M/S NKD MARITIME LIMITED versus THE BOARD OF TRUSTEES OF THE PORT OF MUMBAI & ORS. on 22 September 2022

SUPREME COURT REPORTS

[2022] 7 S.C.R.

AM/S NKD MARITIME LIMITED

v.

THE BOARD OF TRUSTEES OF THE PORTOF MUMBAI & ORS.

(Civil Appeal No. 6858 of 2022)

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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 inCan auction conducted in a Commercial Admiralty Suit – Bill of Salestated that the Vessel was sold free from all encumbrances however,the successful bidder would be liable to pay the costs, charges, feesand expenses involved in removing the Vessel – When the appellantwas going to remove the Vessel, disputes arose inter alia w.r.tanchorage charges claimed by respondent no.1 – Application filedDby appellant seeking directions to raise revised bills – Allowed bySingle 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 onthe period of stay of the Vessel at the harbour – Rates vary depending Eon the duration for which the Vessel remains at the anchorage – Inthe present case, more than 30 days had elapsed since the Vesselhad been brought to the anchorage – At the time of sale, the Vesselwas paying anchorage fees at the rate applicable when a vessel isdocked for more than 30 days – Appellant purchased the Vessel on ‘as is, where is’ basis free from encumbrances, anchorage chargesFhave been levied from the date of the sale – Rates were payable onthe 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.GMajor Port Trusts Act, 1963 – s.50-B – Appellant purchaseda Vessel in an auction – Bill of Sale inter alia stated that the Vesselwas sold free from all encumbrances – Disputes arose w.r.t anchoragecharges claimed by Respondent No.1-Port Trust – It charged approx.Rs.15,00,000/- per day on the basis that the Vessel had been dockedat the anchorage for more than 30 days which would be approx.H

M/S NKD MARITIME LIMITED v. THE BOARD OF TRUSTEESOF THE PORT OF MUMBAI & ORS.

Rs.5,00,000/- per day if the vessel were to be docked for less than30 days – Plea of appellant that that anchorage charges fall withinthe ‘port dues’ u/s.50-B, port dues not having been defined in theAct, all charges payable within the premises of the Port fall withinthe broad expression ‘port dues’ – Held : Whether port dues withinthe meaning of s.50-B of the Major Port Trust Act include othercharges leviable within the port premises i.e., charges other thanPort Entry charges, is not in issue in this case – The issue waswhether the rate would be approximately Rs.5,00,000/- per day orRs.15,00,000/- per day.

Dismissing the appeal, the Court

Conclusion

Dismissing the appeal, the Court

HELD: In exercise of powers under Sections 48, 49 and 50of the Major Port Trusts Act, 1963, the Tariff Authority for MajorPort (TAMP) issued a notification notifying the scales of rate formajor ports. Clause 2.15 of this notification provides a scheduleof anchorage fees. As per the said Clause, the anchorage fees iscalculated as per the formula depending on the period of stay ofthe Vessel at the harbour. The rates vary depending on theduration for which the Vessel remains at the anchorage, hereinanchorage points V-1 and Y. The rate of anchorage for a foreigngoing vessel is USD $ 0.0047 GRT (Gross Registered Tonnage)per hour or any part thereof from the first day on wards till the30th day. If the Vessel is docked at the anchorage for over 30days, the applicable rate beyond the 30th day is USD $ 0.0118. Inthis case, the vessel was at V-1 anchorage with effect from 13thJune 2020. It is not in dispute that more than 30 days had elapsedsince the Vessel had been brought to the anchorage. At the timeof sale, the Vessel was paying anchorage fees at the rate applicablewhen a vessel is docked for more than 30 days. As held by theDivision Bench, it is far-fetched to suggest that prior anchoragewas of the Vessel under sale and the rate that it attracts as aresult of such prior anchorage are in the nature of encumbrancesfor the purposes of anchorage fees to be applied after the date ofBill 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 AB

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Awhich the Vessel was docked. Under Section 50-B, when a Vesselenters a port but does not discharge or take in any cargo orpassengers, she is charged with port dues at a rate to bedetermined by the Authority, which, in any event, should notexceed half the rate with which she otherwise would bechargeable. Whether port dues within the meaning of SectionB50-B of the Major Port Trust Act include other charges leviablewithin the port premises, i.e., charges other than Port Entrycharges is not in issue in this case as held by the Division Bench.The issue was whether the rate would be approximatelyRs.5,00,000/- per day or Rs.15,00,000/- per day. The DivisionCBench rightly allowed the appeal and set aside the order of theSingle Bench. [Paras 13, 14, 23-25][290-E-H; 291-A; 294-C-G]CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6858of 2022.

