Holding

The Board’s right to recover demurrage is founded on Section 158 of the Contract Act, Section 1 of the Bills of Lading Act and Section 59(1) of the Major Port Trusts Act, making the title of the goods irrelevant, and the Board’s refusal to grant remission was set aside for lack of rational basis.

Summary

The appellant purchased 78 consignments of zinc and copper that had been stored at the Port of Bombay after the original consignees failed to lift them. The Board of Trustees of the Port of Bombay levied demurrage charges of Rs.2,81,67,333 and granted only partial remission, which the appellant challenged. The Supreme Court examined whether the appellant, who acquired title to the goods after they were detained, was liable for demurrage incurred before that time and whether the Board could lawfully refuse remission. It held that the Board’s right to recover demurrage stems from Section 158 of the Contract Act, Section 1 of the Bills of Lading Act and Section 59(1) of the Major Port Trusts Act, and that the point at which title passes is irrelevant. The Court also ruled that the question of liability is a pure and substantial question of law, therefore the appellant could raise it for the first time. Finding the Board’s refusal to grant remission unsupported by rational consideration, the Court set aside that order and remitted the matter to the Board to decide with reasons.

Issues considered

The appellant's liability to pay demurrage for the period before acquiring title to the goods.
The statutory basis of the Board's authority to recover demurrage and from whom it may recover.
Whether the question of liability is a pure and substantial question of law that can be raised for the first time before the Supreme Court.
The Board's discretion to grant or decline remission of demurrage and the requirement of rational consideration.
The relevance of the title of the goods and the nature of the bailment relationship to the Board's right to recover dues.

Legislation cited

Bills of Lading Act, 1856s. 1
Customs Act, 1962s. 292
Indian Contract Act, 1872s. 148, s. 158, s. 171
International Airports Authority Act, 1971
Major Port Trusts Act, 1963s. 42, s. 48, s. 49, s. 50, s. 53, s. 59(1), s. 61, s. 62, s. 63

Subjects

bailmentdemurragemajor port trusts actliabilityremissionsub‑baileeboard of trusteescustoms detentioncontract lawtitle of goods

Judgment

[2017] 4 S.C.R. 591

MIS. RASIKLAL KANTILAL & CO. A
v.
BOARD OF TRUSTEE OF PORT OF BOMBAY & OTHERS
(Civil Appeal No. 5968 of20ll)
FEBRUARY 28, 2017 B
[J. CHELAMESWAR AND ABHAY MANOHAR SAPRE, JJ.)
Bailment:
Consignments (78 in numbers) shipped on cash against
documents basis - Received at Bombay Port - Consignees filed C
bills of entry only in respect of 37 consignments, but failed to lift
the consignments - Consignments stored at the Port - Exporter/
Co11'signor sold the consigned goods to the petitioner - Petitioner
applied to Customs Authorities to file Bills of Entry for 41
consignments and to substitute Bills of Entry in respect 37 D
consignments - Customs authority issued detention certificate
specifically mentioning that detention was for "bonafide operation
of ITC formalities" - Notification of "Statement. of guideline~ for
Permission of Demurrage Charges", 1992 whereby in cases where
goods/consignments detained by Customs for 'ITC facilities' were
to be considered for grant of remission from payment of demzirrage E
for the period the goods were being so processed by Customs
Authorities - Levy of demurrage charges giving remission of certain
amount from the demurrage charge - Whether the appellant was
liable to pay demurrage charges for the period anterior to his
acquisition of title to the goods and whether the appellant was F
entitiled to complete remission of the demurrage charges on account
of delayed clearance for the goods by the Customs Department -
Held: The right of Board of Trustee to recover its dues (either from
the steamer agent or the consignee) flows from s.158 of Contract
Act rlw. s.1 of Bills of lading Act and from s.59(1) of the Major Port
Trusts Act, 1963 - Enquiry into the title of the goods and the point G
of time at which the title passes to the consignee is irrelevant for
determining the authority of the Board to recover its dues - The
question as to who would be liable to pay the dues would depend
on the nature of relationship between the consignor and consignee
H
591
592 SUPREME COURT REPORTS [2017] 4 S.C.R.

A - In the present case, the Board was sub-bailee of the goods bailed
by consignor (bailor) to the ship-owner (bailee) through the agent
(steamer agent) of the bailee - Appellant is only claiming through
the bailor without any contractual relationship with the Board -
Therefore, the Board would be entitled to enforce its rights flowing
B from the bailment between the ship-owner and the Board, against
the consignee and recover expenses from him, incurred in connection
with the bailment - Since the order of the Board declining total
remission charges was not based on rational consideration and a
sound policy, the order of the Board is set aside leaving it open to
the Board to take appropriate decision duly recording the reasons
. C for such decision - Major Port Trusts Act, 1963 - ss. 59(1) and 63
- Contract Act, 1872 - s. 158 - Bills of Lading Act, 1856 - s. J.
Plea:
New plea - Raising of - Jn Supreme Court - Permissibility -
Held: A pure and substantial question of law cannot be barred from
D being raised for the first time. ·
Words and Phrases:
'Demurrage' - Meaning of
'Bailment' - Meaning of
E
Partly allowing the appeal, the Court
HELD: I. Though the question as regards the liability of
the appellant to pay the demurrage was not raised before the
High Court, the appellant need not be barred from raising this
question before this Court because it is a pure and substantial
.F
question of law. No enquiry into any fact is really necessary to
decide the said question of law. The only fact which is not clearly
established on record is the point of time at which the titlP- in the
goods passed to the appellant. [Paras 30, 31) (609-F-G; 610-B]
2.1 Enquiry into the title of the goods and the point of time
G at which the title passes to the consignee is irrelevant for
determining the authority of a Board of Trustee to recover the
amounts due to it under the Major Port Trusts Act, 1963. The
authority and right of a Board to recover its dues either from the
steamer agent or the consignee, flows from two different sources:
H
M/S. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE· 593
OF PORT OF BOMBAY

(i) Section 158 of the Contract Act, 1872 read with Section 1 of A
the Bills of Lading Act, 1856. (ii) Section 59(1) of 1963 Act.
[Para 37) [615-B-C]
2.2 The essence of bailment is possession and the consent
of the owner of the goods is not necessary. There is a distinction
between possession and custody of goods. Title to the goods is B
irrelevant even in the cases of a bailment arising under a contract.
Any person who is capable of giving physical possession of goods
can enter into a contract of bailment and create bailment. Bailment
is a contractual relationship and bailment can be created by any
person who is in possession/custody of goods but not necessarily
the owner of the goods. When the purpose of bailment is C
accomplished, the goods are to be returned or otherwise disposed
of according to the directions of the person (bailor) delivering
them. [Paras 38 and 41] [615-C-D; 617-F-G]
Trustees of the Port of Bombay v. Premier Automobiles
Ltd. (1981) 1 SCR 532 : (1981) 1 SCC 228 - relied D
on.
2.3 Section 158 of the Contract Act stipulates the obligations
of the bailor to pay the necessary expenses incurred by the bailee
"for the purpose of bailment". The obligation of the ·bailee to
return the bailed goods when the purpose of bailment is E
accomplished and the obligation of the bailor to pay the bailee
"the necessary expenses incurred by him for the purpose of the
bailment" would attend not only a bailment by contract but every
kind of bailment. [Para 42) [618-C, E]
2.4 If the bailor has such an obligation to pay the bailee, F
any person claiming through the bailor must necessarily be bound
by such an obligation unless the bailee releases such person from
such an obligation. A consignee is a person claiming through the
consignor (bailor). In the context of import of goods into India
by ship, the consignees' rights are governed inter alia by Section G
1 of the Bills of Lading Act, 1856. The Act enacts a fiction that
the consignee to whom the property in the goods shall pass, shall
be "subject to the same liabilities in respect of such goods as if
the contract contained in the bill of lading had been made with
himself'. Bill of lading is evidence of a contract between the
H
594 SUPREME COURT REPORTS [2017] 4 S.C.R.

