Procedure for sale of goods and application of sale proceeds

Related judgements & precedents

These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.

1. Chairman, Cochin Port Trust vs Seahorse Ship Agencies Pvt. Ltd.

   Supreme Court of India 05 Aug 2020 Binding precedent for all courts in India; Supreme Court judgment establishing a Reportable (2020) 5 SCC 1

   Court's Decision & Legal Precedent

   After the Port Trust takes charge of imported goods and issues a receipt therefor, liability for payment of storage charges and demurrage shifts exclusively from the steamer agent (who may remain liable only for unloading services up to custody point) to the owner of the goods, which may be the consignor, consignee, importer, or their agents. The passing of title in goods to the consignee, the endorsement of the bill of lading by the steamer agent, and whether delivery order is issued are all immaterial to determining demurrage liability post-custody. The steamer agent ceases all liability once goods are taken into Port custody as the statutory bailment relationship established between Port (as bailee) and shipowner (as bailor) is discharged by section 42(7) when receipt is given. Containers, being receptacles for goods and subject to return rather than consumption, are not themselves imported goods subject to demurrage in the same manner; demurrage ultimately charges against the cargo owner. Port Trust must exercise its discretion under sections 61-62 reasonably and within reasonable time (ordinarily four months) as required by Article 14 of the Constitution.

   On this section: Procedure for sale of goods and application of sale proceeds; freight and charges paid first, then duty, then custody charges, balance to owner

   Read the full order on eCourts India

2. Chairman, Board of Trustees, C. P. T vs Arebee Star Maritime Agen. Pvt. L

   Supreme Court of India 05 Aug 2020 Binding Precedent For All Lower Courts In India And Persuasive For International Reportable (2020) 8 SCC 552 Or (2018) 4 SCC 592 For Reference Order

   Court's Decision & Legal Precedent

   The statutory scheme of the Major Port Trusts Act 1963 establishes a clear demarcation of liability for port charges at the critical juncture of Port Trust taking custody of goods and issuing receipt thereof. Prior to this point steamer agents may be liable for rates payable by vessel for services performed to the vessel including charges for landing and removal of goods to storage point. Subsequent to this point and for the entire period goods are stored in Port premises the only parties liable for demurrage and storage charges are the owner of the goods or other persons entitled to the goods whether beneficially entitled or not including importers consignees and consignors or their agents. The steamer agent is absolved of all liability for goods once Port Trust assumes custody as the master or owner of vessel stands relieved of responsibility for loss or damage to goods under section 42(7) of the Act. The passing of title to goods under general law or whether bill of lading is endorsed or delivery order issued are matters wholly irrelevant to determining post-custody liability as Port Trust takes charge from ship-owner becoming bailee to ship-owner as bailor not to consignee. Containers are merely receptacles in which goods are imported and must be distinguished from the goods themselves. Containers do not become part of the mass of goods within India for import duty purposes and must be returned to their owners once destuffing occurs. Accordingly containers themselves are not subject to demurrage or storage charges once destuffed. While sections 61 and 62 of the Act confer discretion on Port Trust to sell goods marked by word 'may' not mandatory word 'shall' the Port Trust as State under Article 12 Constitution is subject to Article 14 equality constraint and must exercise this discretion reasonably including implicit constitutional duty to sell goods within reasonable time ordinarily not exceeding four months from date of landing unless strong reasons exist justifying continued detention which must be capable of judicial review.

   On this section: Sale proceeds application in Customs sales. Similar scheme to MPT Act emphasizing goods owner pays charges.

   Read the full order on eCourts India

3. Chairman, Cochin Port Trust vs A. P. Industries

   Supreme Court of India 05 Aug 2020 Binding (SC) - Landmark Three-Judge Bench Judgment Reportable (2020) 9 SCC 1

   Court's Decision & Legal Precedent

   After the Port Trust takes charge of imported goods and issues a receipt therefor, the steamer agent or vessel owner shall not be liable for demurrage, storage charges, or other dues to the Port Trust. Such liability passes exclusively to the importer, owner, consignee, or their agents. The point of time at which title to goods passes to the consignee is irrelevant in determining this liability. The Port Trust's duty is to recover such charges from persons beneficially entitled to the goods, which may be determined through the legal framework of the Customs Act (importer) or the Indian Bills of Lading Act (consignee). Containers fit for repetitive use are not 'imported goods' but mere receptacles and the Port Trust bears the duty to destuff such containers and return them within reasonable time. The discretion granted to Port Trust under Sections 61-62 of the MPT Act cannot be construed as a mandatory duty but must be exercised reasonably within approximately four months from the date of landing goods, subject to the constraints of Article 14 of the Constitution.

