http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 19  

PETITIONER: THE TRUSTEES OF THE PORT OFMADRAS BY ITS CHAIRMAN

       Vs.

RESPONDENT: K.   P. V. SHEIK MOHAMED ROWTHER&    CO. AND OTHERS

DATE OF JUDGMENT: 11/12/1962

BENCH:

ACT: Port  Trust-Charges  to be levied on  steamer  agents-Labour supplied  by Port Trust not fully or properly  utilised-Rate of charges-Liability of consignee-Madras Port Trust Scale of Rates,  ’E’  scale-Madras Port Trust Act, 1905  (Mad.  2  of 1905) ss. 39, 40, 42.

HEADNOTE: In  exercise  of the powers under s. 42 of the  Madras  Port Trust  Act,  1905, the Trustees of the Port of  Mardas,  the appellants,  made amendments to the Madras Port Trust  Scale of  Rates  in 1958.  By the amendment, Scale ’E’  was  added under  Ch.   V and it was to come into force from  March  1, 1958.   The scale laid down charges to be paid  by  Masters, Owners or Agents of vessels in respect of Port Trust  labour requisitioned  and  supplied  but  not  fully  or   properly utilised.  These charges were to be on account of the labour of the Port Trust rendered idle on account of some lapse  on the  part of the ship owners or on account of extra  payment to labour for the simultaneous working of more than one hook at  the vessel’s hatch.  The labour requisition Form  to  be submitted  by the steamer-agents was also modified  and  the new  form  contained  an  undertaking on  the  part  of  the steamer-agents  for the payment of the charges laid down  in Port Trust’s scale of rates from time to time in respect  of labour  rendered idle or not properly utilised and also  for working more than one hook simultaneously at the hatch.  The respondents,  the steameragents, filed petitions before  the High  Court of Madras under I’ . 226 of the Constitution  of India,  praying  for a direction to the Port  Trust  not  to enforce these rates and not to require the filling in of the new  form,  on the grounds, inter alia, (1) that  the  ship- owners  and the steamer-agents could not be made liable  for charges  for  short  labour employed  in  the  receiving  or removal  of  cargo  and such charges must be  borne  by  the consignee,  (2)  the  Port Trust had  power  to  impose  and recover rates only or services rendered and that they had no right  to impose charges by way of compensation for  default or to collect 916 charges from Masters, Owners or Agents of vessels in respect of  operations  not  properly  falling  under  the  head  of discharge  of  cargo  from the vessel,  (3)  the  compulsion imposed  on  steamer agents in the matter of the  scale  ’E’ rates  and in respect of the signing of the requisition  for shore labour was outside the authority conferred by law  and was illegal, and (4) such imposition whether as charges  for services  or as compensation for default of  steamer  agents was an unreasonable restriction on the fundamental right  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 19  

the  petitioners to carry on business as steamer-agents  and was inoperative in law. Held  :  (1) The object behind the scale ’E’  rates  was  to expedite the discharge of the cargo at the quay and thus  to enable  a quantity of cargo to be discharged ’quickly.   The services rendered by the Port Trust were therefore  services to  the  ship and, consequently, charges for them  could  be validity realised from the steamer-agents. (2)  The  Madras Port Trust Act, 1905, did not  contain  any provision which would constitute the Port Trust an agent  of the consignee for the purpose of the taking delivery of  the goods  and the expression "receiving" in cl. (b)  of  sub-s. (1) of s.   39  of  the  Act did not mean receiving  the  goods  on behalf of the  consignee. (3) Under ss. 39 and 40 the Port Trust took charge of the  goods on behalf of the ship-owner and not on behalf  of the  consignee,  and whatever services it performed  at  the time  of  the  landing  of the goods  or  on  their  removal thereafter, were services rendered to the ship. (4)  The  impugned charges were rightly levied by scale  ‘F’ on  the Master, Owner or Agent of the vessels and  that  the Port  Trust  could  validly  insist  on  the   steamer-agent requisitioning the shorc-labour to express., an  undertaking in the form for requisitioning labour that lie would pay the charges  laid down in the Port Trust’s scale of  rates  from time  to  time  in respect of labour rendered  idle  or  not properly  utilised and also for working more than  one  hook simultaneously at a vessel’s hatch. Case law reviewed.

JUDGMENT: CIVIL APPELLATE JURISDICTION ; Civil Appeals Nos. 187 to 191 of 1962. Appeals  from the judgment and order dated March 3  1961  of the  Madras High Court in Writ Appeal Nos. 53, 54,  55,  56, and 57 of 1960,  917 M.   C. Setalvad, Attorney-General for India, A. V. Viswanatha Sastri, R.Ganapathy Iyer, V.   V. Raghasvan and G. Gopalakrishnan, for the appellants. S.   T. Desai and P. Ram Reddy, for the respondents. 1962.  December 11.  The judgment of the Court was delivered by RAGHUBAR DAYAL, J.-The appellants, the Trustees of the  Port of Madras, hereinafter called the Board, appeal ag-tinst the order  of  the  High  Court  of  Madras  allowing  the  writ petitions  filed under Art. 226 of the Constitution by  each of the respondents and issuing a writ of mandamus  directing the appellants to forbear from enforcing the scale ’E’ rates of  the Madras Port Trust Scale of Rates and from  requiring the  signing of the Shore Labour Requisition Form  from  the steamer agent. The respondents, who are either partnership firms or limited companies,  carry  on  the business  of  steamer  agents  at Madras.   The  Board,  with  the  sanction  of  the  Central Government,  made amendments to the Madras Port Trust  Scale of  Rates  in 1958.  By the amendment, scale ’E’  was  added under  Chapter  V. It was to come into force from  March  1, 1958.   The scale laid down charges to be paid  by  masters, owners or agents of vessels in respect of Port Trust  labour requisitioned  and  supplied  but  not  fully  or   properly