A shipper (consignor) and the owner of the ship by which the owner
of the ship agrees to transport the goods delivered by the
consignor to a specified destination and deliver it to the cor-signee.
Delivery of goods pursuant to a bill of lading creates a bailment
between the shipper and the owner of the ship. Obviously the
legislature knew that a consignee under a bill of lading is a 3'd
B
party to the contract but intrinsically connected with the
transaction and thought it. necessary to specify the rights and
obligations of the consignee. Hence, the fiction. under the 1856
Act is that the moment the property in goods passes to the
consignee, the liabilities of the consignee in respect of such goods
c would be the same as those of the consignor, as if the contract
contained in the bill of lading had been made with the consignee.
[Paras 43 and 44] [618-F; 619-A-D]
2.5 Section 63 of 1963 Act authorises the Board to sell the
goods "placed in their Custody". Bailment can come into
D existence even otherwise than by a contract. There is nl' bailor
and bailee relationship between the Board (the 1" respondent)
and the consignee (the appellant); either voluntarily or statutorily
compelled but such a relationship exists between the 1"
respondent and the owner of the ship (through the steamer agent).
It is possible in a given case where the consignee or any other
E person (such as the appellant) claiming through the consignor,
eventually may not come forward to take delivery of the goods
for a variety of reasons-considerations of economy or supervening
disability imposed by law etc. Therefore, in such cases to say
that merely because the bill of lading is endorsed or the delivery
F order is issued, the consignor or his agent is absolved of the
responsibility for payment (of rates or rent for services rendered
w.r.t goods) would result in a situation that the Board would. incur
·expenses without any legal right to recover such amount from
the consignor and be driven to litigation for recovering the same
from the consignee who did not take delivery of the goods with·
G whom the Board had no contract of bailment and consequently
no contractual obligation to pay the 'raies or rent'. [Para 38] [615-
D-E; 616-A, F-H; 617-A-B]
2.6 Enquiry into the relationship between either the Board,
the consignor of goods, the owner of the vessel and the £teamer
H
MJS: RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 595
OF PORT OF BOMBAY

agent on one hand or the consignee and the Board on the other, A
is wholly irrelevant in examining the right of the Board to recover
the amounts due towards the rates or rent for services rendered
with respect to the goods. The right of the Board is
unquestionable. The only question is: from whom can the Board
recover and not who is liable. Depending on the nature of the B
relationship between the consignor and consignee, the liability
may befall either of them. [Para 39) [617-B-D]
2.7 On the other hand, the 1" respondent is a sub-bailee of
the goods bailed by consignor (bailor) to the ship-owner (bailee).
The goods are bailed through the agent (steamer agent) of the
bailee. The appellant is only a person claiming through the bailor, C
without any direct contractual relationship with the 1st respon«:Ient.
[Para 40) [617-D-E]
2.8 Therefore, the 1st respondent (sub-bailee) would be
entitled to enforce its rights flowing from the bailment between
the ship-owner and the 1st respondent against the consignee and D
recover expenses incurred by it in connection w~th the bailment
from the consignee. The terms and conditions of the contract
between the consignor or person claiming delivery of the gaods
are irrelevant for determining the right of the 1" respondent to
recover its dues. The obligations/liability of the consignee is E
determined by the statute. But the said obligation is not exclusive
to the consignee. The consignor (bailor) is not relieved of the
obligation to pay by virtue of Section 158 of the Contract Act the
expenses incurred by the 1st respondent. The declaration under
Section 42(7) absolving the owner of the ship and his agents is
limited only to the obligations owed by the bailor to the consignee F
not to the sub-bailor like the 1" respondent. [Para 45) [619-D-G]
2.9 Section 59 f?f 1963 Act, creates lien in favour of 1't
respondent in respect of any goods and also authorises the 1''
respondent to seize and detain the goods, it clearly makes a special
provision. Under the Contracts Act, every bailee has no lien on G .
the goods delivered to him. Such a lien is available only to limited
classes of bailees specified under Section 171. They are -
bankers, factors, wharfingers, attorneys of a High Court and
policy-brokers. It can be seen from Section 171 that only those
H
596 SUPREME COURT REPORTS [2017] 4 S.C.R.

A specific categories of bailees have a right to retain goods bailed
to them as security for the amounts due to them. No other
category of bailee has such a right unless there is an express
contract creating such a lien. Section 59 of 1963 Act, also
expressly authorises the 1" respondent to seize and detain goods
B taken charge of by it. Parliament also invested the 1" respondent
with the authority to sell the goods and appropriate the proceeds
of sale under Section 63 of the 1963 Act towards various heads
indicated thereunder without the need to file a suit·. [Paras 46
and 47) [619-H; 620-A-C; 621-AJ
C 2.10 If the 1963 Act authorises the 1'' respondent to
recover its dues by bailing the goods under bailment, in those
cases where the consignee does not turn up to take the delivery
of the goods within the time stipulated under Sections 61 or 62 of
the 1963 Act, to deny the right to demand and recover the amounts
due from the consignee when he seeks delivery of the goods
D under bailment would be illogical and inconsistent with the scheme
of the 1963 Act. [Para 48] [621-B-C]
2.11 Denying such a right on the ground that the person
claiming delivery of the goods acquired title to the goods only
towards the end of the period of the bailment of the goods with
E the 1'' respondent would result in driving the 1'' respondent to
recover the amount due to it from the bailor or his agent who
may or may not be within the jurisdiction of the municipal courts
of this country (by resorting to a cumbersome procedure of
litigation). [Para 48) [621-DJ
F Trustees of the Port of Madras, Through its Chairman
v. K.P. V. Sheikh Mohd. Rowther & Co. Pvt. Ltd. & Anr.
(1997) 10 SCC 285; Forbes Forbes Campbell &
Company Limited v. Board of Trustees, Port of Bombay
(2015) 1 sec 228 : [2014] 12 SCR 337 - relied on.
G The Trustees of the Port of Madras by its Chairman v.
K.P. V. Sheik Mohamed Rowther & Co. & Ors. [1963)
Supp. 2 SCR 915 - held inapplicable.
Port of Bombay v. Sriyanesh Knitters (1999) 7 SCC
359 : [1999) 3 SCR 1238 - referred to.
H
MIS. RASIKLAL KANTII & CO. v. BOARD OF TRUSTEE 597
OF PO!ri' OF BOMBAY

Indian Contract and Specific Relief Acts by Pollock and A
Mu/la, J31h Edition - referred to.
3.1 The guidelines permit granting of remission upto 80
per cent of demurrage in appropriate cases. However, the cap of
80 per cent is not absolute. The 1'1 respondent can even grant
complete remission in appropriate cases. Admittedly, the 1'1 B
respondent granted remission to an extent of Rs.90,52,535.00
(approximately) out of the total claim towards demurrage of
Rs.2,81,67,333.00. The liability to pay demurrage arose because
of the non-clearance of the goods from the l ' 1 respondent's
property for a considerable period of time. [Para 49) [622-C-D)
c
3.2 Delay in taking delivery before the point of time when
appellant started claiming the right to take delivery, is attributable
purely to the failure of the original consignee. The appellant clearly
knew or at least ought to have known, when he purchased the
goods that the 1st respondent would demand demurrage. The D
appellant as a person claiming through the consignor is not
- entitled in law to claim any right of remission on the ground that
he did not have any interest or title in the goods for such period.
Delay after the appellant's right to take delivery of goods ume
into existence, occurred because of the time taken in ensuring
that the appellant complied with the various statutory obligations E
to import goods such as amendment of the IGM etc. The fact
that the appellant was not permitted to clear the goods because_
of the pendency of some proceedings initiated by the customs
authorities by itself does not create a right of remission in favour
of the appellant. Thougltit may constitute a relevant circumstance
F
for considering granting remission if the l '1 respondent so chooses
as a matter of policy. As a matter of fact, remission of a part of the
demurrage was granted by the 1•1 respondent. [Paras 49 and 50)
[623-A-D] , .

International Airports Authority of India v. Grand·Slam
G
International (1995) 3 SCC 151 : [1995) 2 SCR 149-
referred to.
3.3 The respondent's decision to decline remission to the
appellant cannot be called discriminatory, on the ground that
H
598 SUPREME COURT REPORTS [2017] 4 S.C.R.

A remission was granted in the case of a similarly situated consignee.
The cases of that consignee and that of the appellant are not
identical. [Paras 51 and 52) [623-E-F)
3.4 However, the authority of the 1'' respondent to grant
or decline remission of any amount due towards any rate payable
B under the 1963 Act must be based on rational consideration and
a sound policy. Such a requirement is inherent in the fact that 1"
respondent is a statutory body discharging important statutory
obligations. 1" respondent could not bring anything on.record
which demonstrates the reasons for declining remission as
claimed by the appellant nor any clear policy of the respondent
c which regulates the discretion. Therefore, the decision of 1''
respondent dated 16.09.1995 in declining the remission is set
aside and it is left open to the respondent to take appropriate
decision on the application duly recording the reasons for such
decision. [Para 53) [624-B-D)
D Trustees of the Port of Madras v. Aminchand Pyarelal
& Ors. (1976) 3 SCC 167 : [1976) 1 SCR 721;
International Airport Authority of India v. Ashok
Dhawan and Ors. (1997) 11 SCC 343 - referred to.
Case Law Reference
E
[1976) 1 SCR 721 referred to Para 25

(1997) 11 sec 343 referred to Para 26

(1963) Supp. 2 SCR 915 held inapplicable Para 32
F
(1997) 10 sec 285 relied on Para 32

[2014) 12 SCR 337 relied on Para 32
[1999) 3 SCR 1238 referred to Para 36
G
[1981] 1 SCR 532 relied on Para 38

(1995) 2 SCR 149 referred to Para 50
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5968
H of2011.
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 599
OF PORT OF BOMBAY

From the Judgment and Order dated 12.04.2010 of the High Court A
of Judicature at Bombay in Writ Petition No. 2012 of 1996.
Anirudh Deshmukh, Mohit D. Ram, Advs. for the Appellant.
Ms. Pinky Anand, ASG, Parag P. Tripathi, Ashok Panda, Sr. Advs.,
A. V. Rangam, Buddy A. Ranganadhan, D. V. Raghu Vamsy, Kabir
Hathi, A&hok K. Srivastav, Shashank Dewan, B. Krishna Prasad, Advs. B
for the Respondents.
The Judgment of the Court was delivered by
J. CHELAMESWAR, J. l. Written submissions filed by the
appellant present a reasonably concise and sufficiently reliable statement c
of facts for adjudication of this appeal. Insofar as relevant they are:
"During the period November 1991 to January 1992, 78 shipments
of zinc ingots and copper iron bars were imported by 5 different
consignees from one Mis Metal Distributors (UK) Ltd.; these
consignments were landed at the Bombay Port. The consignees filed D
bills of entry for 37 out of the 78 consignments, but subsequently failed
to lift the consignments and thus, they came to be stored at by the Port
of Bombay.
The distinguishing factor of the above consignments was that they
were shipped on "CAD Basis" i.e. cash against documents, in which E
the title to the goods would remain with the exporter till such a time the
importer would retire the documents against payments.
Facing a grave loss M/s Metal Distributors (UK) Ltd., requested
the present petitioner, if they were interested in purchasing the goods. It
is pertin~nt to mention that the present petitioner and the original F
consignees are no where related, and the present petitioner is a third
party to the sales.
On 23.03.1992, the petitioner through his agent applied to the
Customs Authorities to have the Bills of Entry substituted in their name
for the 37 consignments for which the original consignees had filed Bills G
of Entry, and also applielto file Bills of Entry for the remaining 41
consignments lying unclaimed. The formal agreement between the Ml
s Metal Distributors (UK) Ltd. and the petitioner was entered
subsequently, in April of 1992.