   On this section: Similar procedure to MPT Act Section 63; establishes that sale proceeds are paid to owner of goods after payment of carrier freight charges, not to steamer agent

   Read the full order on eCourts India

4. Board of Trustees Cochin Port Trust vs P and O Nedlloyd (india) Pvt. LTD

   Supreme Court of India 05 Aug 2020 Binding (Supreme Court Three Judge Bench) Reportable (2020) 8 SCC 1

   Court's Decision & Legal Precedent

   Post-Landing Of Goods And After Port Trust Takes Charge And Issues Receipt Therefore, Storage Charges, Demurrage, And Ground Rent Are Payable By The Importer, Owner, Consignee, Or Their Agent, And Not By The Steamer Agent Or Vessel Owner. The Steamer Agent's Liability For Port Dues Extends Only Up To The Point When Port Trust Takes Custody Of The Goods. Title To Goods Is Irrelevant In Determining Liability For Storage Charges. Containers Are Receptacles For Goods, Not Goods Themselves, And Cannot Be Classified As Goods For Purpose Of Demurrage Charging. Port Trust Must Exercise Its Discretion To Sell Uncleared Goods Within A Reasonable Period, Ordinarily Not Exceeding Four Months From Date Of Custody, As Required Under Article 14 Of The Constitution.

   On this section: Proceeds Applied To Freight, Duty, And Custody Charges Due To Person Holding Goods; Parallel Provision To MPT Act Section 63

   Read the full order on eCourts India

5. Chairman, Cochin Port Trust vs Maersk India Pvt. LTD

   Supreme Court of India 05 Aug 2020 Binding (Supreme Court) Reportable (2020) 8 SCC 1

   Court's Decision & Legal Precedent

   The statutory scheme of the Major Port Trusts Act 1963 establishes a two-stage liability framework: (1) STAGE ONE (PRE-LANDING TO RECEIPT): Until the Port Trust takes charge of goods and issues a receipt therefor, services rendered are for the vessel and steamer agents may be liable for landing and ancillary charges under the statutory bailment that comes into existence between vessel (bailor) and Port (bailee). (2) STAGE TWO (POST-RECEIPT/POST-LANDING): Once the Port Trust takes charge and receipt is issued, the vessel and steamer agents are absolved of all liability for the goods per section 42(7) of the Act. From this point forward, demurrage and storage charges are the liability of the importer, owner, consignee or their agents (i.e., persons beneficially entitled to the goods), not the steamer agent or vessel. (3) TITLE IRRELEVANCE: The point of time at which title to goods passes to the consignee is immaterial to determining liability for post-landing storage charges. Liability follows statutory entitlement and beneficial ownership per the MPT Act scheme, not technical title transfer. (4) CONTAINERS: A container which is a receptacle for transport and must be returned is not goods for purposes of storage charge liability. The Port Trust must destuff containers entrusted to it and return empty containers within a feasible period. (5) PORT DISCRETION: The Port Trust's power under sections 61-62 to sell goods is discretionary (may, not shall) but must be exercised reasonably with outer limit ordinarily of four months from landing date per Article 14 constraints, after which Port must justify continued detention.

   On this section: Sale proceeds applied first to expenses, then freight and carrier charges, then customs duty, then custody charges, then other due, then excess to owner; shows priority order

   Read the full order on eCourts India

6. Chairman Cochin Port Trust vs Cma Cgm Agencies India Pvt. LTD

   Supreme Court of India 05 Aug 2020 Binding (Supreme Court of India) - Landmark Decision Reportable (2018) 4 SCC 592 [Reference Order dated 07-03-2018]; (2020) 10 SCC 1 [Main Judgment dated 05-08-2020]