From the Judgment and Order dated 12.02.2021 of the High CourtDof Judicature at Bombay in Cross Objection (L) No. 2057 of 2021 inCommercial Appeal (L) No. 1577 of 2021 in Interim Application No.6531 of 2020 in Sheriff’s Report No. 53 of 2020 in Commercial AdmiraltySuit (L) No. 3579 of 2020.

Siddharth Bhatnagar, Sr. Adv., Prathamesh Kamat, Akash Kakade,EVikrant 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.FThe Judgment of the Court was delivered byINDIRA BANERJEE, J.

1. Leave granted.

2. This appeal is against a judgment and order dated 12[th] February2021 passed by the Commercial Appeal Division of the Bombay HighGCourt (Division Bench) allowing Commercial Appeal (L) No. 1557 of2021 filed by the Respondent No.1, hereinafter referred to as the “PortTrust” and setting aside an interim order dated 6[th] January 2021 passedby the Commercial Division (Single Bench) of the same High Court H

disposing of Interim Application No. 6531 of 2020 filed by the AppellantM/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 toas “Jalesh” and had been sailing under the flag of the Bahamas.

4. At the request of Jalesh, Glander International BunkeringDMCC, hereinafter referred to as “Glander”, had supplied bunkers tothe Vessel. The charges for the bunkers supplied by Glander to the Vesselwere not paid.

5. On 24[th] September, 2020, Glander filed an Admiralty Suit beingCommercial Admiralty (L) Suit No. 3579 of 2020 against the owners andparties interested in the Vessel for recovery of USD $2,213,320, beingthe charges for the bunkers along with accrued interest before theCommercial Division of the Bombay High Court.

6. By an order dated 7[th] October 2020, the Commercial Divisionof the High Court directed the Sheriff of Mumbai to sell the Vesselthrough public auction by issuing newspaper advertisements.

7. Pursuant to auction notices published in newspapers on 28[th]October 2020, on the directions of the High Court, 13 bidders includingNKD submitted their bids. NKD’s bid of Rs.11.65 million was the highestand the same was accordingly accepted.

8. On or about 7[th] November 2020, NKD paid the purchase pricefor the Vessel after which a Bill of Sale was drawn in favour of NKD on9[th] November 2020 by the Prothonotary and Senior Master of the HighCourt. The Bill of Sale clearly states that the Vessel was sold free fromall encumbrances. On 11[th] November 2020, delivery of the Vessel wasgiven to NKD.

9. The Vessel had initially arrived at the Port of Mumbai on23[rd] March 2020. When NKD was going to remove the Vessel, theRespondent No.1 raised bills in respect of Anchorage charges andRespondent No.4 raised bills in respect of Light Dues Charges.

10. It is the case of NKD that NKD has purchased the Vessel inan auction conducted through Sheriff Report No. 53 of 2020 inCommercial Admiralty Suit (L) No. 3579 of 2020 for the purpose ofdemolition of the Vessel. The terms and conditions of sale are set out inthe order of the High Court, dated 28[th] October 2020 on Sheriff Report A

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ANo. 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 vesselhaving confirmed in favour of M/s. NKD Maritime Limited, itshall be handed over to the said M/s. NKD Maritime Limited,Bfree from all encumbrances. This, of course is subject to theentire sale consideration being received by the office of theSheriff of Mumbai within the stipulated time as mentionedearlier.”