H
600 SUPREME COURT REPORTS [2017] 4 S.C.R.

A That on 05.05.1992 the Clearing Agent of the petitioner wrote to
the Customs Authorities seeking an amendment of the IGM so that the
goods could be cleared. This was followed by a communication dated
03.06.1992 from the original exporter i.e. Mis Metal Distributors UK
that the petitioner had agreed to buy the aforesaid consignments since
B the original importers had failed to clear the goods.
It is pertinentto mention that on 04.09.1992 the Customs Authority
wrote to the petitioner stating that would be granting permission to amend
the IGM for only 41 consignments and that the balance 37 consignments
on the ground that Bills of Entry for those consignments stood filed.
c On 09.09.1992 the petitioner was granted a detention certificate
by the Customs Authority for the aforesaid 41 consignments signifying
the period of detention as from 09.06.1992 to 09 .09 .1992. Since the said
period was incorrect, the petitioner requested the Customs Authority to
correct the Detention Certificate and the same was subsequently
D corrected to reflect the date as 23 .03 .1992 to 09 .09 .1992. It is pertinent
to mention that the Detention Certificate initially read "for procedural
formalities for amending the IGM" however subsequently the aforesaid
detention certificates were amended by the Detention Certificates dated
18.11.1993and01.12.1993 for the 41 consignments and specifically 'read
for "bonafide operation ofITC Formalities".
E
In the meantime the Government of India was pleased t.0 notify
the "Statement of Guidelines for Remission of Demurrage Charges",
1992, vide which in certain cases where goods/consignments detained
by Customs for "ITC Facilities" were to be considered for grant of
remission from payment of demurrage for the period the goods were
F being so processed by Customs Authorities.
In the meantime the Port of Bombay levied a total of
Rs.2,81,67 ,333 as demurrage charges, the total remission granted by the
Port of Bombay was Rs.90,52,535, and therefore demanded a balance
G ofRs.1,91,14,798 on the ground that the petitioner was liable to pay
demurrage for the period of 23 .03 .1992 till 09 .09 .1992, on the ground
that no remission could be granted prior to date of noting.
Thus, on 16.09.1995, the Port of Bombay rejected the request of
the petitioner for grant of remission of demurrage."
H
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 601
OF PORT OF BOMBAY [J. CHELAMESWAR, J.]

2. Aggrieved by the order of the Ist respondent, the appellant, A
filed WP No.2012/1996 1• The appellant however cleared the goods after
making payment of the amount (claimed by the 1" respondent towards
demurrage ), under protest.
3. By the judgment underappeal dated 12.4.2010, the High Court
dismissed the writ petition. Hence the appeal. B
4. The only issue pleaded and argued before the High Court in the
above-mentioned writ petition was the correctness of the decision of the
1" respondent to decline grant of remission of the entire demand towards
demurrage on account of non-clearance of the goods.
5. However, before us, a twofold submission is made by the c
appellant:
(i) that the appellant acquired title to the goods long after they
arrived in the 1st respondent's port and discharged from the
vessel which carried the goods. Therefore, demurrage
1
D
Prayer in Writ Petition No.2012 of 1996:
(a) The this Hon'ble Court be pleased to declare that the impugned action on the part
of the Respondents 1 to 3 in not granting the remission of demurrage charges in respect
ofthe said consignments since inception and restricting granting of remission of demurrage
charges oniy from the date of tiling of the bills of entry in the name of the petitioners
were and are unlawful, illegal and null and void.
(b) That this Hon'ble Court be pleased to issue a writ of Certiorari or a Writ in the E
nature of Certiorari or any other appropriate writ, order or direction calling for the
record and proceedings in the matter of the application of the petitioners for review and
reconsideration of the grant of remission/refund of demurrage charges of various
consignments set out in the petition hereabove as also in relation to the said
communication dated 24.5.1996 and after considering the validity, legality and propriety
ihereof, be pleased to quash and set aside the said action and/or decision on the pmt of F
the Respondents 1 to 3 in not granting further remission of demurrage charges in favour
of the petitioners;
(c) That this Hon'ble Court be pleased to issue a writ of Mandamus or a writ in the
nature of Mandamus or any other appropriate writ, order or direction ordering and
directing the Respondents I to 3 to forthwith grant remission and/or refund of the
amount of Rs. alongwith interest thereon at the rate of 18% per annum from the date of
payment of the respective amounts as per the statement annexed hereto and marked as G
Exhibit in favour of the petitioners;
(d) In the alternative and without prejudice to the above;
This Hon'ble Court be pleased to order the Respondents 4 and 5 to pay to the
petitioners the deficit amount after considering the remission that has already been
granted and that will be granted by the Respondent l to 3 along with interest thereon at
18% per annum from such date as this Hon'ble Court may deem fit; H
602 SUPREME COURT REPORTS [2017] 4 S.C.R.

A payable for the period anterior to appellant's acquisition of
title to the goods is to be collected from the steamer agent of
the vessel; and the appellant incurs no liability in law to pay
the demurrage - since the 1st respondent rendered no service
to the appellant during that period;
B (ii) In the alternative, it is argued that in view of the facts and
circumstances of the case, the appellant is entitled for complete
remission of the amount claimed towards demurrage on
account of delayed clearance of the goods. According to the
appellant- a substantial portion of the delay occurred because
of the non-clearance of the goods by the customs department.
c (iii) An ancillary submission in this regard is that the 1''respondent
granted complete remission of the amount payable towards
demurrage in the case of another importer i.e. M/s. Gilt Pack
who was similarly situated. Therefore, the action of the 1st
respondent in declining remission to the appellant is
D discriminatory.
6. To decide the correctness of the various submissions noted
above, an examination of the rights and obligations of the 1st respondent
and its authority to collect demurrage is required.
7. Import and export of goods into any country has always been
E the subject matter of regulation. This has been a potential source for
raising revenue. Import or export of goods could be either by land, sea
or air; by use of vehicles, vessels or aircrafts. Since we are concerned
in this case with import of goods by sea, we confine our examination to
the law dealing with it.

F Without going into the historical details of the import export trade
and regulations thereon, suffice it to state that under Section 29 2 of the
Customs Act, 1962, the person-in-charge of a vessel entering India from
any place outside India is prohibited from causing or permitting the entry
of such vessel at any place other than a customs port, subject to certain

G 2
Section 29. Arrival of vessels and aircrafts in India.-( l) The person-in-charge of a
vessel ... entering India from any place outside India shall not cause or permit the
vessel ... to call or ... -
(a) for the first time after arrival in India; or
(b) at any time while it is carrying passengers or cargo brought in that vessel or
aircraft, at any place other than a customs port or a customs airport, as the case may be
unless permitted by the Board.
H x x ,,;·
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 603
OF PORT OF BOMBAY [J. CHELAMESWAR, J.)

exceptions. The expression "customs port" is defined under Section 2( 12)3 A
of the Customs Act, 1962. Section 7 thereof authorises the Centl'.al ·
Board of Excise and Customs constituted under the Central Boards of
Revenue Act, 1963 to appoint by a notification in the official gazette, the
ports which alone shall be customs ports for the unloading of imported
goods and the loading of export goods etc.
B
IndianPortsActs, 1855, 1875, 1889and 1908regulatedtheactivities
of the ports in India. The Port Trust Acts of 1879, 1890 and 1905 of
Bombay, Calcutta and Madras respectively regulated the activities of
the said ports in India through Port Trusts (bodies corporate).
8. Some of these are repealed and others modified4 by the Major c
Port Trusts Act, 1963 (hereinafter referred to as 'THE ACT") which is .
a law made by the Parliament "to make provision for the constitution of
port autaorities for certain major ports in India and to vest the
administration, control and management of such ports in those authorities''.
Section:; of THE ACT authorises the Central Government to constitute
a Board of Trustees in respect of any major port. Qua the definition D
under Section 2(b )5, the Board of Trustees so constituted is called
BOARD6 • Section 5 of the ACT declares each of the BOARDS to be
a body corporate to administer, control and manage the port of Bombay.
Different BOARDS came to be constituted for different major poi ts in
the country. The 1st respondent is admittedly one of the BOARDS 'E
constitut~d under Section 3( I) ?fTHE ACT.