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 19  

utilised.  The charges, for the sake of brevity, may be said to  be on account of the labour of the Port  Trust,  Madras, rendered  idle on account of some lapse on the part  of  the ship.  owners or on account of extra payment to  labour  for the  simultaneous  working  of more than  one  work  at  the vessel’s hatch.  The labour requisition Form to be submitted by  the  steamer-agents was also modified and the  new  form contained an undertaking 918 on  the  part of the steamer-agents for the payment  of  the charges laid down in the Board’s scale of rates from time to time  in  respect of labour rendered idle  or  not  properly utilised   and   also  for  working  more  than   one   hook simultaneously at the hatch.  These amendments in the  scale of rates were made by the Board in the exercise of its power under s. 42 of the Madras Port Trust Act, 1905 (Mad.  Act 11 of 1905), hereinafter called the Act.  This section empowers the Board to frame a scale of rates at which and a statement of the conditions under which any of the services  specified in the various clauses of the section shall be performed  by the  Board  or  by a person to whom  any  service  has  been relinquished  under  s. 41-A of the  Act.   Thereafter,  the respondents, viz., the steamer-agents, filed petitions under Art.  226 of the Constitution, in the High Court of  Madras, and prayed for the issue of a writ of mandamus directing the Board  not  to enforce these rates and not  to  require  the filling  in  of the new form.  They contended that  (1)  the ship-owners and the steamer-agents cannot be made liable for charges  for  shore  labour employed  in  the  receiving  or removal  of  cargo  and such charges must be  borne  by  the consignee   (II)  s.  39  of  the  Act  provided  for   -the performance of services by the Board and the other  sections provided  for the imposition and recovery of rates  for  the services performed for the vessel and services performed for the  goods.  Services in the former category are to be  paid for  on  behalf of the carrier i. e., by the  master,  ship- owner  or the steamer-agent, and the services in the  latter category constitute a liability on the consignee ; (iii) the Board  has  power  to  impose and  recover  rates  only  for services  rendered  and that they have no  right  to  impose charges  by  way of compensation for default or  to  collect charges from masters, owners or agents of vessels in respect of  operations  not  properly  falling  under  the  head  of discharge of cargo from the vessel ; (iv) prior to 1914, the steamer-agents acted as landing-agents 919 for removing cargo from ship to pier and collected for these services  from  the consignees a separate  charge  known  as ’landing charge’ in addition to the freight.  When the quays were  constructed  and cargo came to be  landed  there,  the Board took over the landing of goods and collected quay dues instead of ’landing charges’ which were wholly paid by I  he consignees.  These quay dues later on merged in the  harbour dues’  collected  by  the Board  from  the  consignees;  (v) usually,  the steamer agent informs the Traffic Manager  the probable  date  of arrival of the vessel under  his  agency, tonnage  hatch-wise of cagro to be landed at Madras and  the number of hatches proposed to be worked.  Under the  revised procedure  adopted by the Board on August 1, 1957, before  a ship has reached its berth, the steamer agent is required to make an application and a deposit in his current account  to cover  charges for the working of the vessel in  respect  of overtime,  supply of cranes, water and appliances  and  from March  1, 1958, to meet the scale’ ’E’ contingencies also  ; (vi)  the operation which goes on at the quay  is  described

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 19  

thus  : After the Port Trust pilot brings the vessel to  the berth alloted to her : "The  stevedore  labour supplied by the Madras  Dock  Labour Board,  a  statutory  body, board the  vessel,  prepare  the slings in the holds or hatches, work the ship’s winches  and the cargo is hoisted on the quayside.  When the sling  rests on  the  shore or in the barge in the case of  discharge  at moorings, the shore labour unsling the cargo and the Trust’s Tally Clerk notes the items in a tally sheet.  As each sheet is  closed  a duplicate copy of the import  tally  sheet  is given  to  the steamer agent’s representative on  the  spot. This duplicate copy is the receipt prescribed under  section 39  (3) of the Madras Port Trust Act...... The shore  labour remove the cargo from the point of landing 920 to the shed or open for stacking and subsequent delivery  of the  goods from the Trust to the consignee.   The  consignee obtains delivery order from the Steamer agent and then files Harbour  Import  Application with the Trust for  payment  of Harbour dues and Bill of Entry with the Customs for the duty payable by him.  On payment of the duty and the harbour dues by  the.  consignee  the cargo is delivered to  him  by  the Trust." (vii)The  Board adopted the piece-rate scheme for  the  Dock workers  in  pursuance  of  the  report  of  the  jeejeebhoy Committee  and the new scale ‘E’ rates are a part of such  a scheme.  (viii), Prior to March 1, 1958 the cost  of  shore- labour  was met entirely by the Port Trust.  No  distinction was  made between the charges for shore labour  in  ordinary cases and charges for shore- labour in respect of idle, time or additional work. (ix) Under the scheme which was  brought into force on March 1, 1958, charges for shore labour in the contingencies  covered by the scale ’E’ have  been  excluded from Harbour dues.  These charges are now treated as charges for  which  the steamer-agent is made responsible.  (x)  The compulsion  imposed  on  steamer agents  in  the  matter  of payment of the scale ’E’ rates and in respect of the signing of the requisition for shore labour is outside the authority conferred  by law on the trustees of the Port of Madras  and is  illegal.   Such  an imposition whether  as  charges  for services or as compensation for default of steamer agents is illegal  and an unreasonable restriction on the  fundamental right  of  the petitioners to carry on business  as  steamer agents  and  is  inoperative in law.  (xi)  the  Port  Trust authorities  receiving goods on the quay or in the barge  at moorings, do so on behalf -of the consignee. The  Board,  by the common counter-affidavit  filed  on  its behalf by the Deputy Traffic Manager of the  921 Madras Port Trust, admitted the direct arrangements  between the ship-owner, master, or agent with the stevedores but did not  accept the allegations about the nature of the  various rates and duties levied and the legal position as stated  in the petitions.  According to the Board, (i) the Harbour dues on  the import cargo under scale A, Chapter II of the  Scale of  Rates,  are  payable  on  tonnage  and  include,  beside overhead, a nominal rent for storage for a specified  period etc.,  and  the item of charges for  porterage  involved  in moving  the goods from the landing point to the  storage  or stacking  point. (ii) It is not correct that the  ship-owner has  nothing to do with the import cargo after it  has  been landed  by the stevedores at the landing point on the  quay, as the ship-owner in each case by the bill of lading has  to deliver  the  goods to the consignee named in  the  bill  of lading  or  his  nominee and he  remains  liable  under  his

