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Ednasa Shipping Co. Ltd., Hong Kong Vs. Board of Trustees of the Port of Visakhapatnam - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Appeal No. 585 of 1977
Judge
Reported inAIR1978AP306
ActsMajor Port Trusts Act, 1963 - Sections 116, 123 and 131
AppellantEdnasa Shipping Co. Ltd., Hong Kong
RespondentBoard of Trustees of the Port of Visakhapatnam
Appellant AdvocateS. Venkateswaran, Adv. for ;N.V. Suryanarayana Murthy, ;K.L. Krishnan and ;V. Aravamudan, Advs.
Respondent AdvocateK. Srinivasa Murthy, ;S.R. James and ;K. Nagaraja Rao, Advs.
Excerpt:
civil - recovery of damages - sections 116, 123 and 131 of major port trusts act, 1963 - under section 116 of said act port trust board empowered to recover damages caused to port property due to negligence of any vessel - board empowered to call upon vessel masters to furnish security for damages in view of regulation 42 - whether regulation 42 confers board with power to impose certain conditions in security bond - in view of said regulation a security can be cash security - board not precluded from imposing condition of pre determine damages as it is not possible to recover damages once foreign vessels leave territorial waters of country - held, conditions imposed in bank guarantee are reasonable and within powers of board trust. - .....from anchorage to the berth, the two tug lines broke and the ship collided with the jetty. the port trust authorities estimated the damage caused to the jetty at rs. 16,00,000/-. the port trust authorities called upon the master of the ship do deposit that amount failing which they would not permit the ship to sail. while the petitioner contends that the collision took place on account of the negligence of the port trust pilot, who was then in overall command of the ship, the port trust authorities contend that it took place on account of the negligence of the master of the ship. in this appeal we are not concerned with that question. some correspondence took place between the parties as to the nature of the bank guarantee to be furnished by the petitioner, but they could not arrive.....
Judgment:

Ganghadhara Rao, J.

1. This Writ Appeal is filed by the petitioner in writ Petition No. 3829/76, against the Judgement of Jeeevan Reddy , J. dismissing that petition. The petitioner is Ednasa Shipping Co., Limited, Hong Kong, represented by their Agents M/s. J. M. Baxi & Co., Bombay.

2. The motor vessel 'Lalinda' belonging to the petitioner arrived at the Vishakaptnam Port on 26th October, 1976. While it was being brought from anchorage to the berth, the two tug lines broke and the ship collided with the jetty. The Port Trust Authorities estimated the damage caused to the jetty at Rs. 16,00,000/-. The Port Trust Authorities called upon the Master of the Ship do deposit that amount failing which they would not permit the ship to sail. While the petitioner contends that the collision took place on account of the negligence of the Port Trust Pilot, who was then in overall command of the ship, the Port Trust Authorities contend that it took place on account of the negligence of the Master of the ship. In this appeal we are not concerned with that question. Some correspondence took place between the parties as to the nature of the Bank Guarantee to be furnished by the petitioner, but they could not arrive at any agreement. It is further stated that on 17th November, 1976, while he said ship was being shifted from Dolphin Jetty to J-3 berth, It collided again with the water barage belonging to the Port Trust, and the Port Trust Authorities demanded a further amount of Rs. 15,000/- by way of damages on that account. The petitioner denied its liability even in respect of this collision. Since the ship was not permitted to sail without furnishing the Bank Guarantee as demanded by the Port Trust Authorities, the petitioner has filed writ petition No. 3829/1976 in this court. It was dismissed. Hence this Appeal.

3. It is submitted by the learned counsel for the Appellant that the Port Trust Authority has no power to impose certain conditions in the Bank Guarantee. Those conditions are: that if a demand is made by the Port Trust Board for honouring the Bank Guarantee, the Bank would have no right to decline to cash the same for any reason whatsoever. The fact that there is a dispute between the Port Trust Board and the petitioner should be no ground for the Bank to decline to honour the Bank Guarantee. If the Bank decline to honour the Bank Guarantee that shall be sufficient reason for the Port Trust Board to enforce the Bank Guarantee unconditionally without any reference to the petitioner. The Bank should further agree that a mere demand by the Port Trust Board is sufficient for the Bank to pay the amount covered by the petitioner cannot be valid ground for the Bank to decline payment to the Port Trust Board. It is contended by the appellant that the Bank guarantee must be a security to secure the amount ultimately payable by the petitioner on its determination, but it cannot be in the nature of a call guarantee. It is urged that the Port Trust Authority has no power to pre-estimate the damage and call upon the petitioner to furnish a Bank Guarantee for that amount. It is contended that the power of the Port Trust to recover the damage is by filing a petition before a Magistrate under S. 116 of the Major Port Trusts Act, 1963 or to file a suit under S. 131 of that Act. It is also submitted that Regulation 42 which empowers the Port Trust Board to take security does not give them the power to impose the conditions referred to supra. in the Bank Guarantee.