9. We shall now examine the provisions of THE ACT insofar as it
is relevant for the purpose of this case.
10. Section 35(1)7 of the Act obligates BOARDS to execute
F
.3 Section 2(12f "customs port" means any port appointed under clause (a) ofsection.7
to be a customs port, and includes a place appointed under clause (aa) of that section to
be an inland container depot.
4
A complete analysis of the evolution of the law in this regard requires an elaborate
study and would be beyond the scope of any judgment.
'Section 2(b) "Board", in relation to a port, means the Board ofTmstees constituted
G
under this Act for that port; .
6
Section 3. Constitution of Board ofTmstees.-{ I) With effect from such date as may
be specified by notification in the Official Gazette, the Central Government shall-cause
to be constituted in respect ofany major port a Board ofTmstees to be called the Board
ofTmstees of that port, which shall consist of the following Tmstees, namely ...
7
Section 35 (I) A Board may execute such works within or without the limits of the
port and provide such appliances as it may deem necessary or expedient. H
604 SUPREME COURT REPORTS [2017] 4 S.C.R.

A various works, within or even without the limits of the ports8 being
administered by each of the BOARDS, of the nature indicated under
Section 35(2)(a) to(!). An examination of the tenor of the various clauses
indic<>tes that such works are intended to facilitate creation pf ports
which can be conveniently used by (vessels 9) for loading and unloading
of cargo etc.
B
11. Section 37 to 42 of the Act authorise BOARDS to compel sea
going vessels to use the works executed by BOARDS for landing or
shipping of any goods -or passengers, subject to various conditions
specified under the said provisions.
c 12. Section 41 (1) contemplates the publication of a notified order.
By such an order, BOARD may "(i) declare that such dock, berth, wharf,
quay, stage, jetty or pier is ready for receiving, landing or shipment of
goods or passengers from or on vessels, not being sea-going vessels,
and, (ii) direct that within certain limits to be specified therein it shall not
D be lawful, without the express sanction of the Board, to land or ship any
goods or passengers out of, or into, any vessel, not being a sea-going
vessel, of any class specified in such order, except at such dock, berth,
wharf, quay, stage, jetty or pier". Section 41 (2) declares that once such
a notified order is published, "it shall not be lawful without the consent of
the Board for any vessel":
E
(i) to land or ship any goods or passengers at any place within
the limits so specified, except at such dock, berth, wharf,
quay, stage, jetty or pier; or
(ii) while within such limits, to anchor, fasten or lie within fifty
F - yards of the ordinary low-water mark."
13. Section 42(2) authorises BOARDS to take charge of the goods
for performing such services. -

• The expression "Port" is defined under Section 2(q) as follows:-
G "Section 2 (q) "port" means any major port to which this Act applies within
such limits as may, from time to time, be defined by the Central Government for
the purposes of this Act by notification in the Official Gazette, and, until a
notification is so issued, within such limits as may have been defined by the
Central Government under the provisions of the Indian Ports Act;"
9 Section 2(z) "vessel" includes anything made for the conveyance, mainly by water, of

H human beings or of goods and a caisson;"
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 605
OF PORT OF BOMBAY {J. CHELAMESWAR, J.]

A ·Board may, if so requested by the owner, take charge of the A
goods for the purpose of performing the service or services and
shall give a receipt in such form as the Board may specify.
Sub-section (7) declares that when the charge bf the goods is taken and
receipt given, the recipient is discharged of any liability for the damage
or loss occurring to the goods thereafter 10 • B
14. Section 43 stipulates the nature and extent of the responsibility
of BOARDS for any loss or destruction or deterioration in the goods
which were taken charge of by BOARD - details of which are not
necessary for the present purpose.
15. Chapter VI of the Act deals with imposition and recovery of C
rates at ports. The expression "rate" is defined under Section 2(v) 11 •
16. Various services which BOARDS are obliged to perforr:i are
specified under various provisions of THE ACT. Those services fall
into thre.: categories - (I) services rendered to the vessel entering the
Port; (2) services rendered to goods either imported by vessels or to be D
exported through vessel, and (3) services rendered to passengers arriving
or departing from vessels in the Port.
17. Sections 49A, 49B, 50A and SOB deal ~ith services to be
rendered by a BOARD exclusively to vessels using the Port administered
by BOARDS and authorise the collection of various rates specified E
under each of those sections for services referred to therein, as and
when rendered.
18. Section 48 prior to its amendment (by Act 15 of 1997)
authorised every BOARD administering each of the major ports to
prescribe a scale ofrates for various services rendered by that BOARD. F
Section 48 (pre 1997 Amendment) 12
"Section 48. Scales of rates for services performed by Board or
other person.-(!) Every Board shall from time to time frame a
10
Section 42(7). After any goods have been taken charge of and a receipt given for them G
under this section, no liability for any loss or damage which may occur to them
shall attach to any person to whom a receipt has been given or to the master or owner
of the vessel from which the goods have been landed or transshipped.
11
Section 2(v)- "rate" includes any toll, due, rent. rate, fee, or charge leviable under this
Act;
12 Post 1997, a common authority (TARIFF AUTHORITY). for all major ports is

brought into existence under Section 47A to frame scales. H
606 SUPREME COURT REPORTS [2017} 4 S.C.R.

A scale of rates at which and a statement of the conditions under ·
which, any of the services specified hereunder shall be performed
by itself or any person authorised under section 42 at or in-relation
to the port or port approaches-
(a) transshipping of passengers or goods between vessels in the
B port or port approaches;
(b) landing and shipping of passengers or goods from or to such
vessels to or from any wharf, quay, jetty, pier, dock, berth,
mooring, stage or erection, land or building in the possession
or occupation of the Board or at any place within the limits of
c the port or port approaches;
(c) cranage or porterage of goods on any such place;
(d) wharfage, storage or demurrage of goods on any such place;
D (e) any other service in respect of vessels, passengers or goods,
excepting the services in respect of vessels for which fees
are chargeable under the Indian Ports Act.
(2) Different scales and conditions may be framed for different
classes of goods and vessels."
E Section 48( I)(a) and (b) indicate the nature of services to be
rendered by BOARDS. Section 48( I)(c) and (d) indicate the nature of
the rate payable for such services. ·Clause (d) inter alia provi:les that
BOARDS can frame scale of rates for storage or demurrage of goods
on any such place. The expression "such place" occurring under clause
F (d) must necessarily refer to the places mentioned in Section 48( 1)(b)
i.e. wharf, quay, jetty, pier, dock, berth etc executed by, and land or
building either in "possession or occupation" of BOARDS.
19. It is apparent from the language of Section 48 that though it
autho:ises BOARDS to stipulate and collect rates for various services
to be rendered, the Act is silent regarding persons from whom
G such rates could be collected. It is pertinent to note that since services
contemplated under Sections 49A, 49B, 50A and SOB are services
exclusively to be rendered to the vessel (ship). It is reasonable to interpret
that only the ship and its agents are liable to pay the rates for those
services. We are fortified in our conclusion by the language of Sections
H
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 607
OF PORT OF BOMBAY [J. CHELAMESWAR, J.)

50A1 3 and 50B 14 which make it express when they say "she 15 would A
otherwise be chargeable".
20. Section 64 authorises BOARDS to "distrain or arrest" a vessel
when the master of that vessd refuses or neglects to pay any rate or
penalty payable under this Act and to "detain" the vessel until the amount
due to the BOARD is paid. B
21. On the other hand, with reference to services rendered to
goods, a lien 16 is created under Section 59( 1) 17 on the goods, in favour of
BOARDS, and BOARDS are also entitled to seize and detain the goods
until the rates and rents are fully paid.
22. It appears to us that in view of the fact Section 42(2) only
contemplates "taking charge" of the goods but not "taking possession" c
of goods, Parliament conferred on BOARDS the authority to "seize and
detain" the goods of which charge is taken of. The purpose behind the
twin declarations contained in Section 59 is a little intriguing. However,
we do not wish to express any final opinion in this regard as no submission
in this regard is made and such an examination is not necessary for D
deciding the case on hand.
23. Under Sections 61 and 62 of the Act, such detained goods
could be sold by the BOARD either by public auction or otherwise,
subject to conditions stipulated in those Sections and following the
procedure specified thereunder without the need to file a suit for the
E
recovery of the amounts due to the BOARDS. .
13 Section SOA. Port-due on vessels in ballast.- A vessel entering any port in ballast

and not carrying passengers shall be charged with a port-due at a rate to be determined
by the Authority and not exceeding three-fourths of the rate with which she would
otherwise be chargeable.
14 Section SOB. Port-due on vessels not discharging or taking in cargo.- When a

vessel enters a port but does not discharge or take in any cargo or passengers therein, F
(within thL exception of such unshipment and reshipment as may be necessary for
purposes of repair), she shall be charged with a port-due at a rate to be determined
by the aut~ority and not exceeding half the rate with which she would otherw:se· be
chargeable.
"In Maritime Law by a long established practice a vessel is always referred to as "she".
"Lien is defined in Halsbury's Laws of England (4'" Edition, Volume 28 at page 221,
para 502) as "In its primary or legal sense "lien" means a right at common law in one G
man to retain that which is rightfully and continuously in his possession belonging to
another until the present and accrued claims are satisfied."
17 Section 59. Board's lien for rates.-(!) For the amount of all rates leviable under this

Act in respect of any goods, and for the rent due to the Board for any buildings, plinths
stacking areas, or other premises on or in which any goods may have been placed, the
Board shall have a lien on such goods, and may seize and detain the same until such
rates and rents are fully paid. H
608 SUPREME COURT REPORTS [2017] 4 S.C.R ..

