& Co. Pvt. Ltd. Vs. Board of Trustees  INSC 195 (29 March 1994)
Jagdish Saran (J) Verma, Jagdish Saran (J) Kuldip Singh (J)
1994 SCC Supl. (2) 349 JT 1994 (3) 109 1994 SCALE (2)406
Judgment of the Court was delivered by - VERMA, J.- These appeals by special
leave are against the dismissal of the Writ Petition Nos. 174-of 1983, 124 and
146 of 1984 filed by the appellants in the Bombay High Court, Panaji Bench, Goa. The appellants, in the writ petitions had
challenged the notification dated 25-10-1983 amended by the notification dated
26-4-1984 by which the Board of Trustees of the Mormugao Port had 351 revised
the rates of wharf dues on some export cargo, namely, iron ore and iron ore
pellets handled through the Mechanical Ore Handling Plant (referred hereafter
as 'MOHP') at Berth No. 9. The increase was made from the existing rate of Rs
27.56 per tonne or part thereof to Rs 28.22 and there was also levy of
surcharge subject to rebate of Rs 8.80 per tonne. It was further notified that
50% of the handling charges were payable before receipt of the cargo for
unloading and the balance of 50% was to be paid before shipment of the cargo.
The appellants challenged the levy of the said surcharge as well as the
requirement of payment of 50% of the handling charges before receipt of the
cargo for unloading. The writ petitions have been dismissed by the High Court
hence these appeals by special leave.
was stated by Shri Ashok Desai, learned counsel for the appellant that in these
appeals there was no challenge to the revision of the handling charges from Rs
27.56 per tonne or part thereof to Rs 28.22. The challenge in these appeals has
been confined mainly to the levy of the surcharge by the aforesaid notifications.
The challenge has been made to notes 1 and 2 of the notification.
would be appropriate to quote the aforesaid two notifications which are as
OF GOA, DAMAN AND Diu Industries and Labour Department Mormugao Port Trust
Notification No. 3-GA(8)183 In exercise of the powers conferred under Chapter
IV of the Major Port Trusts Act, 1963 and with the prior sanction of the
Central Government in terms of Section 52 of the said Act, the following
amendments be made to the Schedule of Harbour and Railway Rates published in
the Boletim Official No. 21,Seriesl,dated 31-5-1962 and a amended from time to
of Harbour and Railway Rates Proposed Amendment
------------------------------------------------------------ Existing Rates
Revised Rates -------------------------------------------------------------
Section 'B' Section 'B' Wharf dues on Export CargoWharf dues on Export Cargo
Item Item No. Rs No. Rs 27(a)Iron ore handled 27.56 per27 Iron ore handled
28.22 per through the 1000 kgs. or (a)through MOHP 1000 kgs.
at Berth part thereof. at Berth No. 9 or part No. 9 thereof.
Iron ore pellets 27.56 per27 Iron ore pellets 28.22 per handled through 1000 kgs.
or (b)handled through 1000 kgs. the MOHP at part thereof.
Berth or part Berth No. 9 No.9 there of.
Note: In addition to above (1) handling charges minimum rental surcharge shall
be leviable at Rs 8.80 per tonne subject to rebate for the plot allottees
holding the plot for a minimum period of 1 year on the following pattern.
achieving a level of Rate of turnover rebate allowed (Rs per tonne) 6.25 times
of nominal plot1.00 capacity 6.50 times of nominal plot2.00 capacity 6.75 times
of nominal plot3.00 capacity 7.00 times of nominal plot4.00 capacity 7.25 times
of nominal plot5.20 capacity 7.50 times of nominal plot6.40 capacity 7.75 times
of nominal plot7.60 capacity 8.00 times of nominal plot8.80 capacity Note: 50%
of the handling charges shall be (2) payable before the cargo is received for
50% of the handling charges will become payable before the shipment of the
Port Trust By Order Mormugao, Goa. A.B. Gadgil 25-10-1983 Dy. Secretary
GOVERNMENT OF GOA, DAMAN AND Diu MORMUGAO PORT TRUST Notification No.
3-GA(8)184 In exercise of the powers conferred under Chapter VI of the Major
Port Trusts Act, 1963 and with the prior sanction of the Central Government in
terms of Section 52 of the said Act, the following amendment be made to the
Schedule of Harbour and Railway Rates published in the Boletim Official No. 21,
Series 1, dated 31-5-1962 and as amended from time to time :
----------------------------------------------------------- Existing Rates
Revised Rates -----------------------------------------------------------
Section 'B' Section 'B' Wharf dues on Export Cargo Wharf dues on Export Cargo Note (1): Below Item Nos. 27(a) and
In addition to above handling charges minimum rental surcharge shall be leviable
at Rs 8.80 per tonne subject to rebate for the plot allottees holding the plot
for a minimum period of 1 year on the following pattern.