   Court's Decision & Legal Precedent

   After a Port Trust takes charge of imported goods from a vessel and issues a receipt therefor, the Port Trust becomes the bailee of those goods. Demurrage and storage charges accruing thereafter for goods stored in the Port's premises are payable by the importer, owner, consignee or other person beneficially entitled to the goods, and NOT by the steamer agent or ship-owner. However, charges for services rendered at the time of landing of goods or their removal from the vessel to the Port's storage premises (such as unloading charges and labour dues) may be charged against the steamer agent as services rendered to the vessel. The time at which title in goods passes to the consignee is irrelevant in determining such liability. The Port Trust must act reasonably in exercising its discretion to sell goods under Sections 61-62 of the MPT Act and must attempt to sell goods within reasonable time from when it assumes custody, with four months from landing being the outer limit, failing which it must provide written explanation justifiable by the courts. Containers are receptacles for goods, not imported goods themselves, and must be destuffed and returned to the steamer agent or container owner within a short feasible period.

   On this section: When goods sold, proceeds applied first to expenses, then freight and charges to carrier, then duty, then custody charges, then amount due under customs; balance to owner; ship-owner not listed as payee demonstrating importer/owner liability

   Read the full order on eCourts India

7. Chairman, Cochin Port Trust vs Marine Container Service (south) Pvt. LTD

   Supreme Court of India 05 Aug 2020 Binding (Supreme Court Judgment on Questions of Law) Reportable (2020) 8 SCC 1

   Court's Decision & Legal Precedent

   After the Port Trust takes charge of goods and issues a receipt under Section 42(2) of the Major Port Trusts Act, 1963, the steamer agent/shipowner ceases to have any liability for storage, demurrage, or other charges in respect of those goods. The liability for such charges post-landing attaches exclusively to the importer, owner, consignee, or other person beneficially entitled to the goods. The point of time at which title to goods passes is not relevant to this determination. The endorsement of the bill of lading by a steamer agent (which provides delivery mechanism) is distinct from endorsement by the consignor (which transfers title) and does not create liability on the steamer agent for storage charges. Further, as 'State' under Article 12 of the Constitution, a Port Trust must act constitutionally reasonably under Article 14, ordinarily selling uncleared goods within four months from the date of landing, and must destuff containers and return them promptly to enable resolution of the goods/container deadlock, rather than indefinitely detaining containers while charging storage to steamer agents.

   On this section: Provides parallel procedure for customs authorities to sell uncleared goods. Demonstrates that responsibility for uncleared goods is with importer/owner under customs regime.

   Read the full order on eCourts India

8. Chairman, Cochin Port Trust vs Hanjin Shipping India Pvt. LTD

   Supreme Court of India 05 Aug 2020 Binding - Supreme Court Three-Judge Bench Reportable (2018) 4 SCC 592 (for the Division Bench Reference Order)

   Court's Decision & Legal Precedent

   Upon the Major Port Trusts Act, 1963: (1) The point of time at which title to goods passes to the consignee is not relevant to determine the liability of the consignee or steamer agent in respect of charges to be paid to the Port Trust. (2) Once the Port Trust takes charge of goods and issues receipt therefor, the steamer agent may be held liable for Port Trust dues in connection with services rendered qua unloading of goods, but thereafter, the importer, owner, consignee or their agent is liable to pay demurrage charges for storage of goods. (3) The Port Trust, as 'State' under Article 12 of the Constitution, is bound by Article 14 constraints and must ordinarily sell goods within four months from the date of landing, unless reasonably justified otherwise. (4) Containers are receptacles for imported goods, not imported goods themselves; containers must be returned to steamer agents, and carrying goods in containers makes no difference to the principle that only the owner of goods or person entitled to goods is liable to pay demurrage. (5) The Port Trust is under a duty to destuff every container entrusted to it and return destuffed containers to appropriate persons within as short a period as is feasible where the owner/person entitled to goods does not come forward to take delivery. (6) The statutory scheme of the MPT Act allocates liability for storage charges post-custody exclusively to the owner/beneficial owner of goods, whether consignor, consignee, importer, or their agents, and never to the steamer agent post-custody.

   On this section: Procedure for sale of goods and application of proceeds: first to expenses, then freight/charges to carrier, then duty, then custody charges, then amounts due under Customs Act, then balance to owner

   Read the full order on eCourts India

The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.