A 24. The dispute in this case centres around demurrage. Therefore,
we deem it appropriate to examine the meaning of the expression
"demurrage". The expression "demurrage" is not defined under the Act.
Strictly speaking, the expression demurrage in the world of shipping meant-
"DEMURRAGE in its strict meaning, is a sum agreed by the
B charterer to be paid as liquidated damages for delay beyond a
stipulated or reasonable time for loading or unloading, generally
referred to as the lay-days or lay-time. Where the sum is only to
be paid for a fixed number of days, and a further delay takes
place, the shipowner's remedy is to recover unliquidated "damages
for detention" for the period of the delay. The phrase "derr..urrage"
c is sometimes loosely used to cover both these meanings." 18
The circumstances in which and the nature of demurrage payable in a
given circumstance has been the subject matter of considerable legal
literature 19 • However, in India, the expression "demurrage" appears to
have acquired a different connotation.
D Under the Madras Port Trust Act, 1905, certain bye-laws were
framed by the Port Trust in exercise of the statutory powers undtr which
"Scale of Rates" payable at the Port of Madras were framed. Chapter
IV thereof was headed "Demurrage". Under the said Chapter, it was
stipulated that "demurrage is chargeable on all goods left in Board's
transit sheds or yards beyond the expiry of the free days".
E
25. In Trustees of the Port of Madras v. Aminc/1and Pyare/a/
& Others, (l 976) 3 SCC 167, this Court had an occasion to consider the
true meaning of"demurrage" occurring in the above mentioned context
and opined20 that the "Board has used the expression "demurrage" not
in the strict mercantile sense but merely to signify a charge which may
F be levied on goods after the expiration of free days".
26. Regulation 2(g) ofthe International Airports Authority (Storage
and Processing of Goods) Regulation, 1980 made under the provisions
"Scrutton on Charterparties and Bills of Lading, Twenty Third Edition, p.380
19
Useful reference can be made to Halsbuiy's Laws ofEngland, Fourth Edition. Similarly,
G a seminal work titled "Law on Demurrage" by Hugo Tiberg covering laws of various
countries on the subject.
20 Para 31. The High Court has cited many texts and dictionaries bearing on the meaning

of"demurrage" but these have no relevance for the reason that demurrage being a charge
and not a service, the power of the Board is not limited to fixing rates of demurrage.
Besides, it is plain that the Board has used the expression "demurrage" not in the strict
mercantile sense but merely to signify a charge which may be levied on goods after the
H expiration of free days. Rule I 3(b) itself furnishes a clue to the sense in which the
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 609
OF PORT OF BOMBAY [J. CHELAMESWAR, J.]

of the International Airports Authority Act, 1971, defined the expression A
'demurrage' to mean, the rate or amount payable to the airport by a
shipper or consignee or carrier, for not removing the cargo within the
time allowed. 21
27. By virtue of Section 59 22 of THE ACT, the !st respondent
had a lien on goods placed on or in the property of the !st respondent B
"for the amount of all rates leviable under the Act" and also the authority/
right to seize and detain goods placed on or in any premises belonging to
the I st respondent until the amount due towards the rent or any rate for
any services rendered by the 1st respondent with respect tu such goods
is fully paid. Further, the I st respondent is also entitled under Sections 61
and 62 to sell the goods in question so seized and detained without the C
need to file a suit for the recovery of the amounts due to it.
28. We shall now deal with submissions by the appellant.
29. The first submission is that the amounts due for providing the
various c~ervices to the imported goods) until the title in the goods passed
to the appellant would be a services rendered to the stea!ller agent. The D
appellant cannot be compelled to pay for services not rendered to him.
Such an argument is based on-
(i) that the goods in question were shipped by the exporter on
Cash against Document Basis (CAD), therefore the title of
the goods would remain with the exporter till such time, the E
importer "retires the documents against payments";
(ii) The owner of the vessel is a bailee of the shipper. The I st
respondent is sub-bailee of the owner of the vessel through
his steamer agent for the vessel from the point of their
discharge from the vessel till the point when title in the goods F
passed to the appellant.
30. The I st respondent, on the other hand, argued that the question
regarding the liability of the appellant to pay the demurrage was never
raised before the High Court nor did the High Court consider that question
expression "demurrage" is used by the Bo'ard. It provides, inter alia, that "demurrage" . G
shall be recovered at a concessional rate for a period of thirty days plus one working
day where the goods are detained for compliance with certain formalities and where the
Collector of Customs certifies that the detention of goods is "not attributable t'.> any
fault ornegligence on the part of importers''.
21 See International Airport Authority oflndia v. Ashok Dhawan & Others, ( 1997) ll

sec 343
22
SeeF/N 17 H
610 SUPREME COURT REPORTS [2017] 4 S.C.R.

A and, therefore, the appellant may not be permitted to make ~he said
submission. 23
31. In our opinion, though the question was not raised before the
High Court, the appellant need not be barred from raising this question
before us because it is a pure and substantial question oflaw. No enquiry
into any fact is really necessary to decide the said question of law. The
B
only fact which is not clearly established on record is the point of time at
which the title in the goods passed to the appellant. But, in our opinion
(for the reasons to be given later), that fact is wholly irrelevant for
determining the authority of the 1''respondent to collect demurrage from
the appellant. We, therefore, proceed to examine the correctness of the
c submission.
32. In support of this submission, the appellant relied upon three
judgments of this Court in The Trustees of the Port of Madras by its
Chairman v. K.P. V. Sheik Mohamed Rowther & Co. & Others, ( 1963)
Supp. 2 SCR 915 (hereafter "ROWTHER-1"), Trustees ofthe Port of
D Madras, Through its Chairman v. K.P.V. Sheikh Mohd. Rowther &
Co. Pvt. Ltd. & Another, (1997) 10 SCC 285 (hereafter "ROWTHER-
11") and Forbes Forbes Campbell & Company Limited v. Board of
Trustees, Port of Bombay, (2015) 1 SCC 228.
ROWTHER-1 is a case which arose under the Madras Port Trust
Act, 1905.
E
. In exercise of the power under Section 42 of the said Act the
Board of the Madras Port Trust made certain scale of rates. One of
.the items in the scales stipulated charges to be paid by "masters, owners
jlr agents of vessels" in respect of port trust labour requisitioned and
supplied by it but not fully or properly utilized.
F
A writ petition came to be filed in the Madras High Court for a
direction to the Board not to enforce the said rates.
It was argued that under provisions of the Madras Port Trust Act,
certain services are to be rendered to the vessel and certain services to
G the goods carried by the vessel. The service such as the one for which
23
See also para l of the written submissions of the respondent;
"l. The entire claim of the Appellants before the Respondents and in the Writ
Petition was for remission. (Ref pg @79 (Request for Remission) and page 143
(Writ Prayers). Having sought "remission" of the accrued demurrage, it is obvious
that the appellants had admitted their liability to pay the demurrage. Jfthe appellants
have not been so liable, there was no question of them claiming remission. Hence,
H today, it is not open to the Appellants to dispute the liability."
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 611
OF PORT OF BOMBAY [J. CHELAMESWAR, J.]

the rate :iad been demanded was a service rendered to the consignee A
and not to the steamer agent. Therefore steamer agents could not be
compelled to pay the rate for the said service.
The Madras High Court dismissed the writ petition. An intra
court appeal thereon was allowed by the Division Bench holding that the
service in question "must be deemed to be service rendered to the B
consignee". On a further appeal, this Court recorded the issue in para
30:-
"30. The question for determination, in the case then is whether
the law making the steamer-agent liable to pay these charges is
good Iaw 24 ." c
33. The entire argument in the case revolved around the question
whether the Madras Port Trust was acting as an agent of the consignee
or the steamer agent when it took charge of goods discharged from the
vessel. The case of the steamer agent was that the Madras Port Trust
acted as the agent of the consignee. This submission was rejected. This D
Court held:
"57. If the Board was an agent of the consignee, it was bound to
deliver the goods to the consignee and should not have any rights
of retaining the goods till the payment of the rates and other dues
for which it had a lien on the goods. The provision of there teing E
a lien on the goods for the payment of the dues of the Board or
the freight, make it clear that the Board did not have the custody
of the goods as an agent of the consignee."
The appeal was allowed by this Court upholding the authority of
the port trust to collect the 'rate' from the steamer agent.
F
34. This Court held that BOARD receives goods as a sub-b:iilee
from the bailee (ship owner) through the bailee's agent (See para 4925
24
It may be mentioned that the law referred above is a piece of subordinate legislation.
"Para 49. These observations apply when the goods are to be delivered to the consignee
alongside the ship and not when they are handed over to the statutory body, like the
Board, as a sub-bailee. How the delivery is to be made depends on the terms of the bill G
oflading and the custom of the Port. The case is no authority for the propositioa that
in all circumstances the master of the vessel is not responsible for the performance of
the acts subsequent to his placing the goods in such a position that the consignee can
get them, as contended for the respondents. The delivery contemplated in these
observatio'ls, is not, in our opinion, equivalent to the landing of the goods at the quay
as contemplated by the various provisions of the Act.
H
612 SUPREME COURT REPORTS [2017] 4S.C.R.