11. It is not in dispute that the Bill of Sale also mentions that thebill was being sold free of all encumbrances. However, the successfulCbidder would be liable to pay the costs, charges, fees and expenses ofany kind involved in removing the Vessel. According to NKD, theRespondent No.4, i.e., the Customs Authorities raised a bill on NKDlevying 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 madeover to the Appellant on 11[th] November 2020. General Light Dues chargeswere payable on and from 11[th] November 2020. NKD also disputed itsliability 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 theMajor 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. Clause2.15 of this notification provides a schedule of anchorage fees.F14. As per Clause 2.15 of the notification, issued by the TAMP, the

F14. As per Clause 2.15 of the notification, issued by the TAMP, theanchorage fees is calculated as per the formula depending on the periodof stay of the Vessel at the harbour. The rates vary depending on theduration for which the Vessel remains at the anchorage, herein anchoragepoints V-1 and Y. The rate of anchorage for a foreign going vessel isUSD $ 0.0047 GRT (Gross Registered Tonnage) per hour or any partGthereof from the first day on wards till the 30[th] day. If the Vessel isdocked at the anchorage for over 30 days, the applicable rate beyondthe 30[th] day is USD $ 0.0118. In this case, the vessel was at V-1anchorage with effect from 13[th] June 2020. It is not in dispute that morethan 30 days had elapsed since the Vessel had been brought to the H

anchorage. At the time of sale, the Vessel was paying anchorage fees atthe rate applicable when a vessel is docked for more than 30 days.

15. Disputes arose between NKD and the Port Trust with regardto the anchorage charges claimed by the Port Trust. The Port Trustcharged approximately Rs.15,00,000/- per day on the basis that the Vesselhad been docked at the anchorage for more than 30 days. If the vesselwere to be docked for less than 30 days, the anchorage charges wouldbe 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 seekingdirections on the Customs Authorities and the Mumbai Port Trust toraise revised bills, levying Light Dues Charges and/or Anchorage Chargesfrom the date on which physical possession of the vessel was made overto NKD, i.e., 11[th] November 2020.

17. The main thrust of the arguments of NKD is based on theterms and conditions of the Sale of the Vessel which is set out hereinbelowfor convenience :

“5. The above Vessel M.V. Kamika (IMG No.8521220) is beingsold on as is where is, what is there basis, free and clear ofall existing liens encumbrances and claims and no Purchasers)shall be to raise any objection in respect of or on account ofany damage thereto or defect therein. All the costs, charges,fees and expenses of any kind of nature involved in removingM.A. Karnika (IMO No.8521220) from her present positionwill be solely to the account of the successful purchaser. Thesuccessful bidder should take over the safety of the VesselM/V. Karnika (IMO No.8521220) within 24 hours of beingdeclared the highest/successful bidder and payment of theentire sale consideration to be made in this Hon’ble Court.

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10. The sale is subject to the sanction of the Hon’ble HighCourt of Judicature at Bombay.

11. The offerer(s) or bidder(s) whose offer or bid will beaccepted by the Hon’ble High Court. Bombay (hereinafterreferred to as “The purchaser”) shall give an undertaking inthe form annexed hereto and complete the purchase accordingto these conditions and shall also pay the purchase price in AB

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accordance with Term No.8 hereinabove, otherwise, the saidvessel shall be again put up for sale and re-sold and EarnestMoney Deposit of Rs.2,00,00,000/- (Rupees Two Crores only)or equivalent US Dollars and any amount paid towardspurchase price shall be forfeited and the defaulting purchases,shall be liable for any deficiency upon such resale togetherwith costs, charges and expenses attending the resale, butshall not be entitled to the benefit of any increase in thepurchase money on such resale. The Purchaser(s) shall alsosubscribe his/their address including e-mail & fax to the saidUndertaking at the foot of these conditions. Allcommunications shall be deemed to have been served, uponsuch communication being sent to the Purchaser(s) by e-mailand/or fax and/or post or upon such communication left forthe Purchaser(s) at such address, unless such Purchaser(s)is/are to the knowledge of the Sheriff of Mumbai representedby an Advocate or Advocates, in which case service on suchAdvocate or Advocates shall be deemed to be sufficient.

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12. Upon payment of the full purchase money in the manneraforesaid, and on the sale being sanctioned by the Hon’bleHigh Court of Judicature at Bombay, the Purchaser(s) shalltake immediate steps to take possession of the vessel purchasedby him/them. The Purchaser(s) shall at his/their expense takesuch steps as may be necessary for the purpose of obtainingpossession thereof and the Sheriff of Mumbai shall not beresponsible in that behalf.

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F14. The Purchaser(s) shall take delivery of the said vesselforthwith after making payment of the full purchase price ofthe vessel and with the sanction of the sale by the Hon’bleHigh Court of Judicature at Bombay. The said vessel shallremain at the risk and expense of such purchaser(s) from thedate of sanction of sale by the Hon’ble High Court ofGJudicature at Bombay in respect of the said vessel.