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 19  

contract until he has delivered the goods to the person  who is entitled to take delivery of the goods. (iii) Under s.   39 of the Act the Port Trust gives facilities and undertakes  certain services.  One of such services  is  the moving of the goods from the landing point to the storage or stacking  point and thereafter delivering the goods  to  the persons  entitled under the bill of lading.  The Board  does not  undertake the unloading of the goods from the  ship  to the quay.  The ship-owner makes his own arrangements through the stevedores, though the Board is authorised to  undertake such services on behalf of the ship-owner.  It is a  service to  the  ship-owner by the Board to give  the  ship-owner  a receipt for the goods to keep them in custody and deliver to the  consignee.  The services undertaken in respect  of  the import  cargo  till they have been moved to the  storage  or stacking point are services to the ship-owner for which  the ship-owner  or master or steamer agent is  primarily  liable and  the  charges may properly and legally  be  levied  from them.  (iv)  The Board collects the harbour  dues  from  the consignee at the time of giving delivery, but in fact      922      makes that collection as agent of the ship-owner,      master, steamer agent who are primarily the persons      liable for the dues. (v) The Board is entitled to      collect the harbour dues from the ship-owner, master      or steamer agent. (vi) The issuance of a receipt to      the master at the landing point is a mere matter of      convenience for betokening the fact that the goods      have been handed over to the Port Trust for removal,      storage and delivery and does not in any way detract      from   the  fact  that  the  subsequent  services   are facilities      and services rendered to the’ ship-owner in respect of      the goods which are the subject of contract of carri-      age by the ship-owner. (vii) The past practice had      been for the agents to inform the Board about the      shore labour which would be necessary for moving      the goods in respect of each steamer. Prior to 1956,      this was done orally and then the Form was intro-      duced which contains the same particulars except      the undertaking to pay the scale ’E’ charges as the      impugned Form now contains. Since the enforce-      ment of the new piece-rate scheme, the payment to      labour was not based on tonnage but a daily wage      was fixed along with a provision for payment for      idle time and hook allowance for working two or      three hooks simultaneously at a         vessel’s hatch.      (viii) The proper utilisation of the time of the      labour depends upon the steamer agents first giving      a proper anticipation and shift at which they were to      be put on the job being the time when the cargo will      be ready for removal and, secondly, there giving a      continuous supply of cargo for removal so that there      is no gap in the work. (ix) The levy of multiple      hook allowance against the steamer agents is a facility      to the ship to discharge fast and sail quicker. When      two or more hooks work in a ship’s hatch, the gangs      handling cargo will not be in a position to handle      more cargo and therefore the approval of Board was      obtained for payment of an allowance to compensate      such loss in their earnings. As working of additional      hooks    in a vessel’s hatch benefits the ship, the  923 recovery  of  hook allowance from the steamer  agents  under scale  ’E’  is legitimate. (x) The  additional  charge  made

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 19  

under  scale  ’E’  is  a charge  in  respect  of  facilities afforded  to and services undertaken on behalf of the  ship- owner,  master, agent by the Board in relation to the  cargo which is under contract of carriage by them, in the same way as harbour dues. To  understand the exact nature of the impugned charges,  it is  necessary  to  quote  the scale  ’E’  charges  to  which objection is taken : SCALE  E-Charges  Against  Masters,  Owners,  or  Agents  of Vessels  in respect of Port Trust Labour  requisitioned  and supplied but not fully or properly utilised Item Classification for purposes no.             of this Scale 1.   Port  Trust  Mazdoors rendered idle on account  of  the breakdown  of ship’s winches, wrigging of  ship’s  derricks, shifting  of cranes at the request of the steamer agents  or stevedores,  cargo not being ready for shipment,  completion of  loading  and/or unloading before the end of  the  shift, late arrival of vessel at the berth or for any other  reason which  is  attributable  to the vessel  and  is  beyond  the control of the workmen. Note : Idle time will be calculated as follows Charges Payable 64 nP. per mazdoor per hour in the case of 8 hr. shifts  and at 80 nP. per hour in the case of 6-1/2 hr. shifts. 924 item Classification for purposes no.  of this Scale Any continuous stoppage of work of 15 minutes or under shall be  ignored  and  any continuous stoppage in  excess  of  15 minutes and up to 30 minutes shall be counted as 30 minutes. If  the said continuous stoppage continues in excess  of  30 minutes  the actual excess rounded off to the  next  quarter will  be calculated as idle time.  For example, if there  is continuous  stoppage for 35 minutes, the idle time  will  be calculated as 45 minutes. 2.   Port Trust Mazdoors sent away or not required after shore work shall have thereof or Rs. commenced at the  start of 2.50 per half shift           each shift.    or part thereof.        3. Allowances for working   Rs. 1.25 for each           of two hooks simultane-  mazdoor (Madras           ously at a vessel’s hatch.    Port Trust Shore                Mazdoor) employ-                ed at the hooks.        4. Allowances for working of     Rs. 1.66 for each           more than two hooks Madras Port Trust           simultaneously at a vessel’s  Shore      Mazdoor           hatch.    employed at the                hooks. N. B.-One     hour’s clear notice in writing must be given of cancellation of labour requisitioned                       Charges Payable Rs. 5 per mazdoor per shift or part  925 for work at hooks.  If cancellation orders are not  received in  time,  charges  will  be  levied  for  the  full  period requisitioned. Note : The above amendment will take effect from the date of Introduction of the Piece-Rate Scheme, viz., March 1, 1958.                           Sd/-etc. A  circular  Exhibit-B was issued by the Board  to  all  the steamer agents on February 25, 1958, explaining the features

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 19  

of  the Piece-Rate Scheme for Dock and Stevedore  works  for the  Port of Madras.  The Board emphasized that  the  Piece- Rate  Scheme  was  formulated to increase  the  out-turn  of vessels and sought the cooperation of the steamer agents and the  stevedores  in  the implementation of  the  scheme  and making it a success. The salient features of the scheme in respect of payment  of wages to the workers show that, under the scheme, the worker is  assured  of a minimum daily wage and  that,  the  actual earnings  for a day really depend on his output  per  shift, they  being  linked with productivity.  A  gang  of  workers consists  of  one maistri and 14 workers.  They  handle  the goods  at a particular point, say a hook.  Datum lines  have been fixed for different kinds of cargo per hook per  shift. ’Datum lines’ means the ’standard output’ of the work to  be performed  by  a gang in a particular hook during  a  shift. The  output is calculated in deadweight tons.  Thus a  daily wage  rate as well as a wage rate for standard  output  have been  fixed  for  all categories of workers  who  have  been classified  in  five categories, one of which  is  the  Port Trust  Shore Labour.  If the ’workers produce more than  the datum  lines, they are entitled to the increased wage  rate. There is steady increase in the earnings 926 if  the output exceeds the 100% of the datum tonnage and  at 150%  the worker gets twice his daily wage rate and at  200% the piece rate wage is thrice the daily wage rate. These  features  of  the scheme  sufficiently  indicate  the significance  of ’idle time’ for the workers.  If, during  a shift, the workers are not actually employed on the job  for which they are engaged and have to remain idle, their output of work during that shift, on the basis of tonnage, is bound to  be less and, consequently, their earnings would be  less than  what  they  could be if  they  had  been  continuously employed  during  the  shift.  To compensate  such  loss  in earnings due to the time of the workers remaining unemployed idle  allowance  is granted for such time during  which  the workers  are rendered idle for reasons beyond their  control for  periods  in excess of 15 minutes.  The  circular  shows that  idle allowance is paid at the daily wage rate for  the following reasons : (i)  breakdown of cranes or winches. (ii) shifting of quay cranes or rigging of ship’s derricks. (iii)     cargo not ready for shipment (iv) late arrival of vessels at the berth (v)  completion  of loading and/or unloading before the  end of the shift (vi) actual rain-time during shift working hours, and (vii)     any other reason beyond the control of the workmen except slow work on the part of the workmen covered by  this scheme. Item  No. I of scale ’E’ charges makes the idle  a1lowances, for reasons nos. (ii) to (v) and for  927 breakdown  of  ship’s  winches  mentioned  in  reason   (i), chargeable against masters, owners or agents of vessels  who control matters giving rise to those reasons. The workers are also paid multiple hook allowance.  They are entitled  to  "hook allowance’ at the rate of 1/4th  of  the daily  wage if two hooks work simultaneously at a hatch  and 1/3rd  of  the -daily wage, if more than 2 hooks work  at  a hatch.  One gang of workers handle goods at one point, i.e., at one hook.. If several hooks are simultaneously worked  at the vessel’s hatch, an equal number of gangs of workers will be  employed  to handle the goods.  The result is  that  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 19  