A of the judgment). This Court upheld the impugned provision which
fastened the liability upon the steamer agent. This Court opined that the
goods were delivered to the BOARD by the consignor's bailee (the ship
owner) through the steamer agent (the bailee's agent) making the
BOARD a sub~bailee. Therefore, the service rendered by the BOARD
is a service to the owner of the ship.
B
ROWTHER-I is not an authority for the proposition that a
BOARD could collect rates due for the services rendered to goods
only from the steamer agent. Nor did this Court deal with the question
whether the title in the goods is a relevant factor for determining a
C BOARD'S right to collect the rates.
ROWTHER-I is no authority for the proposition that until the title
in goods passed to the consignee the liability to pay various rates payable
to a BOARD for the services rendered in respect of the· goods falls
exclusively on the steamer agent.
p
35. In ROWTHER-II, the question was "whether demurrage
charges, harbour dues etc." were to be recovered from the consignee
or the steamer agent.
The Madras High Court concluded that the consignee was liable
E to pay the demurrage.
It was a case where the goods remained in the custody of the
Port Trust for a long time and were ultimately confiscated by the customs
authorities. Whether demurrage was to be recovered from the steamer
· agent or the consignee was in issue.
F High Court held that the steamer agent's responsibility ceases
"once the goods are handed over to the Port Trust" and the bill oflading
is endorsed26 • The High Court further held that upon the endorsement
of the Bill oflading, "the property in the goods vests" in the consignee
and therefore the steamer agent's responsibility for the custody of the
G
26
" ...... Once the goods are handed over to the Port Trust by the steamer and the

steamer agents have duly endorsed the bill oflading or issued the delivery order, their
obligation to deliver the goods personally to the owner or the endorsee comes to an end.
. The subsequent detention of the goods by the Port Trust as a result of the intervention
by the Customs authorities cannot be said to be on behalf of or for the benefit of the
steamer agents."
H
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 613
OF PORT OF BOMBAY [J. CHELAMESWAR, J.]

goods ceases 27 • The High Court, therefore, concluded that only the A
consignee was liable.
This Court approved the conclusion of the High Court.
36. In Forbes Forbes Campbell & Company Limited v. Board
of Trustees, Port of Bombay, (2015) 1 SCC 228, this Court examined
the liability of the steamer agent to pay demurrage and port charges to B
the BOARD of Bombay Port in respect of goods brought into the Port
and warehoused by the said authority.
The question arose in the context of the BOARD'S resolution to
recover the rent (on cargo transported in containers) from the steamer
agent. The steamer agent contended that neither THE ACT nor the c
subordinate legislation made thereunder created such liability either on
the ship owner or his agent (steamer agent).
Rejecting such submission, this Court held that "in the absence of
any specific bar in the statute, such liability can reasonably fall o:i the
steamer agent'', if on a proper construction of the provisions of the Act D
such a conclusion can be reached.
"Para 10. While it is correct that the liability to pay demurrage
charges and port rent is statutory, in the absence of any specific
bar under the statute, such liability can reasonably fall on a steamer
agent if on a construction of the provisions of the Act such a E
conclusion can be reached. Determination of the aforesaid
question really does not hinge on the meaning of the expression
"owner" as appearing in Section 2(o) of the 1963 Act, as has
been sought to be urged on behalf of the appellant though going
by the language of Section 2(o) and the other provisions of the F
Act especially Section 42, an owner would include a shipo'vner
or his agent. Otherwise it is difficult to reconcile how custody of
the goods for the purpose of rendering services under Sectivn 42
can be entrusted to the Port Trust Authority by the owner as
provided therein under Section 42(2). At that stage the goods may
still be in the custody of the shipowner under a separate bailment G
27
••••• By the endorsement of the bill of lading or the issue of a delivery order by the

steamer agents, the property in the goods vests on such consignee or cndorsee, and thus
it appears to be clear that the steamer or the steamer agents are not responsible for the
custody of the goods after the property in the goods passes to the consignee or enriorsee
till the Customs authorities actually give a clearance.
H
614 SUPREME COURT REPORTS [2017] 4 S.C.R.

A with the shipper or the consignor, as may be. Even dehors the
above question the liability to pay demurrage charges and port
rent would accrue to the account of the steamer agent if a contract
ofbailment between the steamer agent and the Port Trust Authority
can be held to come into existence under Section 42(2) read with
Section 43(l)(ii) of the 1963 Act."
B
On examination of the provisions of THE ACT and two earlier
judgments2!, this Court rejected the submission that there comes into
existence the relationship of bailor and bailee between the consignee
and the BOARD as was held earlier by this Court in Sriyanesh Knitters.
c "11. For the reasons already indicated the decision in Sriyanesh
Knitters with regard to the existence of a relationship of bailor
and bailee between the consignee and the Port Trust Authority
instead of the steamer agent and the Port Trust Authority cannot
be understood to be a restatement of a general principle of law
but a mere conclusion reached in the facts of the case where the
D consignee had already appeared in the scene."
and concluded29 that once the bill of lading is endorsed or the delivery
order issued, it is the consignee or endorsee who would be liable to pay
the demurrage and other dues of the Port Trust Authority. It further held
that in all other situations the contract of bailment is one between the
E agent of the bail or and the BOARD (Bailee) fastening the liability on the
(steamer) agent for such rates till such time the bill oflading is endorsed
or delivery order is issued by the steamer agent.
37. With respect, we agree with the conclusi.ons recorded by this
Court in the cases ofROWTHER-11 and Forbes that a BOARD could
F recover the rates due, either from the steamer agent or the consignee
but we are of the humble opinion that enquiry into the question as to
when the property in the goods passes to the consignee is not relevant.

"ROWTHER-1 and Port ofBombay v. Sriyanesh Knitter~·. (1999) 7 SCC 359
G 29
Para 12. From the above, the position oflaw which appears to emerge is that once the
bill oflading is endorsed or the delivery order is issued it is the consignee or endorsee
who would be liable to pay the demurrage charges and other dues of the Port Trust
Authority. In all other situations the contract of bailment is one between the steamer
agent (bailor) and the Port Trust Authority (bailee) giving rise to the liability of the
steamer agent for such charges till such time that the bill of lading is endorsed or
H delivery order is issued by the steamer agent.
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 615
OF PORT OF BOMBAY [J. CHELAMESWAR, J.]

We have already noticed the submission of the appellant A
that the appellant is not liable to make payment of any demurrage
incurred prior to the acquisition of title in the goods by the
appellant. Enquiry into the title of the goods and the point of
time at which the title passes to the consignee is equally irrelevant
for determining the authority of a BOARD to recover the amounts due
B
to it under THE ACT. The authority and right of a BOARD to recover
its dues either from the steamer agent or the consignee flows from two
different sources:
(i) Section 158 of the Indian Contract Act, 1872 read with Section
1 of the Indian Bills of Lading Act, 1856.
c
(ii) Section 59( 1) of THE ACT.
38. The essence ofbailment is possession and the consent of the
owner of the goods is not necessary.Jo The distinction between possession
and custody of goods is also noted by jurists.J 1 In this context, the language
of Section 49(2) is significant - "A Board may ...... take charge of the D
goods ....... ". But we do not propose to examine the significance as the
same is neither argued nor necessary. In our opinion, for the purpose of
the present, we must also mention here that Section 63 of THE ACT
authorises the BOARD to sell the goods "placed in their CUSTODY".
30 Trustees of the Port of Bombay Vs. Premier Automobiles Ltd. (1981) 1 SCC 228,
E
para 11.
"I I. It is well settled that the essence of bailment is possession. It is equally well ·
settled that a bailment may arise, as in this case, even when the owner of the goods has
not consented to their possession by the bailee at all : PALMER ON BAILMENT,
1979 edition, page 2. There may thus be bailment when a wharfinger takes possession
of goods unloaded at the quay side. A bailment is not therefore technically and essentially
subject to the limitations of an agreement, and the notion of privily need not be F
introduced in an area where it is unnecessary, for bailment, as we have said, arises out
of possession, and essentially connotes the relationship between a person and the thing
in his charge. It is sufficient if that possession is within the knowledge of the person
concerned. It follows that a bailment may very well exist without the creation of.a
contract between the parties and it essentially gives rise to remedies which, in truth and
substance, cannot be said to be contractual. That is why Palmer has made the assertion
that "bailment is predominantly a tortuous relation" (page 36), and the two are G
fundamentally similar.
'"Bailment' is a technical term of the common law, though etymologically it might
mean any kind of handing over. It involves change of possession. One who has custody
without possession, like a servant, or a guest using his host's goods, is not a bailee.
[See: Pollock & Mulla, The Indian Contract ""d Specific Relief Acts, 13'" Ed.
Page 1931)
H
616 SUPREME COURT REPORTS [2017] 4 S.C.R.

