cited

Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017s. 8
Major Port Trusts Act, 1963s. 48, s. 49, s. 50, s. 50-B

Subjects

anchorage feesport duesMajor Port Trusts ActAdmiralty Actsale of vesselencumbrancestariff authoritycommercial admiralty suitpublic auction

Judgment

286 [2022]REPORTS
SUPREME COURT 7 S.C.R. 286 [2022] 7 S.C.R.

A M/S NKD MARITIME LIMITED
v.
THE BOARD OF TRUSTEES OF THE PORT
OF MUMBAI & ORS.
(Civil Appeal No. 6858 of 2022)
B
SEPTEMBER 22, 2022
[INDIRA BANERJEE AND J.K. MAHESHWARI, JJ.]
Major Port Trusts Act, 1963 – ss.48-50 – Notification –
Anchorage fees – Calculation of – Appellant purchased a Vessel in
C an auction conducted in a Commercial Admiralty Suit – Bill of Sale
stated that the Vessel was sold free from all encumbrances however,
the successful bidder would be liable to pay the costs, charges, fees
and expenses involved in removing the Vessel – When the appellant
was going to remove the Vessel, disputes arose inter alia w.r.t
anchorage charges claimed by respondent no.1 – Application filed
D by appellant seeking directions to raise revised bills – Allowed by
Single Bench – Order set aside by Division Bench – On appeal,
held: As per notification issued by Tariff Authority for Major Port,
the anchorage fees is calculated as per the formula depending on
the period of stay of the Vessel at the harbour – Rates vary depending
E on the duration for which the Vessel remains at the anchorage – In
the present case, 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 – Appellant purchased the Vessel on
‘as is, where is’ basis free from encumbrances, anchorage charges
F have been levied from the date of the sale – Rates were payable on
the basis of the number of days for which the Vessel was docked –
Division Bench rightly set aside the order of Single Bench –
Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017
– s.8.
G Major Port Trusts Act, 1963 – s.50-B – Appellant purchased
a Vessel in an auction – Bill of Sale inter alia stated that the Vessel
was sold free from all encumbrances – Disputes arose w.r.t anchorage
charges claimed by Respondent No.1-Port Trust – It charged approx.
Rs.15,00,000/- per day on the basis that the Vessel had been docked
at the anchorage for more than 30 days which would be approx.
H
286
M/S NKD MARITIME LIMITED v. THE BOARD OF TRUSTEES 287
OF THE PORT OF MUMBAI & ORS.

Rs.5,00,000/- per day if the vessel were to be docked for less than A
30 days – Plea of appellant that that anchorage charges fall within
the ‘port dues’ u/s.50-B, port dues not having been defined in the
Act, all charges payable within the premises of the Port fall within
the broad expression ‘port dues’ – Held : Whether port dues within
the meaning of s.50-B of the Major Port Trust Act include other
B
charges leviable within the port premises i.e., charges other than
Port Entry charges, is not in issue in this case – The issue was
whether the rate would be approximately Rs.5,00,000/- per day or
Rs.15,00,000/- per day.
Dismissing the appeal, the Court
C
HELD: In exercise of powers under Sections 48, 49 and 50
of the Major Port Trusts Act, 1963, the Tariff Authority for Major
Port (TAMP) issued a notification notifying the scales of rate for
major ports. Clause 2.15 of this notification provides a schedule
of anchorage fees. As per the said Clause, the anchorage fees is
calculated as per the formula depending on the period of stay of D
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
E
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 F
when a vessel is docked for more than 30 days. 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
G
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
H
288 SUPREME COURT REPORTS [2022] 7 S.C.R.

A which the Vessel was docked. 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. Whether port dues within the meaning of Section
B
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. The Division
C Bench rightly allowed the appeal and set aside the order of the
Single Bench. [Paras 13, 14, 23-25][290-E-H; 291-A; 294-C-G]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6858
of 2022.
From the Judgment and Order dated 12.02.2021 of the High Court
D of Judicature at Bombay in Cross Objection (L) No. 2057 of 2021 in
Commercial Appeal (L) No. 1577 of 2021 in Interim Application No.
6531 of 2020 in Sheriff’s Report No. 53 of 2020 in Commercial Admiralty
Suit (L) No. 3579 of 2020.
Siddharth Bhatnagar, Sr. Adv., Prathamesh Kamat, Akash Kakade,
E Vikrant Shetty, Gurdeepsingh Sachar, Somanatha padhan, Swetab Kumar,
Ms. Pracheta Kar, Ms. Sukhada Kakade, Aditya Sidhra, Nadeem Afroz,
Advs. for the Appellant.
Jayant Bhushan, Sr. Adv., A. V. Rangam, Buddy A. Ranganadhan,
Ms. Aditi Sharma, Advs. for the Respondents.
F The Judgment of the Court was delivered by
INDIRA BANERJEE, J.
1. 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
G 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

H
M/S NKD MARITIME LIMITED v. THE BOARD OF TRUSTEES 289
OF THE PORT OF MUMBAI & ORS. [INDIRA BANERJEE, J.]

disposing of Interim Application No. 6531 of 2020 filed by the Appellant A
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 B
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 C
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 D
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.
E
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 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. F
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 G
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
H
290 SUPREME COURT REPORTS [2022] 7 S.C.R.

A 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,
B 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
C 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 23 rd March 2020, i.e.,
the time when the Vessel arrived at Mumbai Port till the date of its removal.
D 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”.
E 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.
F 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
G
thereof from the first day on wards till the 30 th 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
H
M/S NKD MARITIME LIMITED v. THE BOARD OF TRUSTEES 291
OF THE PORT OF MUMBAI & ORS. [INDIRA BANERJEE, J.]

anchorage. At the time of sale, the Vessel was paying anchorage fees at A
the rate applicable when a vessel is docked for more than 30 days.
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 B
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 C
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 : D
“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, E
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 F
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. G
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 complete the purchase according
to these conditions and shall also pay the purchase price in
H
292 SUPREME COURT REPORTS [2022] 7 S.C.R.

A 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
B
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
C 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
D
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
E 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
F 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
G
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
H
M/S NKD MARITIME LIMITED v. THE BOARD OF TRUSTEES 293
OF THE PORT OF MUMBAI & ORS. [INDIRA BANERJEE, J.]

same will be approved by and on behalf of the Sheriff of A
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
B
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.”
18. By an order dated 6th January 2021, the Commercial Division C
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. D
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 E
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
F
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 G
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 H
294 SUPREME COURT REPORTS [2022] 7 S.C.R.

A that no pre-sale liabilities in respect of the Vessel have been foisted on
NKD. Referring to the terms and 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
B
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
C 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
D 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
E 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.
24. Mr. Bhatnagar submits that port dues not having been defined
F 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
G 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.

H Divya Pandey Appeal dismissed.
(Assisted by: Roopanshi Virang, LCRA)