output per gang is proportionately reduced and  consequently its earnings are reduced.  There may be further reduction in earnings  if the cargo is discharged during half-shift.   It is  to  compensate  such losses that  under  the  piece-rate scheme, the workers are paid hook allowance. The simultaneous working of more than one hook at the  hatch of  a ship helps the ship to discharge cargo fast  and  sail away  quicker.   The hook allowance is charged  against  the master,  and steamer. agents of the ship as the  working  of additional hooks benefits the ship. The  writ  petitions were disposed of by  a  learned  Single judge of the High Court.  He dismissed them holding that the liability to pay the charges.- being for services  rendered, the charges could be imposed only on the person to whom that service  is rendered, that the entrustment of the  goods  to the Board is by the shipping agent though the entrustment is for  ultimate  delivery of the goods to the  consignees  and that  the  service is rendered to the  shipping  agent  even though  the consignee also benefits by that service  and  it Was not necessary for imposing the liability that 928 the shipping agent must exclusively benefit from the service rendered. On  appeal, the appellate Bench reversed the order,  allowed the  petitions and issued a writ of mandamus as prayed.   It held  that the Board had no authority to introduce  the  new scale ’E’ rates payable by the master, owner or agent of the vessel, -that the ship-owner’s liability ends when the goods had  been put over the rail of the ship and from the  moment the goods are put within the reach of the Board employees to take  charge of them and tally clerk passes the  receipt  on behalf  of the Board.  The services in respect of which  the new  charges are sought to be levied cannot be deemed to  be services  rendered  to  the master, owner or  agent  of  the vessel.  They must be deemed to be services rendered to  the consignee.   The purpose of the requisition by  the  steamer agent  was really to avoid delay and  consequent  congestion and,  generally,  for  the convenience of  the  Board.   The requisition  must  be  treated  as  one  on  behalf  of  the consignees because it is not part of the duty of the steamer agents to take delivery. The  contentions  raised before us for the parties  are  the same as were urged in the Courts below and will be mentioned when dealt with later. Before  we deal with the contentions of the parties, we  may refer  to the various provisions of law having a bearing  on the  question  before  us.  Clause (7) of s. 5  of  the  Act states  that  ’owner’,  when  used  in  relation  to  goods, includes  any consignor, consignee shipper or agent for  the sale, custody, loading or unloading of such goods.   Section 39 provides for the performance of services by the Board and reads: ,,(I) The Board shall, according to its powers, provide  all reasonable facilities for and shall have power to  undertake the following services:-- (a)   landing,    shipping,   or     transhipping  929 passengers  and  goods between vessels in the port  and  the wharves, piers, quays or docks in possession of the Board; (b)  receiving,  removing, shifting, transporting,,  storing or delivering goods brought within the Board’s premises; (c)  carrying  passengers  by  rail,  tramway  or  otherwise within the limits of the port, subject to such  restrictions and  conditions  as the Central Government may  see  fit  to impose; and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 19  

(d)  receiving and delivering, transporting and booking  and despatching goods originating in the vessels in the port and intended for carriage by the neighbouring railways, or  vice verse,  as  a railway company or  administration  under  the Indian Railways Act. 1890. (2)  The  Board shall, if so required by the owner,  perform in respect of goods all or any of the services mentioned  in clauses (a), (b), and (d) of sub-section (1), provided  that the Board shall not be bound to perform any service which it has relinquished under the provisions of clause (a) of  sub- section (1) of section 41-A. (3)  The Board shall, if required, take charge of the  goods for  the purpose of performing the service and shall give  a receipt  in the form and to the effect prescribed from  time to time by the Central Government. After  any  goods have been taken charge of  and  a  receipt given for them under this section no liability for any  loss or damage which may occur to them shall attach to any person to whom a receipt shall have been given or to the 930 master or the owner of the vessel from which the goods  have been landed or transhipped." Section  40 laying down the responsibility of the Board  for loss etc., of goods reads: "(l)   The  responsibility  of  the  Board  for  the   loss, destruction or deterioration of goods of which it has  taken charge  shall, subject to the other provisions of  this  Act and subject also in the case of goods. received for carriage by  railway  to the provisions of the Indian  Railways  Act, 1890, be that of a bailee under sections 151, 152 and 161 of the  Indian Contract Act, 1872, omitting the words  ’in  the absence of any special contract’ in section 152 of the last- men- tioned Act. Provided that, till the receipt mentioned insub-section (3) of section 39-is given by theBoard, the goods shall be at the risk of the owner. (2)  The Board shall not be in any way responsi- ble  for loss of or damage to goods of which it has  taken charge, unless notice of such loss or damage shall have been given within one month of the date of the  receipt  given for the goods under sub-section  (3)  of section 39." Section  41-A deals with relinquishment of services  subject to  the control of the Central Government and sub-s. (1)  of s.  41  provides that any person to whom any or all  of  the services  under cls. (a) and (b) of sub-s. (1) of s. 39  has or have been relinquished unders.41-A, shall, if so required by  the  owner,  perform in respect of  goods  ’any  of  the services so relinguished add for that purpose take charge of the  goods and give a receipt in the form and to the  effect prescribed from time to time by the Central Government.  931 Section 42 which deals with the scale of rates, reads "The  Board  shall  frame 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  by  a person  to  whom  any service has  been  relinquished  under section 41-A or partly by one and partly by the, other:- (a) Transhippingof passengers ox goods                              ; between vessels in the harbour; (b)  landing and shipping, of passengers or goods from or to such vessels to or from any wharf, quay, pier, dock, land or