·A This Court also recognised that bailment can come into existence even
otherwise than by a contract.
"The State of Gujarat Vs. Memon Mahomed Haji Hasam
(Dead) by LRs, AIR 1967 SC 1885, paras 5 and 6

B "5 ....... Bailment is dealt with by the Contract Act only in cases
where it arises from a contract but it is not correct to say that
there cannot be a bailment without an enforceable contract. As
stated in "Possession in the Common Law" by Pollock and Wright,
p.163.

c "Upon the whole, it is conceived that in general any person is to
be considered as a bailee who otherwise than as a servant either
receives possession of a thing from another or consents to receive
or hold possession of a thing for another upon an undertaking with
the other person either to keep and return or deliver to him the
specific thing or to (convey and) apply the specific thing according
D to the directions antecedent or future of the other person."
"Bailment is a relationship sui generis and ·unless it is sought to
increase or diminish the burdens imposed upon the bailee by th<:
very fact of the bailment, it is not necessary to incorporate it into
the law of contract and to prove a consideration"
E
6. There can, therefore, be bailment and the relationship of a bailor
and a bailee in respect of specific property without there being an
enforceable contract. Nor is consent indispensible for such a
relationship to arise. A finder of goods of another has been held
to be a bailee in certain circumstances."
F
As rightly opined in FORBES' case, there is no bailor and bailee
relationship between the BOARD (the 1st respondent) and the consignee
(the appellant); either voluntarily or statutorily compelled but such a
relationship exists between the 1st respondent and the owner of the ship
(through the steamer agent). It is possible in a given case where the
· G consignee or any other person (such as the appellant herein) claiming
through the consignor, eventually may not come forward to take delivery
of the goods for a variety of reasons - considerations of economy or
supervening disability imposed by law etc. Therefore, in such cases to
say that merely because the bill of lading is endorsed or the delivery
H
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 617 ·
OF PORT OF BOMBAY [J. CHELAMESWAR, J.]

order is issued, the consignor or his agent is absolved of the responsibility A
for payment (of rates or rent for services rendered w.r.t goods) would
result in a situation that the BOARD would incur expenses withom any
legal right to recover such amount from the consignor and be driven to
litigation for recovering the same from the consignee who did not take
delivery of the goods with whom the BOARD had no contract ofbailment B
and consequently no contractual obligation to pay the 'rates or rent'.
39. Enquiry into the relationship between either the BOARD, the
consignor of goods, the owner of the vessel and the steamer agent on
one hand or the consignee and the BOARD on the other, in our opinion,
· is wholly irrelevant in examining the right of the BOARD to recover the C
amounts due towards the rates or rent for services rendered with respect
to the goods. The right of the BOARD is unquestionable. The only
question is: from whom can the BOARD recover - we emphasise ·
the question is not who is liable. Depending on the nature or' the
relationship between the consignor and consignee, the liability may befall
either of them. D

40. On the other hand, in the light of the legal position declared by
the Constitution Bench in ROWTHER-1, the 1" respondent is a sub-
bailee of the goods bailed by consignor (bailor) to the ship-owner (bailee).
The goods are bailed through the agent (steamer agent) of the bailee.
The appellant is only a person claiming through the bailor, without any E
direct contractual relationship with the 1" respondent.
41. Title to the goods is irrelevant even in the cases of a bailment
arising .under a contract. Any person who is capable of giving physical
possession of goods can enter into a contract of bailment and create
bailment. Under Section 148 of the Contract Act, 'bailment', 'bailor' F
and 'bailee' are defined as under:
"A 'bailment' is the delivery of goods by one person to ancther
for some purpose, upon a contract that they shall, when the purpose
is accomplished, be returned or otherwise disposed of according
to the directions of the person delivering them. The person G
delivering the goods is called the 'bailor'. The person to whom
they are delivered is called the 'bailee'.
Explanation.- If a person is already in possession of the goods of
another contracts to hold them as a bailee, he thereby becomes
H
618 SUPREME COURT REPORTS [2017] 4 S.C.R.

A the bailee, and the owner becomes the bailor of such goods,
although they may not have been delivered by way ofbailment."

It can be seen from the above that bailment is a contractual relationship
and bailment can be created by any person who is in possessionhustody
of goods but not necessarily the owner of the goods. When the purpose
B ofbailment is accomplished the goods are to be returned or otherwise
disposed of according to the directions of the person (bail or) delivering
them.
42. Section 158 of the Contract Act stipulates the obl.!gations of
the bailor to pay the necessary expenses incurred by the bailee "for the
C purpose ofbailment". Section 158 of the Contract Act reads as under:
"Section 158. Repayment by bailor of necessary expt:nses. -
Where, by the conditions of the bailment, the goods are to be kept
or to be carried, or to have work done upon them by the bailee for
the bailor, and the bailee is to receive no remuneration, the bail or
D shall repay to the bailee the necessary expenses incurred by him
for the purpose ofbailment."

The obligation of the bailee to return the bailed goods when the
purpose ofbailment is accomplished and the obligation of the bailor to
E pay t~e bailee "the necessary expenses incurred by him for the purpose
of the bailment" in our opinion would attend not only a bailment by contract
but every kind ofbailment.
43. If the bailor has such an obligation to pay the bailee, ani' person
claiming through the bailor must necessarily be bound by such an
F. obligation unless the bailee releases such person from such an obiigation.
A consignee is a person claiming through the consignor (bailor). In the
context of import of goods into India by ship, the consignees' rights are
governed inter alia by Section I of the Bills of Lading Act, 1856.
1. Rights under bills of lading to vest in consignee or endorsee -
Every consignee of goods named in a bill of lading and every
G
endorsee of a bill oflading to whom the property in the goods
herein mentioned shall pass, upon or by reason of such consignment
or endorsement, shall have transferred to and vested in him all
rights of suit, and be subject to the same liabilities in respect of
such goods as if the contract contained in the bill of lading had
H been made with himself.
M/S. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 619
OF PORT OF BOMBAY [J. CHELAMESWAR, J.]

44. It can be seen from the above that the 1856 Act enacts a A
fiction that the consignee to whom the property in the goods shall pass
shall be "subject to the same liabilities in respect of such goods as ifthe
contract contained in the bill oflading had been made with himself'. Bill
of lading is evidence of a contract32 between the shipper (consignor)
and the owner of the ship by which the owner of the ship agrees to B
transport the goods delivered by the consignor to a specified destination
and deliver it to the consignee. Delivery of goods pursuant to a bill of
lading creates a bailment between the shipper and the owner of the ship.
Obviously the legislature knew that a consignee under a bill oflading is
a 3rd party to the contract but intrinsically connected with the transaction
and thought it necessary to specify the rights and obligations of the C
consignee. Hence, the fiction under the 1856 Act, that the moment the
property in goods passes to the consignee, the liabilities of the consignee
in respect of such goods would be the same as those of the consignor, as
if the contract contained in the bill of lading had been made with the
consignee.
D
45. The consequence is that the 1st respondent (sub-bailee) would
be entitled to enforce its rights flowing from the Bailment between the
ship owner and the 1st respondent against the consignee and recover
expenses incurred by it in connection with the bailment from the
consignee. The terms and conditions of the contract between the •
consignor or person claiming delivery of the goods are irrelevant for E
determining the right of the 1st respondent to recover its dues. The
obligations/liability of the consignee is determined by the statute. But the
said obligation is not exclusive to the consignee. The consignor (bailor)
is not relieved of the obligation to pay by virtue of Section 158 of the
Contract Act the expenses incurred by the l" respondent. Nothing is F
brought to our notice to hold otherwise. At this juncture, we must point
out that the declaration under Section 42(7) 33 absolving the owner cf the
ship and his agents is limited only to the obligations owed by the bailor to
the consignee not to the sub baifor like the 1'1 respondent.
46. Section 59 ofTHEACT, creates lien in favour of l '1 respondent G
in respect of any goods and also authorises the 1st respondent to seize
32
Called contract of affreightment
31
Section 42 (7) After any goods have been taken charge of and a receipt given for them
under this section, no liability for any loss or damagewhich may occur to them shall
attach to any person to whom a receipt has been given or to the master or owner of the
vessel from which the goods have been landed or transhipped. H
620 SUPREME COURT REPORTS [2017] 4 S.C.R.