4. On the other hand, it is submitted by the learned counsel for the Port Trust Board that the Port Trust has jurisdiction to impose such conditions particularly, in view of the fact that it is a Foreign Ship and if it were to sail away, the Port Trust would have no remedy to recover the damages. It is further submitted that if the damage caused to the Port is not immediately repaired, it will cause dislocation to the traffic, and the Port Trust cannot afford to wait until the quantum of damages is determined by a Court. Lastly it is stated that if ultimately a competent Court or an arbitrator or by mutual negotiations the actual damage is ascertained, the balance of amount, if any, will be refunded to the appellant by the Port Trust Board.

5. Before we discuss this question we have the state that, as a fact, it is proforma of guarantee prescribed by the Central Government that is being followed in all such cases.

6. Now we will refer to the relevant provisions of the Act and the Regulations. Under S. 116 of the Major Port Trusts Act, if through the negligence of any person having the guidance or command of any vessel. any damage is caused to a jetty, the amount of such damage shall on the application of the Board of recoverable, together with the cost of such recovery by distress and sale under a Magistrate's warrant, of a sufficient portion of the boats, masts, spares, ropes, cables, anchors or stores belonging to such vessel. But, no Magistrate shall issue such a warrant until the Master of the vessel has been duly summoned to appear before him and, if he appears, until he has been heard. No such warrant shall also be issued if the vessel was at the time under the orders of duly authorised employee of the Board and the damage caused was attributable to the order, act or improper omission of such employee. A prima facie reading of that sections shows that an application has to be made to a Magistrate only to recover the amount of damages, but not to determine the amount of damages. It does not show that the Magistrate has to determine the quantum of damages. Section 131 of the same Act provides, that without prejudice to any other action that may be taken under that Act, a Board may recover by suit any rates, damages, expenses, costs or in the case of sale the balance thereof, when the proceeds of sale are insufficient, or any penalties payable to, or recoverable by the Board under this Act or under any regulations made in pursuance thereof. Thus, the section gives a remedy of a suit also to the Board to recover damages. Basing on these two sections, it is argued by the learned counsel for the appellant that the Port Trust can proceed only under these two sections to recover the damages, but it cannot itself determine it and call upon the appellant to furnish the Bank Guarantee with the terms mentioned therein. Here we may note that the Port Trust has not taken any action either under S. 116 or S. 131. Now we will refer to Regulation 42. The Regulations are made under S. 123 of the Major Port Trusts Act. Regulation 42 says, that the Masters and Owners of Vessels shall be held liable for any damage whatsoever that shall have been caused by their vessels or servants to any of the works or property right to detain their vessels in Port until security has been given for the amount of damage caused. This Regulation shows that if damage is caused to any of the works or property of the Board by the Vessels or servants, the Master and Owners of the vessels are liable for that damage. The Board has the right to detain their vessels in the Port until security is given for the amount of damage caused. It implies that the Board can estimate damage and call upon the Master or the Owners of the Vessel to give security for that amount. If he does not give such security, they can detain the vessel in the Port. It cannot be said that it can be invoked only after action is taken either under S. 116 or S. 131 of the Major Port Trusts Act.

7. The next question for our consideration is whether the power given to the Port Trust Board to take security under that Regulation gives them the power to impose the conditions mentioned in the security bond. Regulation 42 simply speaks if security. It means, it can be even a cash security for the amount of damage caused. Therefore, we are of the opinion that the Port Trust Board is not precluded from calling upon the appellant to furnish the Bank Guarantee which it can encash. Equally, it cannot be said that the conditions imposed in the Bank Guarantee are not justifies in the circumstances of the case. The vessel belongs to a Foreign National. It is not possible to recover the sum, once the vessel leaves the territorial waters of the country. The Port Trust Board cannot be compelled to go to a Court of law for determining the damage. The Board cannot wait until the damage is determined by a Court of law. They have to immediately repair the jetty. Otherwise, the operational efficiency of the Port will go down and there will be complete dislocation and other vessels which have to come in, cannot be provided with berths as per the schedule. If the appellant is aggrieved by the decision of the Board regarding the assessment of damage, he is not precluded from moving the Court of law. The learned counsel for the appellant has not brought to our notice any provision of the Act which precludes the appellant from filling a suit. On the other hand S. 120 of the Major Port Trusts Acts makes it clear that even the appellant can file a suit. In these circumstances, we are of the opinion that the conditions imposed by the Port Trust Board in the Bank Guarantee are reasonable and, they are entitled to impose those conditions under Regulation 42. It is not shown to us that they are contrary to any provisions of the Major Port Trusts Act. In this connection we may also refer to S. 65 of the Major Port Trusts Act, which says that Port-Clearance shall not be given until the amount payable under the Regulation had been paid by the Owner or the Master of a vessel. If the appellant is not prepared to give the Bank Guarantee as stipulated by the Port Trust Board, his vessel will not be permitted to sail out of the Port, and nobody compels him to give the Bank Guarantee.

8. The learned counsel for the appellant has referred to the security bonds taken in other Ports. That will have, no relevance to decide the valid Bank Guarantee which the appellant has to furnish and which is liable to be encashed will be subject to the determination of damages, if any, by a competent Court or Tribunal or by mutual negotiations between the parties.

9. In these circumstances, we are not persuaded to take a different view of the matter from the one taken by Jeevan Reddy. J. We confirm his judgement and dismiss this writ Appeal with costs, Advocate' fees Rs. 150/-

10. Appeal dismissed.


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