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 19  

building in the possession or occupation of the, Board or at any place within the limits of the port; (c)  cranage or porterage or goods on any such place; (d)  wharfage, storage or demurrage or goods on any  such place; (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, 1908 (XV of 1908)." Section 44 provides that every scale and every statement  of conditions  framed  by the Board under ss. 42,  43  or  43-A shall  be submitted to the Central Government for  sanction, and  when sanctioned and published, will, have the force  of law.  Sections 45 and 46 provide for the enhancement of  the rates by the Board and the Central Government, if the  Board fails to do so, respectively. 932 Section 50 provides that the rates in respect of goods to be landed  shall be payable immediately on the landing  of  the goods  and those in respect of goods to be removed from  the premises  of  the  Board, or to be shipped  for  export,  or transhipped, shall be pay-able before the goods are  removed or  shipped  or transhipped.  Section 51 gives the  Board  a lien on the goods for the amount of the rates leviable under the Act in respect of any goods and for the rent due to  the Board  on any buildings etc., in which those goods had  been placed.   Section 52 provides for the priority of this  lien of  the Board over certain other liens and claims.   Section 53  provides  for the preservation of lien  for  freight  or other char es including landing charges payable to the  ship owner after the  the  Board.  Section 54 provides for the retention of  such goods in the custody of the Board at the risk and expense of the  owners of the said goods until such lien is  discharged and  also provides that the godown or storage rent would  be payable  by  the party entitled to such goods for  the  time during which they may be so retained. Section  56 provides for the sale of goods after two  months if  rates or rents are not paid or lien for freight  is  not discharged.  Section 57 provides for the publication of  the notice  for  sale  in the case of perishable  goods  in  the custody of the Board, in the Gazette and section 58 provides for  giving notice to the owner of the goods of his  address is  known.  Section 59 provides as to how the sale  proceeds are  to be applied.  It is to be applied in the  payment  of the  expenses  of sale in payment of the  liens  and  claims excepted in s. 52 from the priority of the lien of the Board and  in  payment  of  the rates  and  expenses  of  landing, removing, storing or warehousing the same, and of all  other charges due to the Board in respect thereof. goods are landed and the lien for frieght or charges takes priority over the aforesaid lien of  933 The Board framed by-laws in exercise of the powers conferred by  s.  95  of  the Act.  By-law no.  2,  provides  for  the regulation of admission to the harbour premises by means  of permits etc.  They are to be issued to such of the public as have  business to transact within the premises  in  somewise connected  with  the  purposes, services  or  works  of  the harbour.   By-law -no. 3 provides that the master, owner  or the  agent of a vessel carrying cargo for discharge  at  the Port  of  Madras  shall furnish the  Traffic  Manager,  Port Trust.-  within not less than six clear working days a  true copy  of the complete Import General Manifest  before  being permitted  to  break  bulk.  The manifest is  to  show  full

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 19  

details  of each consignment manifested, including  litreage in the case of liquids in bulk and gross weight in kilos  in other  cases.  Non-submission of such manifests  within  the stipulated time may result in the vessel concerned not being permitted to break bulk. By-law no. 4 provides that no goods maybe landed or  shipped except at places appointed by the Port Trust for each  class of cargo.  By-law 4-A provides that if any vessel discharges upon  any wharf or property of the Port Trust any  cargo  in such a rotten condition as to be a nuisance or injurious  or dangerous  to health, the Traffic Manager, Port  Trust,  may require  the  consignee thereof or if the  consignee  should disclaim,  deny  or dispute the consignment or  decline  all responsibility  for  the  same  or if  there  should  be  no consignee , the owner, master or agent of the vessel from which the same had been discharged, to  forthwith cause the said cargo or goods or substance  to be  removed from the property of the Port Trust and, on  the failure  of such persons to have the goods removed, to  have the  removal effected by the Traffic Manager in such  manner as he may think fit, or cause the same to be destroyed,  and to  demand the expenses incurred from the said consignee  or the said master, owner or agent as the. case may be. 934 By-law  no. 5 provides that when the Port  Trust  undertakes the  reception,  removal, porterage or    storage  of  cargo under s. 39 of the Act, it shall deliver    it or permit its shipment after all dues shall have been paid and that in the case  of  cargo of which the Port Trust does  not  elect  to undertake  such  services,  no  steamer  agent,  shipper  or consignee   may  remove  any part of  such  cargo  from  the harbour premises until authorised by the Port Trust so to do after dues shall have been paid.  By-law no. 6 provides that harbour  dues  on  goods landed,  together  with  any  other charges incur-red under the Port Trust Scale of Rates, shall be  paid  before  removal  of the  goods  from  the  harbour premises.   By-law no. 7 provides that all applications  for permission  to export or import goods shall be  on  approved forms  and that such forms shall be filled in and signed  by the shipper or consignee of the goods or by his agent. We  may also refer to the Manual of Instructions  issued  by the  Board for the Traffic Department.  Mr. Desai has  urged that the Manual should not be looked into as it is not  part of  the  record.  Strictly, this is  correct,  but  whatever extra   is   contained  in  the   instructions   is   really amplification or explanation of facts already on record,  in the  affidavit  and the common counter- affidavit  filed  on behalf  of  the  parties.   We can look  at  the  manual  of instructions  for  this purpose.  The  instructions  provide that  agents of vessels will inform the Traffic  Manager  of the probable date of arrival of their steamers and that  the Traffic  Manager will note his requirements for a quay or  a mooring berth on such notice.  Instruction no. 3 states that the  authority  from the steamer agents as  bailors  to  the Trust  as  bailee to deliver goods may take the form  of  an endorsement by the steamer agents on the bill. of lading and that a bill of lading presented without the steamer  agent’s endorsement  cannot  be accepted.  Instruction no.  4  deals with the tally sheet and is in these terms  935 "’The Form prescribed by the Local Government under  section 39(3) of the Madras Port Trust Act for cargo landed into the custody  of  the Port Trust.  The original copy  serves  the Trust  as  its record.  The duplicate copy,  the  prescribed receipt, is handed to the tenderer immediately the form  has