A and detain the goods, it clearly makes a special provision. Under the
Contracts Act, every bailee has no lien on the goods delivered to him.
Such a lien is available only to limited classes of bailees specified under
Section 171 34 • They are - bankers, factors, wharfingers 35 ; attorneys of
a High Court and policy-brokers. It can be seen from Section i 71 that
only those specific categories of bailees have a right to retain goods
B
bailed to them as security for the amounts due to them.No other category
of bailee has such a right unless there is an express contract creating
such a lien.
47. Section 59 of THE ACT, also expressly authorises the l''
respondent to seize and detain goods taken charge of by it. Parliament
c also invested the 1" respondent with the authority to sell the goods and
appropriate the proceeds of sale under Section 63 36 of the ACT towards
"Board ofTrustees of the Port ojBombay & Ors. v. Sriyanesh Knitters, (1999) 7 SCC 359.
Para 17. .. . This section is in two parts. The first part gives statutory right of lien
to four categories only, namely, bankers, factors, wharfingers and attorneys of High
Court and policy-brokers subject to their contracting out of Section 171. The second
D pati of Section 171 applies to persons other than the aforesaid five categories and to
them Section 171 does not give a statutory right oflien. It provides, that they will have
no right to retain as securities goods bailed to them unless there is an express contract
to ihat effect. Whereas in respect of the first category of persons mentioned in Section
171 the section itself enables them to retain the goods as security in the absence of a
contract to the contrary but in respect of any other person to whom goods are bailed
the right of retaining them as securities can be exercised only if there is an express
E contract to that effect.
"For the sake of completeness in the narration it must also be mentioned that this
Court held in (1999) 7 SCC 359 (at para 22) that a Board constituted under THE ACT
is a wharfinger.
16 63. Application of sale proceeds ( 1) The proceeds of every sale under section 61 or

section 62 shall be applied in the following order-
F (a) in payment of the expenses of the sale;
(b) in payment, according to their respective priorities, of the liens and claims excepted
in sub-section (2) of section 59 from the priority of the lien of the Board;
(c) in payment of the rates and expenses oflanding, removing. storing or warehousing
the same, and of all other charges due to the Board in respect thereof including demurrage
(other than penal demurrage) payable in respect of such goods for a period of four
months from the date of landing.
G (d) in payment ofany penalty or fine due to Central Government under any law for the
time being in force relating to customs;
(e) in payment of any other sum due to the Board.
(2) The surplus, if any, shall be paid to the importer, owner or consignee of the goods
or to his agent, on an application made by him in this behalf within six months from the
date of the sale of the goods.
(3) Where no application has been made under sub-section (2), the surplus shall be
H applied by the Board f~r the purposes of this Act'.
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 621
OF PORT OF BOMBAY [J. CHELAMESWAR, J.]

various heads indicated thereunder without the need to file a suit37 which A
are taken charge of by it in certain circumstances, details of which we
have noticed earlier.
48. If the ACT authorises the I st respondent to recover its dues
by bailing the goods under bailment, in those cases where the consignee
does not turn up to take the delivery of the goods within the time stipulated B
under Sections 61 or 62 of the ACT, to deny the right to demand and
recover the amounts due from the consignee when he seeks delive::y of
the goods under bailment would be illogical and inconsistent with the
scheme of the ACT.
Such right, in our view, undoubtedly enables the I" respondent to c
claim various amounts due to it, from any person claiming delivery of the
goods either the bailor or a person claiming through the bailor for the
services rendered w.r.t. the goods. Denying such a right on the ground
that the person claiming delivery of the goods acquired title to the goods
only towards the end of the period of the bailment of the goods with the
1" respondent would result in driving the I" respondent to recover the D
amount due to it from the bailor or his agent who may or may not be
within the jurisdiction of the municipal courts ofthis country (by resorting
to a cumbersome procedure oflitigation).
The I st submission is, therefore, rejected.
E
37
Board of Trustees of the Port of Bombay & Others v. Sriyanesh Knillers, (1999) 7
SCC359.
"16. There is another aspect which is relevant. Section 171 of the Contract Act only
enables the retention of goods as security. On the other hand in respect of current dues
in respect of existing goods in their possession the Board not only has a lien under
Section 59 of the MPT Act but it also has the power to sell the said goods and realise F
its dues by virtue of Section 61 of the MPT Act. The procedure for exercising this
power of sale of the goods in respect of which the Board has lien is contained in the said
section. Before selling the goods no order of any court or other judicial authority
is required. On the other hand the general lien contemplated by Section 171 of the
Contract Act only enables the retention of the bailed goods as a security. Their retention
does not give any power to sell the goods, unlike the power contained in Section 61 of
the MPT Act. If payment is not made by the consignee to the wharfinger, in a case G
where Section 171 of the Contract Act applies, the wharfinger can only retain the goods
bailed as security and will have to take recourse to other proceedings in accordance with
law for securing an order which would then enable the goods to be sold for realisation
of the amounts due to it. It may in this connection, be necessary forthe wharfinger to file
a suit for the recovery of the amount due to it and Section 131 of the MPT Act clearly
provides that such a remedy of filing a suit is available to the Board."
H
622 SUPREME COURT REPORTS [2017] 4 S.C.R.

A 48A. Now, we deal with the second submission. The appellant
claims that he is entitled to complete remission of the demurrage.
According to the appellant, the facts of the case not only justify but also
demand the exercise of the discretion conferred upon the 1" respondent
under Section 53 of the Act to grant a complete remission of the
demurrage in question. According to the appellant, the Government of
B
India issued certain guidelines3i dated 24.1.1992 which structure the
discretion of the Port Trust in the matter of granting remission.
49. We notice that the text of the guidelines permit granting of
remission upto 80 per cent of demurrage in appropriate cases. We also
c notice that the cap of80 per cent is not absolute. The 1st respondent can
even grant complete remission in appropriate cases.
(i) Admittedly, the 1st respondent granted remission to an extent
of Rs.90,52,535.00 (approximately) out of the total claim towards
demurrage ofRs.2,81,67,333.00.
D (ii) The liability tci pay demurrage arose because of the non-
clearance ·of the goods from the 1'' respondent's property for a
considerable period of time.
(iii) The pe.riod could be divided into two phases:
E Phase I before the point of time when appellant started claiming
the right to take delivery;
38
lt is not very clear from the record whether these guidelines were issued by the
Government of India or guidelines framed by the Ist r.espondent. In the written
submissions, the appellant describes the guidelines framed by the Government oflndia
whereas t1nder the judgment under appeal at para 24, it appears that the appellant's
F case before the High Court was that they were guidelines framed by the Ist respondent.
" .... He would submit that the guidelines framed by the BPT itself provides
for remission asked for by the petitioners when the detention of the goods by
the Custom was for bonafide operation of!TC formalities."
Per contra the case of the lst respondent before the High Court regarding the
guidelines appears to be
G " ..... remission is granted on ex-gratia basis, that too, by exercising discretion
on the basis of guidelines issued by the Union oflndia and adopted by resolution
passed by respondent No. 1 along with Custom Department."
The High Court did not record any categorical finding in this regard except
stating
"47. In exercise of statutory powers under section 101 of the Major Port
Trust Act guidelines for remission of d~,nurrage charges are framed."
H
MIS. RASIKLAL KANTILAL & CO. v. BOARD OF TRUSTEE 623
OF PORT OF BOMBAY [J. CHELAMESWAR, J.]

Delay in taking delivery is attributable purely to the failure of the original A
consignee. The appellant clearly knew or at least ought to have kn0wn,
when he purchased the goods that the 1st respondent would demand
demurrage. The appellant as a person claiming through the consignor is
not entitled in law to claim any right ofremission on the ground that he.
did not have any interest or title in the goods for such period. ·
B
AND
Phase II after the present appellant's right to take delivery of
goods came into existence.
Such delay occurred because of the time taken in ensuring that the
appellant complied with the various statutory obligations to import goods C
such as amendment of the IGM etc.
50. The fact that the appellant was not permitted to clea~ the
goods because of the pendency of some proceedings initiated by the
customs authorities by itself does not create a right of remission in favour
of the appellant. 39 Though it may constitute a relevant circumstance for D
considering granting remission ifthe 1" respondent so chooses as a matter
of policy. As a matter of fact, remission of a part of the demurrage was
granted by the 1" respondent.
51. Now, we come to the submission that the respondent's decision
to decline remission to the appellant is discriminatory because remission E
was granted in the case of a similarly situated consignee calle.d Gilt
Pack. Unfortunately, though the High Court noted the rival submission
in the context of the allegation of discrimination, it did not record any
conclusion on that count.
52. From the facts available on record, we are of the opinion that F
firstly, the cases of Gilt Pack and appellant are not identical. Gilt Pack
was the case where the original consignee sold the goods to a third party
on high seas even before their arrival into India. It so transpired that the
purchaser did not have an appropriate license under the relevant law to
import the goods. In view of the said problem, the goods were detained G
for some time and eventually the original consignee himself cleared the
goods40 • It is in the said circumstances Gilt Pack was grartled remission.
We are not concerned with the question whether the discretion was
39 See lntematicmalAirports Authority ofIndia v. Grand Slam International,(: 995)

3 sec 151
40
The full factual background as to how it all happened is not relevant for our purpose. H
624 SUPREME COURT REPORTS [2017] 4 S.C.R.

A appropriately exercised in the case of Gilt Pack. We are only on the
question whether the facts of Gilt Pack and the appellant herein are
identical.
53. However, we must make it clear that the authority of the 1st
respondent to grant or decline remission of any amount due tow:::rds any
B rate payable under THE ACT must be based on rational consideration - -
and a sound policy. Such a requirement is inherent in the fact that 1st
respondent is a statutory body discharging important statutory obligations.
1st respondent could not bring anything on record to our notice which
demonstrates the reasons for declining remission as claimed by the
. C appellant nor any clear policy of the respondent which regulates the
discretion. In the circumstances, we deem it appropriate to set aside the
decision of 1st respondent dated 16.09.1995 in declining the remission
and leave it open to the respondent to take appropriate decision on the
application duly recording the reasons for such decision.
54. The appeal is accordingly allowed in part. The impugned
D judgment is set aside. There shall be no order as to costs.

Kalpana K. Trip~thy Appeal partly allowed.