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Maheshwary Handling Agency Private Limited Vs. Board of Trustees of Kandla Port Trust and Ors. - (Supreme Court) (17 Sep 2019)

Traffic Manager has discretion to prohibit discharge of goods which are likely to obstruct traffic, cause congestion or hinder convenient movement at Port



In present case, the Appellant is a private limited company engaged in the business of clearing, forwarding and transporting of cargo for import and export as a steamer agent. The issue raised by the Appellant relates to validity of Circular dated 31st August, 1998 issued by the Traffic Manager, the second Respondent, made effective from 1st October, 1998.

The impugned Circular stated that, due to congestion and over stacking at the Kandla Port, problems had cropped up with regard to accounting, stacking and delivery of cargoes etc. and non-availability of adequate storage space for export cargoes. To overcome this problem, storage of cargoes would not be allowed for more than two months and auction of such cargoes would be made under the Customs Act, 1962 and the Port Trusts Act. Further, no renewals would be considered for the areas allotted on rental/warehousing terms, if the cargo had remained stored for more than sixty days.

Aggrieved and challenging the Circular dated 31st August, 1998, the Appellant had approached the High Court with the prayer that the first Respondent should refund the amount collected as penalty rent in terms of the impugned circular. The Civil Application was dismissed by the Single Judge and the Appellant also did not succeed before the Division Bench which had dismissed the Letters Patent Appeal vide impugned judgment.

The Notification dated 4th November, 1993 had specified rent/usage charges for open space, covered space, containers, office accommodation, etc., which charges were payable dependent upon the space and the length of time used for storage. Note 1 to the Notification stated that, a person wanting to use the rental space was required to make an application for storage of goods to the Traffic Manager. It was also specified that, any unauthorised occupation of rented space shall make the person liable to pay double the rent as penalty.

The Traffic Manager of the Port is obligated to control and manage the port operations, check obstructions to traffic movement and remove hindrance for efficient and proper use of berths, landing and shipping of goods and storage in the sheds and open area. Loading and unloading of vessels was subject to control of the Traffic Manager who had the discretion to prohibit discharge of goods which are likely to obstruct traffic, cause congestion or hinder convenient movement at the Port.

It is clear from the Notes that, the Notification had empowered and left it to the Traffic Manager to deal with the question of unauthorised occupation, including the time limits or period during which the goods could be authorised to be stored. The Notification had not specified when and in what circumstances use of the storage area would be treated as unauthorised. This was left to the wisdom of the Traffic Manager who was the person in-charge and responsible for efficient and proper functioning of the port operations and mandated to take the need based decisions on the basis of prevalent facts and circumstances. This latitude was necessary as the Schedule of rates fixed vide Notification dated 4th November, 1993 were applicable till a new Notification or amendment was made by following the procedure prescribed vide Section 52 of the Port Trusts Act, which would require approval from the Central Government.

Prescribing different slabs or rates for storage of cargo for different periods was meant to fix rates for the rent payable and not to deny or curtail the power of the Traffic Manager to authorise and permit use of sheds and space for storage of cargo/containers. As per the Notes, the Traffic Manager, on an application by the owners or their agents was to grant permission for authorised storage. Storage without the permission or contrary to the permission was unauthorised. Further, the space allotted was to be vacated on notice from the Traffic Manager. On failure to comply, and vacate the space, the use was treated as unauthorised occupation and the person in default was liable to pay double the rent for unauthorised use.

The Traffic Manager had authority and discretion for allotment of space for storage on rent and to withdraw allotment of space depending on the availability and to ensure that the port operations were not hindered and obstructed due to congestion and shortage of space. The Circular had brought about uniformity, clarity and transparency in the use of storage facilities at the Kandla Port. The Circular though issued on 31st August, 1998 was made effective and applicable from 1st October, 1998. Therefore, the parties were given time to take steps to avoid the usage of the storage facility from being declared as unauthorised.

The impugned Circular specifically recorded that, there was congestion at the Port which had necessitated issuance of the Circular stipulating that storage of goods beyond the period of sixty days would be treated as unauthorised occupation. The said circular ensured uniformity and equal treatment without discretion as upper time limit of sixty days was prescribed for storage of goods failing which penalty was payable. Period of sixty days is sufficient and long and cannot be termed as unreasonable and violating Article 14 of the Constitution. The appeal fails and is dismissed.


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