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 19  

been entered up with the marks, numbers, description (as far as   possible)  and  other  particulars,  such  as   outward condition  of each individual package and signed by  a  Port Trust  Tally  Checker.   Great care  must  be  exercised  in entering  up Tally Sheets as they are the only  records  for the  settlement of claims between the tenderer and the  Port Trust and contribute largely towards smooth working.   Tally sheets  are kept in the Traffic Sections for 28  days  after the  departure  of  a  vessel and  are  then  filed  in  the Application  Section in the Office of the Assistant  Traffic Manager (Shipping). x     x     x     x x      x     x     x Instruction No. 5 deals with receipting and provides "’As  each tally sheet which is prepared in  duplicate  with carbon paper is completely filled-in, it should be signed by the  Port  Trust  Tally  Checker  and  the  Steamer  Agent’s representative and the duplicate copy should be handed  over to  the  latter on the spot.  This constituted  the  receipt under s. 39(3) of the Act." Instruction no. 26 states that the Trust grants delivery  of cargo  on  the authority of delivery orders granted  by  the steamer agents as bailors.  This authority may take the form of  an endorsement by the bailor on the bill of lading or  a separate delivery order on the Trust issued by the bailor. It  is to be noticed from the various provisions of the  Act that they do not make it obligatory on the 936 part of the Board to undertake the various services      mentioned in s. 39 of the Act.      Section 39, already quoted, empowers the Board firstly, to provide all reasonable facilities, according      to  its  powers,  for the  services  mentioned  in  the various  clauses of sub-s. (1), and secondly,  empowers  the Board  to  undertake  those services.   The  Board  is  thus enabled  to undertake those services.  Sub-section (1)  does not make it a duty of the Board to undertake those services. It  is  only by virtue of sub-s. (2) that the  Board  is  to perform in respect of goods, if required, all or any of  the services  mentioned in cls. (a), (b) or (d) of  sub-s.  (1), those services being in connection with the landing of goods between vessels in the port and the wharves, piers, quays or docks in possession of the Board and in connection with  the receiving,  removing,  shifting,  transporting,  storing  or delivering   of  goods  brought  within  its  premises   and despatching  goods  intended for  carriage  by  neighbouring railways.   Sub-section (3) again says that the Board is  to take  charge of the goods for the purpose of performing  the services, if required to do so, and, in that case, the Board is to give receipt in the form and to the effect  prescribed by  the Central Government.  It is therefore clear that  the performance  of any of the services mentioned in sub-s.  (1) of  s.  39  and  the  taking of  charge  of  the  goods  are consequent  on  the  Board being required to do  so  by  the ’owner’,  which  is  a  general  term  including  consignor, consignee, shipper or agent.  If the owner does not  require the  Board to undertake such services and to take charge  of the goods for these purposes, the Board is not to  undertake those services. It is the steamer-agent, who is in a position to require the Board  to undertake these services in respect of  the  cargo the  ship is to unload.  He alone is respected to have  full knowledge  about the time when the ship is to arrive,  about the suitability of the berth  937 for  that  ship,  about  the  quantity  and  nature  of  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 19  

consignment and about the time the ship would like to be  in the  dock and consequently about the amount of  shore-labour required  in connection with the goods to be landed.  It  is for this reason that it is the steamer-agent who informs the staff of the Board about the arrival of the ship’ who has to furnish the manifest giving details of the goods to be land- ed  and  who  has to submit a requisition  about  the  shore labour required and the period of time during which it would be  required.   It  is admitted for  the  parties  that  the steamer-agent  used  to  convey the  information  about  the necessary  shorelabour  and  about the period  when  it  was required.   The  new Form of  requisition  introduced’  from March 1, 1958, contained an undertaking by the steamer-agent for  the  payment of the labour dues on  account  of  labour remaining idle or on account of labour working more than one hook  simultaneously.   This  was  introduced  in  the  Form because such payments were newly introduced and added to the charges  which used to be collected by them on the basis  of tonnage  handled  by the shore-labour and possibly  also  on account  of  the anticipated objection on the  part  of  the steamer-agents to their liability to pay these charges.  The liability  to pay these charges, however, does not arise  on account of the undertaking but on account of the  sanctioned scale  of rates at which and the conditions under which  the Board  would perform those services.  Section 44 of the  Act provides  that  such sanctioned rates and  conditions  shall have the force of law. The question for determination, in the case, then is whether the law making the steamer-agent liable to pay these charges is good law. The  learned Attorney-General has urged, for the  appellant, that  the object behind the scale ’E’ rates is  to  expedite the discharge of the cargo at the 938 quay and thus to enable a quantity of cargo to be      discharged quickly.  The services rendered, by the      Board are therefore services to the ship and, cons-      equently, charges for them are to be realised from  the steamer-agents. It  is also urged that the harbour dues are  collected  from the  consignees as the Board is a bailee of  the  ship-owner who  is  a  bailee of the shipper and who is  bound  by  the contract  to  deliver  the goods to  the  consignee  or  his nominee,  on  the presentation of the bill  of  lading,  The Board’s taking charge of the goods landed does not amount to its  taking  delivery of the goods from  the  ship-owner  in fulfilment of the ship-owner’s duty to deliver the goods  to the consignee, for the simple reason that the Board does not get the goods on the presentation of the bill of lading. There is no doubt that the object of the impugned charges is what is urged for the appellant.  The charges are for labour rendered idle on account of some default on the part of  the ship-owner  or  his  agent and not on  account  of  anything -which  is  within  the control of  the  workmen.   We  have already  refer-red to the features of the piece-rate  scheme showing the necessity for the payment of the idle  allowance of the workers for labour rendered idle.  Similar considera- tions  justify the payment of that allowance when labour  is sent away or not required after the shore work has commenced at the start of the shift. When  more  than  one hook is worked at the  same  time,  it necessarily  means  quicker unloading of the  goods.   This, again,  is  in  the interest of  the  shipowner.   The  ship completes  its  task  of landing’ the  goods  earlier.   The provision for the workers working more than one hook at  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 19  

same  time is therefore again in the interest of  the  ship- owner. Another  reason  for charging the  steamer-agent  for  these payments is that the goods unloaded by the  939 ship need not be for one consignee alone.  The goods are not unloaded  consignee-wise.   It  is  not  possible,  and   if possible is bound to be very inconvenient, for the Board  to work  out the proportionate charges for each  consignee,  in connection with the payment for idle allowance and the  hook allowance  when cargo is discharged with more than one  hook working   simultaneouly  at  the  vessel’s  hatch.   It   is reasonable therefore to make the ship-owner liable for their payment. There  is no doubt that the ship-owner is the bailee of  the shipper,  the consignor, and that he is responsible for  the delivery  of  the  goods to the consignee  or  a  transferee according to the terms of the bill of lading.  This duty the ship-owner  discharges only when he has delivered the  goods to  the  consignee or such person who be  entitled  to  take delivery in accordance with the endorsements on the bill  of lading.   Delivery  to  the Board is  not  delivery  to  the consignee or such person, both because the delivery is to be on  the presentation of the bill of lading and  because  the Act  contains no provision which would constitute the  Board an agent of the consignee for the purpose of taking delivery of the goods. We,  do  not agree with the contention for  the  respondents that the expression ’receiving’ in cl. (b) of sub-s. (1)  of s. 39 of the Act means receiving the goods on behalf of  the consignee.   The reception of the goods can be on behalf  of the ship-owner also.  The steamer-agent cannot ask the Board to receive the goods on behalf of the consignee. Sub-section  (3) of s. 39 of the Act empowers the  Board  to take  charge  of  the goods for the  purpose  of  performing certain services which do not include the taking delivery of the  goods  from  the ship-owner.  It is true  that  on  the Board’s  taking  charge of the goods and  giving  a  receipt about  it to the ship-owner, the master or the owner of  the vessel is absolved from liability for any loss or damage which may occur to      the goods which had been landed, but this provision      by itself does not suffice to convert the receiving of      the  goods by the Board after they had been  landed  by the ship-owner to the Board’s taking delivery of      those  goods  on behalf of the  consignee.   The  Board simply  takes charge of the goods on being required  by  the steamer-agent to take charge of it. Section 40 speaks of the responsibility of the Board for the loss, destruction or deterioration of the goods of which  it has  taken charge as a bailee under ss. 151, 152 and 161  of the  Indian Contract Act.  Section 148 of the  Contract  Act states  that  a  bailment is the delivery of  goods  by  one person  to  another 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 delivering the goods  is called the bailor and the person to whom they are  delivered is  called the bailee.  It is clear therefore that when  the Board  takes  charge of the goods from the  ship-owner,  the ship-owner  is the bailor and the Board is the  bailee,  and the Board’s responsibility for the goods thereafter is  that of  a  bailee.  The Board does not get the  goods  from  the consignee.   It cannot be the bailee of the  consignee.   It can  be  the agent of the consignee only  if  so  appointed,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 19  