Mormugao Port Trust Mormugao, Goa.
argument of Shri Desai for challenging Below Item Nos. 27(a) and 27(b) In
addition to above handling charges, surcharge shall be leviable at Rs 8.80 per tonne
subject to rebate for the plot allottees holding the plot for a minimum period
of 1 year on the following pattern.
Order A.B. Gadgil Dy. Secretary levy of surcharge relates to 4.The argument of Shri
Desai fro challenging levy of surcharge relates to note 1. He contends that
unless 8 times the nominal plot capacity is achieved there is no rebate
available and up to attaining a level of turnover of six times, full charges
are payable at the rate of Rs 28.22 per tonne plus Rs 8.80 per tonne. Shri
Desai contended that the surcharge is in the nature of a penalty for non-user
or non- utilisation or under-utilisation of Berth No. 9 and the primary purpose
is not to render specific service to a specified class but to avoid diversion
of iron ore traffic from Berth No. 9 to transshippers/reloader vessels. He
submitted that in view of the inherent limitation of Berth No. 9 to accommodate
vessels of a particular description and the requirement of taking the vessels to
transshippers for loading to full capacity this additional surcharge is
unwarranted and unjustified under Section 48 of the Major Port Trusts Act, 1963
(hereinafter referred to as "the Act"). He also contended that the
demand of payment of 50% as handling charges before the cargo is received for
unloading is contrary to the provision of Section 58 of the Act. The challenge
on behalf of the appellant to notes 1 and 2 of the notification is in substance
on the ground of arbitrariness and unreasonableness in addition to the
contention of surcharge being in the nature of penalty.
High Court has taken the view that the levy of surcharge is as a means of
inducement, incentive and compulsion to use Berth No. 9 which is permissible
according to the decision in Trustees of the Port of' Madras v. Aminchand
Pyaretal1. The High Court has also held that the notification read as a whole
indicates that there is nothing unreasonable in notes 1 and 2. The challenge to
the surcharge has been rejected by the High Court after full discussion,
stating as under:
the indisputable fact is that the MOHP is being underutilized, either because
of bunching of vessels in the Port, or because successively ships of a size
bigger than what Berth No. 9 can accommodate are calling on the Mormugao Port for shipment of iron ore, and this underutilization
adversely affects the interest of the port. In the circumstances, the scheme
(1976) 1 SCR 721 354 of rebates evolved by the first respondents appears to
constitute a reasonable device to remedy the said situation. It acts both as an
inducement and compulsion for the use of the MOHP by all the iron ore
exporters. Hence, in our view, it is not correct to say that the challenged
levy of the surcharge with the graded rebates is arbitrary and violates Article
14 of the Constitution." The High Court also rejected the challenge to the
requirement in note 2 of payment of 50% of handling charges before the cargo is
received for unloading and the balance of 50% before the actual loading of the
sea-going ships holding that it was within the ambit of Section 58 of the Act.
same two points arise for decision in this appeal.
challenge to note 2 based on Section 58 of the Act may be disposed of first.
Section 58 reads as under:
in respect of goods to be landed shall be payable immediately on the landing of
the goods and rates in respect of goods to be removed from the premises of a
Board, or to be shipped for export, or to be transshipped, shall be payable
before the goods are so removed or shipped or transshipped." The High
Court has described the working of the MOHP on the basis of the undisputed
averments in the pleadings and summarised the position thus:
correctness of these averments is not challenged by the respondents and we can,
therefore, safely assume that the handling operations on export iron ore are a
continuous process which begins with the unloading of ore, brought in the
exporters' barges, into the plot by the MOHP's barge-unloaders and stackers,
continues with the reclaiming of the said ore by means of reclaimers and ends
with the loading of the sea-going ships by ship- loaders. It becomes thus clear
that the unloading of the ore brought by the exporters' barges is the first
step in the whole process of this shipping for export." The conclusion
reached by the High Court on that basis is as under:
the premises, it would not be correct to say that note 2 contravenes Section 58
of the Act inasmuch as it stipulates that 50% of the handling charges shall be
payable before the cargo is received for unloading.
58 postulates that the rates in respect of goods to be exported shall be
payable before such goods are shipped and since the shipping operation through
the MOHP at Berth No. 9 begins with the unloading of the ore from the barges,
it cannot be gainsaid that the requirement of payment of 50% of handling
charges before the cargo is received for unloading and of the balance 50%
before the actual loading of the sea-going ships is well-within the ambit of
Section 58 of the Act. Therefore, here also, we find no merit in the
petitioners' contention." On behalf of the appellant no infirmity in the
above view taken by the High Court on this point has been shown. This challenge
of the appellant was therefore rightly rejected by the High Court.