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16. The Purchaser(s) shall submit to the Sheriff of Mumbaifor approval a draft of the Certificate of Sale of the vesselimmediately from the date of confirmation of the file and the H

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

same will be approved by and on behalf of the Sheriff ofMumbai and will be forwarded to the Admiralty Registrar /Prothonotary and Senior Master High Court, Bombay forissuance of the same. The costs of certificate of sale to beissued by the Hon’ble High Court including stamp duty,registration charges etc. Payable in respect thereof shall beborne 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 thePurchaser(s) from the date of the sanction of the sale by theHon’ble High Court of Judicature at Bombay.”

18. By an order dated 6[th] January 2021, the Commercial Divisionof the High Court (Single Bench) allowed the application filed by theNKD.

19. While the Port Trust filed Commercial Appeal (L) No. 1577of 2021 against the order of the Commercial Division, NKD filed a CrossObjection (L) Nos. 2057 of 2021 in the Commercial Appeal.

20. Mr. Siddharth Bhatnagar, learned senior counsel appearingon behalf of the Appellant referred to the terms and conditions of sale ofthe Vessel and argued that the Vessel had been sold free from allencumbrances. Mr. Bhatnagar also referred to Section 8 of the Admiralty(Jurisdiction and Settlement of Maritime Claims) Act, 2017 which readsas under :-

“8. Vesting of rights on sale of vessels— On the sale of avessel under this Act by the High Court in exercise of itsadmiralty jurisdiction, the vessel shall vest in the purchaserfree from all encumbrances, liens, attachments, registeredmortgages 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 respectof Anchorage Charges or Light Dues Charges which accrued prior tothe date of sale would have to be met by the erstwhile owners of theVessel and/or met by the Prothonotary and Senior Master of the HighCourt from out of the sale proceeds of the Vessel lying with him. Suchcharges cannot be foisted upon NKD.

22. Mr. Jayant Bhushan, learned senior counsel appearing onbehalf of the Respondents agreed that the Vessel had been sold on “asis, where is” basis, free from all encumbrances. Mr. Bhushan submits AB

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Athat no pre-sale liabilities in respect of the Vessel have been foisted onNKD. Referring to the terms and conditions of sale and in particular, thecondition that all charges dues including Port dues, tariffs, taxes, etc. inrespect of the vessel, Mr. Jayant Bhushan submits, that it would beborne and paid by the purchaser from the date of sanction of the sale bythe High Court. In this case, Mr. Bhushan argued, NKD had only beenBcharged anchorage charges from the date of sanction of the sale till thedate of removal of the vessel from the anchorage.

23. In our view, the Division Bench rightly held that the argumentwas without merit. As held by the Division Bench, it is far-fetched tosuggest that prior anchorage was of the Vessel under sale and the rateCthat it attracts as a result of such prior anchorage are in the nature ofencumbrances for the purposes of anchorage fees to be applied afterthe 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, anchorageDcharges have been levied from the date of the sale. The rates werepayable on the basis of the number of days for which the Vessel wasdocked. NKD, in its cross objection, contended that anchorage chargesfall within the expression ‘port dues’ under Section 50-B of the PortTrusts Act. Under Section 50-B, when a Vessel enters a port but doesnot discharge or take in any cargo or passengers, she is charged withEport dues at a rate to be determined by the Authority, which, in anyevent, should not exceed half the rate with which she otherwise wouldbe chargeable. It is submitted that the Port Trust could not have chargedmore than half the rate under the Scale of Rates for anchorage charges.

24. Mr. Bhatnagar submits that port dues not having been definedFin the Major Port Trust Act, all charges payable within the premises ofthe Port fall within the broad expression ‘port dues’. Whether port dueswithin the meaning of Section 50-B of the Major Port Trust Act includeother charges leviable within the port premises, i.e., charges other thanPort Entry charges is not in issue in this case as held by the DivisionBench. The issue was whether the rate would be approximatelyGRs.5,00,000/- per day or Rs.15,00,000/- per day.

25. In our view, the Division Bench rightly allowed the appealand set aside the order of the Single Bench. The appeal is, therefore,dismissed.

HDivya Pandey(Assisted by: Roopanshi Virang, LCRA)

Appeal dismissed.