which  is not alleged to be the case, and even if the  Board be an agent, then its liability would be as an agent and not as  a bailee.  The provisions of ss. 39 and  40,  therefore, further  support the contention that the Board takes  charge of  the goods on behalf of the ship-owner and not on  behalf of  the consignee, and whatever services it performs at  the time  of  the  landing  of the goods  or  on  their  removal thereafter, are services rendered to the ship. We may now deal with the points urged by Mr. Desai, for  the respondents.  The first and the  941 main  question urged is about the legal obligation.  of  the master in respect of the unloading of the cargo. Mr.  Desai  has  drawn attention to the  provisions  of  the Indian  Carriage  of  Goods by Sea Act, 1925  (Act  XXVI  of 1925),  and especially to the definition of  the  expression ’carriage  of  goods’ in Article I of the Schedule  to  that Act.   ’Carriage  of  goods’ according to cl.  (e)  of  this Article, covers the period from the time when the goods  are loaded  on  to the time when they are  discharged  from  the ship.   Of  course, once the goods are landed, they  are  no more  "carried’ by the ship and the expression "carriage  of goods’,  could only cover the period up to the discharge  of the  goods  from  the ship.  But that does not  in  any  way affect  the  consideration  of  the  questions  before   us. Further,  Rule 6 of Article III provided that unless  notice of  loss  or damage and the general nature of such  loss  or damage  be given in writing to the carrier or his  agent  at the  port of discharge before or at the time of the  removal of  the  goods into the custody of the  person  entitled  to delivery thereof under the contract of carriage, or, if  the loss  or  damage be not apparent, within  three  days,  such removal  shall, prima facie, be evidence of the delivery  by the carrier of the goods as described in the bill of lading. This implies that till the time of the removal of the  goods into  the  custody of the person entitled  to  the  delivery thereof under the contract of carriage, the carrier will not be deemed to have delivered the goods in accordance with the terms  in  the bill of lading.  The  responsibility  of  the carrier for the goods does not cease merely by the technical discharge  of  the goods from the ship but continues  up  to their  delivery in accordance with the terms of the bill  of lading. It  is  urged by Mr. Desai that under the general  law,  the responsibility of the master of the ship ceases when he  has discharged  the goods from the ship and has placed  them  in such position that the consignee 942 can  take  charge  of  them  and  that  whatever  -is  done, thereafter, in connection with the goods, is done on  behalf of the consignee and for his benefit. The charges for labour rendered idle and for labour  working more  hooks  simultaneously, are not  charges  for  services rendered subsequent to the landing of the goods.  These  are charges which are incurred at the last stage of the  process of  landing of the goods and therefore prior to  the  actual landing of the goods.  They are, even under the general law, for  services  rendered  to the master  of  the  ship  whose liability for loss or of damage to the goods continues up to the  placing of the goods on the quay and their  receipt  by the Board. The case Great Eastern Shipping Co. Ltd. v. Govindasamy (1), is  not  of much help.  It was not disputed, in  that  case, that when, the master of the ship lands the goods and leaves them  in charge of the Port Trust the legal effect is as  if

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 19  

the  master representing the shipping company has  delivered the  goods to the consignee for whom the Port Trust must  be deemed to be agents and that, having regard to the  practice obtaining  in  the Madras Port, it was  not  necessary  that there should be a formal requisition by the consignee to the Port  Trust to take charge of the goods.  This case has  not been  taken rightly by the Court below to be of  any  direct authority on the question arising for decision in this case. It  is  stated at p. 684, in Carver’s Carriage of  Goods  by Sea’,  10th Edition, that generally speaking, the  consignee of  the goods or the charterer is bound to remove the  goods from  the  ship’s side, and to provide for  that  purpose  a proper  number  of men and suitable appliances of  the  kind ordinarily used at the port, having regard to the manner  in which the ship is to be discharged.  It is stated at p. 687 "Where the customary manner of discharge at the port requires that the cargo be put out by (1)I.L.R. [1957] Mad. 840.  943 those  working  on the ship, say into lighters or  on  to  a quay, it has been held that the word " alongside’ may  mean, not  actually at the ship’s side but in a lighter  alongside her." We  may now consider some cases on which reliance is  placed for the respondents. In Peterson v. Freebody & Co. (1), the facts were  different from  those of the present case.  The Court was  considering the  liability  of the consignee for demurrage paid  by  the ship-owner,  on account of the delay in the  discharging  of the  cargo.   The suit was between the ship  owner  and  the consignee.  The charter-party provided: "The discharging to take place in eight days... The cargo to be  brought  to  and  taken  from  alongside  the  ship   at merchants’ risk and expense.  The ship to deliver the  cargo with  such dispatch that unnecessary delay can  be  avoided. The  ship to discharge over side in the river or  dock  into lighters or otherwise, if required by consignees." Lord Esher, M. R., stated at p. 297 "’Wherever the delivery is to be, the shipowner, on the  one hand,  must give delivery.  If he merely puts the  goods  on the  rail of his ship, he does not give delivery :  that  is not  enough.   If, on the other hand, the  consignee  merely stands on the other ship, or on the barge or lighter, or  on the quay, and does nothing, he does not take delivery.   The shipowner   has   performed  the  principal  part   of   his -obligation  when he has put the goods over the rail of  his ship; but I think he must do something more-he must put  the goods in such a position that the consignee (1)  [1895] 2 Q.B.D. 294, 296, 297. 944 can take delivery of them.  He must put them so far over the side  as that the consignee can begin to act upon them;  but the  moment  the  goods  are put within  the  reach  of  the consignee  he must take his part in the operation.   At  one moment  of  time the ship-owner and the consignee  are  both acting-the  one in giving and the other in taking  delivery; at another moment the joint act is finished." 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 of lading and the custom of the Port.  The case  is  no  authority  for the  proposition  that  in  all circumstances  the master of the vessel is  not  responsible for  the performance of the acts subsequent to  his  placing