would now deal with the challenge to levy of the surcharge. Section 48 of the
Act reads as under:
(1) Every Board shall from time to time frame a scale of rates at which, and a
statement of the conditions under which, any of the services 355 specified
hereunder shall be performed by itself or any person authorised under Section
42 at or in relation to the port or port approaches - (a) transshipping of
passengers or goods between vessels in the port or port approaches;
landing and shipping of passengers or goods from or to such vessels to or from
any wharf, quay, jetty, pier, dock, berth, mooring, stage or erection, land or
building in the possession or occupation of the Board or at any place within
the limits of the port or port approaches;
or porterage of goods on any such place;
storage or demurrage of goods on any such place;
other service in respect of vessels, passengers or goods, excepting the
services in respect of vessels for which fees are chargeable under the Indian
Different scales and conditions may be framed for different classes of goods
and vessels." The general power of the Board to make regulations is
contained in Section 123 of the Act, Mormugao Port (Shipment of Ore and Pellets from
Mechanical Ore Handling Plant at Berth No. 9 and related matters) Regulations,
1979 are material for the present purpose. The object of these regulations is
to define the procedure to be observed in respect of utilisation of the
services of the MOHP at Berth No. 9 of Mormugao Port Trust including the use of
its storage yard and the conditions upon which such services shall be made
available with a view to achieve maximum possible efficiency in the working of
the plant and to define the procedure to be observed in respect of the utilisation
of other loading facilities in the port.
2.1 provides that the operation of the MOHP including unloading of ore/pellets
and the maintenance of the said plant shall be performed solely by the Board.
2.5 provides that all vessels shall load ore/pellets in Mormugao Port only at the MOHP except in the cases specifically provided.
Some such exceptions are when the vessels are likely to be detained unduly on
account of interruption of loading at MOHP due to breakdown of the plant,
dredging at Berth No. 9 or other legitimate reasons. Regulation 3.1 requires
the Board to designate a part of the plant area to be used for the purpose of
storage of ore/pellets. Regulation 3.3 requires the Board to allocate storage
plots in such a manner as to ensure the most efficient service of the plots by
3.7 indicates allotment of the storage plots on the basis of export potential
and not more than one storage plot is to be allotted to each applicant.
Regulation 6.1 requires berthing of vessels at Berth No. 9 in the order in
which they arrive at the port. Regulation 6.6 says that in case of a breakdown
of the MOHP causing interruption while loading of vessels permission to
continue loading by other means may be given. Regulation 8.1 provides for
payment of charges at the specified rates and in the manner specified in the
schedule. Regulation 9.1 says that no transshipper/reloader platform shall
operate within the port unless permitted by the Board.
Reading the impugned notifications with the Regulations it is clear that the
allotment of storage.plots is made on rational basis depending on the export
potential of the applicant and, therefore, nominal plot capacity in note 1 of
the notification for the purpose of the rate of rebate allowed is integrally
connected with the exercise of allotment of storage plot to the exporter. The
rate of rebate available to a particular exporter in accordance with note 1 is,
therefore, on 356 rational basis having nexus with the object of achieving the
maximum possible efficiency in the working of the Mechanical Ore Handling Plant
and the most efficient service of the plots by the MOHP. At the hearing it was
shown to us with reference to the facts on record that an exporter availing
service of the MOHP to the extent possible was able to earn rebate and only
those who avoid its use may have difficulty.
MOHP having been installed at a cost of about Rs 83 crores for the purpose of
providing service to the exporters the fixation of handling charges
commensurate with the cost of the plant while providing the incentive of rebate
ensuring full efficiency and use of the plant is a reasonable exercise of the
power available to the Board. It is clear that the charges have to be worked
out to avoid any loss and each exporter is given a storage plot on the basis of
his export potential to enable him to avail the benefit of the graded rebate
which has been given. The affidavit dated 11-1-1985 of A.B. Gadgil, Deputy
Secretary of the Board at pages 109 to 146 of the Paper Book gives full facts
indicating the attempts of the exporters to avoid full utilisation of Berth No.
9 'using transshippers/reloader vessels owned by them and thereby preventing
full utilisation of MOHP'. A cost analysis based on the actual working of the
MOHP was carried out and the revised rates specified in the notification were
worked out on that basis.
contents of the affidavit along with undisputed facts make it clear that the
revision of the handling charges including the levy of surcharge and provision
for rebate in note 1 as also the requirement of note 2 of the notification is
well within the statutory powers and a is neither arbitrary nor unreasonable.
In fact, charges prescribed in this manner provide incentive for full utilisation
of the MOHP by giving rebate for such use and care is taken to provide for an
alternative in case of non-availability of the MOHP for any legitimate reason.
There is thus no basis to contend that the charges are in the nature of
in fact for the service provided and the rates are to ensure full and efficient
utilisation of the MOHP by the exporter. This is within the permissible
exercise of the statutory power.
9. We find
no merit in these appeals and they are, accordingly, dismissed with costs - one