In a recent legal case, the court provided significant clarity on post-sale liabilities in the admiralty sector. The court’s in-depth legal analysis and ruling have established an important precedent regarding the determination of charges post the sale of a vessel. This decision has far-reaching implications for future cases and maritime law interpretations.
Facts
- NKD filed an application in Commercial Admiralty Suit seeking directions on Customs Authorities and Mumbai Port Trust to raise revised bills for Light Dues Charges and Anchorage Charges from the date of physical possession of the vessel, which was 11 November 2020.
- NKD purchased the vessel in an auction for demolition purposes, with the condition that the successful bidder would pay for costs involved in removing the vessel.
- Dispute arose over Anchorage Charges claimed by the Port Trust, as the vessel had been docked for over 30 days with applicable rates beyond 30 days being USD $ 0.0118.
- NKD contended that as the vessel was sold free from all encumbrances, any liability for Anchorage Charges or Light Dues Charges prior to the sale date should be met by the previous owners or from sale proceeds held by the court.
- Glander filed an Admiralty Suit for recovering bunkers charges against the vessel owners, with rates varying depending on the duration of vessel stay at the anchorage.
- Bills for Light Dues Charges and Anchorage Charges were raised by the Customs Authorities and Port Trust respectively, for the period from vessel’s arrival till its removal, which was disputed by NKD citing the vessel’s sale being free of encumbrances.
- Auction for the vessel was completed with NKD as the successful bidder who paid the purchase price on 7 November 2020 and received physical delivery on 11 November 2020.
Also Read: Legal Analysis of Appeal Provisions in Admiralty and Commercial Court Cases
Arguments
- NKD has not been burdened with any pre-sale liabilities related to the Vessel.
- Port dues, not specifically defined in the Major Port Trust Act, encompass all charges payable within the Port premises.
- The Vessel was sold with the condition of being free from encumbrances.
- Port Trust was not authorized to charge more than half the anchorage charges rate.
- All charges including Port dues were to be paid by the purchaser from the date of sale approval by the High Court.
Analysis
- NKD argued that anchorage charges should be considered as encumbrances for the purposes of port dues after the sale of the vessel.
- The Division Bench disagreed with NKD’s argument, stating that prior anchorage and the rates associated with it are not considered encumbrances post-sale.
- Anchorage charges are distinct from port dues under Section 50-B of the Port Trusts Act, applicable based on the number of days a vessel is docked.
- Section 50-B determines port dues for vessels entering a port without cargo or passengers, with rates not exceeding half of the standard rate.
- The Division Bench affirmed that NKD, having purchased the vessel ‘as is, where is,’ is liable to pay anchorage charges from the date of sale onwards.
- Port dues within the meaning of Section 50-B of the Major Port Trust Act do not include charges other than Port Entry charges.
- The Division Bench correctly allowed the appeal and overturned the decision of the Single Bench.
Decision
- The appeal has been dismissed.
- The issue in question was the determination of the daily rate, which was either Rs.5,00,000/- per day or Rs.15,00,000/- per day.
Case Title: M/S NKD MARITIME LIMITD Vs. THE BOARD OF TRUSTEES OF THE PORT OF MUMBAI (2022 INSC 1002)
Case Number: C.A. No.-006858-006858 / 2022