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 19  

the  goods  in such a position that the  consignee  can  get them,  as  contended  for  the  respondents.   The  delivery contemplated in these observations, is not, in our  opinion, equivalent  to  the  landing of the goods  at  the  quay  as contemplated by the various provisions of the Act. We  have already discussed that the landing of the goods  by the ship-owner on the quay and placing them in charge of the Board  does not amount to delivering them to the  consignee, even though it absolves the master of the ship from  further responsibility for the loss or damage to the goods. The  case reported as British Ship-owners’ Co. (Limited)  v. Grimond  (1), is again, not of help, as it simply held  that delivery to the porters., whom the consignee was obliged  by the Harbour Regulation to employ and pay for the purpose  of receiving,  was delivery to the consignee.  In  the  present case  there  is  nothing to show  that  the  consignees  are obliged by (1)  (1876) III Ses.  Oases IV Series 968.  945 the Board to engage the shore-labour.  Further, in the above case, Lord justice Clerk said at p. 972 "The question of delivery is as much one of common-sense  as of  technical  rules.  The general rule is  that  goods  are delivered when they are so completely in the custody of  the consignee that he may do as he pleases with them." When  the goods are placed in the charge of the  Board,  the consignee  is  not at liberty to do anything he  likes  with them  and therefore, in the view expressed by  Lord  Justice Clerk,  the making over of the goods to the Board  does  not amount to delivery to the consignee. In Sze Hai Tong Bank Ltd. v. Rambler Cycle Co.  Ltd., (1) it was said : "It  is perfectly clear. law that a ship-owner who  delivers without  production  of the bill of lading does  so  at  his peril.   The  Contract is to deliver, on production  of  the bill  of  lading, to the person entitled under the  bill  of lading..... The’ shipping company did not deliver the  goods to any such person.  They are therefore liable for breach of contract  unless  there is some term in the bill  of  lading protecting  them.   And they delivered  the  goods,  without production  of the bill of lading, to a person who  was  not entitled  to  receive them.  They are  therefore  liable  in conversion unless likewise so protected." Clause 2 of the Bill of lading provided : "During  the period before the goods are loaded on or  after they are discharged from the ship on which they are  carried by  sea, the following terms and conditions shall  apply  to the exclu- (1)  [l9591 A. C. 576, 586. 946 sion of any other provisions in this bill of lading that may be  inconsistent therewith, viz., (a) so long as  the  goods remain  in  the  actual  custody  of  the  "carrier  or  his servants’.. - (b) whilst the goods are being transported  to or   from  the  ship........  (c)  in  another   cases   the responsibility  of  the carrier, whether as  carrier  or  as custodian  or  bailee  of  the goods,  shall  be  deemed  to commence  only when the goods are loaded on the ship and  to cease absolutely after they are discharged therefrom." It  was held that this clause did not protect the  shipowner in spite of the width of these expressions and its operation must  be  limited and modified to the  extent  necessary  to enable the effect to be given to the main object and  intent of the contract and at least so as not to permit the carrier deliberately  to  disregard his obligation  as  to  delivery

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 19  

against the production of the bill of lading. In  the  present  case, it was  further  contended  that  as between  the master of the ship and the consignee,  the  Act made  it obligatory that the consignee gets his  goods  from the  Board and not direct from the master of the  ship,  and that therefore the Board acts as the agent of the consignee. We have not been referred to any provision in the Act  which supports  this  contention.   Assuming,  however,  that  the consignee cannot take delivery of the goods at the quay from the ship direct, it does not follow that the Board  receives the  goods  as  the  agent  of  the  consignee.   The   only reasonable  conclusion in the circumstances can be that  the place  of delivery is shifted from the side of the  ship  to the  warehouses  where the Board stores the goods  till  the consignee  appears  to  take delivery on the  basis  of  the delivery  order  by the steamer-agent which  is  usually  an endorsement  on  the bill of lading, and the  quay  be  con- sidered a part of the ship.  In Hamburg, it is so  947 considered, as would appear from the following note at p. 37 of  the  German Law of Carriage of Goods by  Sea,  by  Sieve King: "’Where  goods are shipped from or discharged on to a  quay, the  question arises whose agent the owner of the  quay  is. This of course depends upon the wording of the rules and bye laws  regulating the passing of goods over the quay.   As  a rule  (in  Hamburg for instance) the qua  is  considered  as forming part of the ship the owner of the quay is the agent of the master.   The fact  of  the shipper having handed the goods  over  to  the owner of the quay is tantamount to a receipt for the same on the  part of the master; the goods discharged upon the  quay are  considered  as  still being in the  possession  of  the master  until  the  consignee has  received  them  from  the quay." . 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 being 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. It  is  further  contended that s. 42  draws  a  distinction between  services  performed in respect of  the  vessel  and those  performed  in respect of the goods; that  the  former services  are  rendered to the master of the  ship  and  the latter  to  the consignee, the owner of the goods  and  that service rendered by receiving the goods from the ship at the quay  is  therefore  service to the consignee.   We  do  not construe  the expression " any other service in  respect  of vessel, passengers or goods’ in cl. (e) of s. 42 of the  Act in this manner. 948 If it is interpreted as suggested, the Board must charge the passenger to whom services are rendered.  This is not  done. Any  charges  so incurred must   be realised  from  steamer- agents who may, in their turn, charge the passengers for the same. We  do  not agree with the contention that the  charges  for labour  rendered idle are in the nature of  compensation  or damages  in respect of any loss, inconvenience  or  expenses caused  to the Board or its shore-labour in  consequence  of any default attributed to the master of the ship.  There  is no question of damages.  The labour has been engaged.  It is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 19  

paid for the time during which it remains idle, for no fault of its own.  Charges for that are levied from the person who required  that labour and is responsible for  its  remaining idle.  Of course, if the idle time was due to the default of the  labour, no such charges are required to be paid by  the ship-owner. We  are therefore of opinion that the impugned charges  were rightly levied by scale ’E’ on the master, owner or agent of the vessels and that the Board could insist on the  steamer- agent   requisitioning  the  shore-labour  to   express   an undertaking  in the form for requisitioning labour  that  he will pay the charges laid down in the Board’s scale of rates from time to time in respect of labour rendered idle or  not properly  utilised and also for working more than  one  hook simultaneously at a vessel’s hatch. We  therefore  allow  the appeals with costs  here  and  the Courts  below,  set aside the order of the Court  below  and dismiss the writ petitions.  There will be one hearing fee. Appeals allowed.  949