Supreme Court Rules on Anchorage and Port Dues in Mumbai Port Dispute
The Supreme Court of India recently ruled in the case of M/s NKD Maritime Limited vs. The Board of Trustees of the Port of Mumbai & Others, addressing a dispute over anchorage and port dues at the Mumbai Port. The case revolved around charges imposed on the vessel M.V. Karnika after its auction sale. The Court upheld the Mumbai Port Trust’s right to levy anchorage charges from the date of sale, dismissing the appeal filed by NKD Maritime Limited.
Background of the Case
The vessel M.V. Karnika, owned by Jalesh Cruises Mauritius Limited, was put up for auction following financial difficulties faced by its owner. The auction was conducted as part of the Admiralty Suit (L) No. 3579 of 2020, initiated by Glander International Bunkering DMCC to recover dues related to the supply of bunkers to the vessel.
Following a public auction on October 28, 2020, NKD Maritime Limited emerged as the highest bidder, acquiring the vessel for Rs. 11.65 million. A Bill of Sale was drawn in favor of NKD Maritime Limited on November 9, 2020, confirming that the vessel was sold free from all encumbrances.
However, when NKD attempted to remove the vessel from the Mumbai Port, the Mumbai Port Trust (MPT) raised bills for anchorage charges and the Customs Authorities imposed light dues charges for the period before and after the sale.
Legal Proceedings
Arguments by NKD Maritime Limited
- NKD contended that the vessel was sold “free from all encumbrances” as per the auction terms and conditions.
- It argued that pre-sale liabilities, including anchorage and port dues, should be borne by the vessel’s previous owner or deducted from the auction proceeds held by the court.
- NKD sought a direction from the High Court to revise the dues and charge them only from the date of physical possession, i.e., November 11, 2020.
- The company cited Section 8 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, which states that vessels sold under admiralty jurisdiction are transferred free from encumbrances.
Arguments by Mumbai Port Trust
- The Port Trust contended that anchorage charges were calculated based on the duration of the vessel’s stay at the port and that it was immaterial whether ownership had changed.
- It pointed out that the charges were imposed in accordance with Sections 48, 49, and 50 of the Major Port Trusts Act, 1963, which allowed port authorities to levy dues on vessels.
- The Port Trust further argued that auction terms only excluded liabilities linked to previous owners and did not exempt the new buyer from port-related charges.
- It maintained that the vessel had been docked at Mumbai Port since March 23, 2020, and anchorage dues continued to accrue, reaching approximately Rs. 15,00,000 per day.
Supreme Court’s Observations
The Supreme Court, led by Justice Indira Banerjee and Justice J.K. Maheshwari, examined the case and ruled in favor of the Mumbai Port Trust, making the following key observations:
1. Auction Terms Did Not Waive Post-Sale Liabilities
The Court emphasized that while the vessel was sold free from “encumbrances”, the auction terms clearly stated that the purchaser would be responsible for all costs, charges, fees, and expenses incurred after the sale. The Bill of Sale only ensured that the vessel was free from past mortgages or liens.
2. Anchorage and Port Dues Are Not Encumbrances
The Court rejected NKD’s claim that anchorage charges constituted an “encumbrance”. It clarified that port-related charges are statutory dues imposed on vessels based on their stay in the port and do not attach to the ownership of the vessel.
3. Liability Begins From the Date of Sale
The Court held that the liability for anchorage charges transferred to NKD from the date of the sale, not from the date of physical possession. The Port Trust was within its rights to charge fees under the applicable tariffs.
4. Interpretation of Major Port Trusts Act, 1963
The Court observed that the Major Port Trusts Act, 1963, granted port authorities the power to impose charges irrespective of ownership changes. Section 50-B of the Act allowed the Port Trust to levy dues on vessels that remained docked beyond a stipulated period.
5. Courts Cannot Override Statutory Tariffs
The Court ruled that judicial intervention in tariff-related matters should be minimal, as port authorities have statutory power to fix charges under government regulations. It reaffirmed the principle that tariffs set by regulatory authorities must be honored unless proven arbitrary.
Final Verdict
The Supreme Court dismissed the appeal and ruled as follows:
- NKD Maritime Limited must pay anchorage charges from the date of the sale until the vessel’s removal.
- The Mumbai Port Trust’s demand for charges was upheld as lawful under the Major Port Trusts Act, 1963.
- The Court clarified that auction terms did not exempt the purchaser from post-sale port charges.
- The ruling of the Bombay High Court was affirmed.
Impact of the Judgment
This judgment has significant implications for maritime law and port operations:
- It establishes that auctioned vessels remain subject to statutory port dues, even if sold free from encumbrances.
- Buyers of auctioned vessels must factor in post-sale costs, including anchorage and port fees.
- Port authorities have the legal backing to recover charges regardless of ownership transfers.
- The ruling reinforces that judicial intervention in tariff disputes must align with statutory regulations.
Conclusion
The Supreme Court’s ruling in M/s NKD Maritime Limited vs. The Board of Trustees of the Port of Mumbai provides clarity on the liabilities of vessel purchasers in admiralty auctions. By upholding the Port Trust’s right to collect anchorage charges post-sale, the judgment ensures that statutory dues are honored, reinforcing the financial stability of major ports in India.
Petitioner Name: M/s NKD Maritime Limited.Respondent Name: The Board of Trustees of The Port of Mumbai & Others.Judgment By: Justice Indira Banerjee, Justice J.K. Maheshwari.Place Of Incident: Mumbai Port.Judgment Date: 22-09-2022.
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