(Published in Part – III Section 4 of the Gazette of India, Extraordinary)
|No.28|| New Delhi, the 28th March, 2000
Tariff Authority for Major Ports
No.TAMP/79/99-CPT - In exercise of the powers conferred by Section 49 of the Major Port Trusts Act, 1963 (38 of 1963), the Tariff Authority for Major Ports hereby disposes of the application filed by M/s. Shruti Steels Limited for ordering a 50% refund to it of the berth hire charges collected from it by the Calcutta Port Trust for the ships broken by it during 1994-97, as in the Order appended hereto.
M/s. Shruti Steels Limited ... Applicant
The Calcutta Port Trust ... Respondent
O R D E R
( Passed on this 15th day of March 2000 )
This case relates to an application filed by the Applicant-Firm (M/s. Shruti Steels Limited of Calcutta) for ordering a 50% refund to it of the berth hire charges collected from it by the Calcutta Port Trust (CPT) for the ships broken by it during 1994-97.
2. The facts of the case in brief are as follows:
2.1. The Applicant-Firm (M/s. Shruti Steels Limited) was registered as a Ship-Breaking Company in Calcutta. It was carrying on this business at the CPT. The case relates in particular to 8 ships broken by it at the CPT during 1994-97. In accordance with their established practice, in each of these 8 cases, the CPT charged (full) berth hire with reference to the certified GRT of the vessel concerned for the entire period of ship-breaking. In every case, there were detailed discussions between the CPT and the Applicant-Firm about the procedures/notified Scale of Rates/charges/ etc., issue of minutes of these discussions, conclusion of specific Agreements about the place of activity/period of activity/rates to be levied/etc., and detailed billing of charges.
2.2. In accordance with the established practice of the CPT, and following the detailed procedure described above, the Applicant-Firm had carried on its ship-breaking business at the CPT during 1994-97. There was no protest from it either about the procedures adopted or about the facilities provided or (even) about the rates applied. After the breaking of the eighth ship in reference in 1997, the Applicant-Firm had apparently wound up this business at the CPT.
2.3. Thereafter, in January 99, the Applicant-Firm approached the Ministry of Surface Transport (MOST) with a request for waiver of berth hire charges and issue of instructions under Section 54 of the Major Port Trusts Act (1963) to the CPT. This application was disposed off by the MOST with the following observations:
the rates fixed for berth hire charges by the Calcutta Port Trust (CPT), since have the approval of the Government of India, will remain as it is. However, the firm may either approach the CPT to refer the matter to Tariff Authority for Major Ports (TAMP) ; or, the firm may themselves approach the TAMP for getting redressal.
by this response of the MOST, the
Applicant-Firm thereafter filed a writ petition in the High Court of Calcutta on the
ground that, under Section 54 of the Major Port
Trusts Act, it was the Central Government that
had the power to amend and/or modify the Scale of Rates and no other Authority (including
the Tariff Authority for Major Ports) had the power to do so.
2.4. Aggrieved by this response of the MOST, the Applicant-Firm thereafter filed a writ petition in the High Court of Calcutta on the ground that, under Section 54 of the Major Port Trusts Act, it was the Central Government that had the power to amend and/or modify the Scale of Rates and no other Authority (including the Tariff Authority for Major Ports) had the power to do so.
2.5. In the writ petition, the Union of India raised a preliminary objection that since the petitioner had not approached the Tariff Authority for Major Ports, the writ petition should be deemed to be premature.
2.6. This preliminary objection of the Union of India was upheld by the High Court of Calcutta; and, the writ petition was disposed off by it with a direction to this Authority to treat the writ petition as a representation and dispose it off within a period of 8 weeks from the date of communication of the order by passing a reasoned order thereon after giving, with due notice to all the parties, an opportunity of hearing.
2.7. As directed by the High Court of Calcutta, the Applicant-Firms representation was registered as a tariff case. It was processed in accordance with the procedures established by the Authority and strictly with reference to its Transaction of Business Regulations. The Applicant-Firm objected to the process of consultations (with interested parties/groups) commenced by the Authority. The Applicant-Firm (acting through its Director Shri. S.K. Jain) wanted this case to be treated as a dispute only between itself and the CPT. This contention of the Applicant-Firm was not accepted for the reason that we had treated this as a regular case registered with this Authority for being processed in accordance with its Regulations. In our understanding, the Honble High Court had directed this Authority to deal with this case in the context of the objection that all available forums had not been exhausted before approaching the High Court. Accordingly, we took up this case as a regular case registered with us and not as a case remitted by the High Court with any special directions about the parties, procedures, etc. Upon being explained these details, this position was accepted by the Applicant-Firm.
2.8. Even as these processes were in progress, the Applicant-Firm made a request for postponement of the joint hearing fixed by us at the CPT on 12 November 99 on the ground that more time was needed to study the comments received from different parties as also for involving some others who had not been addressed by the Authority. This request was accepted. The hearing slated for 12 November 99 was adjourned. Copies of all comments received were given to the Applicant-Firm by way of feedback information. Also, the other parties identified by the Applicant-Firm were given notice to give comments and participate, if possible, in the joint hearing to be held later.
2.9. Action as described in the preceding paragraph was bound to involve time thereby making it impossible for this Authority to dispose of the petition within the time limit fixed by the High Court. A request was, therefore, made to the High Court to extend the time limit. The High Court considered the request and extended the time limit by 8 weeks. This extended time limit expired around 18 January 2000. But, at the joint hearing in the CPT on 10 January 2000, the two parties to the case viz., the CPT and the Applicant-Firm wanted time to file written submissions. This request was accepted. The CPT was given time till 20 January 2000 to file its written submissions; and, the Applicant-Firm was given time till 25 January 2000 to file its response thereto. Since no written submissions were received by 25 January 2000, it was decided to wait for some more time. Since nothing had been heard from either party even during this extended period, the case was taken up for final consideration by the Authority on the basis of the information available. In the meanwhile, the Authoritys meeting on 4 February 2000 was held without any chance for this case being included in the agenda. Since the meeting on 15 March 2000 was the meeting next to that, this case was taken up in that meeting for final consideration. (The written submissions received from both sides long after expire of the time limit agreed upon were not taken into account as the case had by then been presented for final consideration by the Authority.)
3. Although, in the writ petition, the Applicant-Firm had questioned the jurisdiction of this Authority to consider this case, at the time of the joint hearing on 10 January 2000, the Applicant-Firms Senior Counsel accepted the jurisdiction of this Authority and expressly submitted to it. He conceded that, since the Union of India recognised the TAMP as the appropriate forum and since the High Court had gone along with that contention, there could be no jurisdictional problems at all.
4.1. It was pointed out by the CPT that the case pertained to the period 1994-98. That being so, any modification of charges in this case would make it a case of retrospective revision. The TAMP was expected to order revisions only prospectively. That being so, there could be no meaningful intervention in this case.
4.2. Even though the CPT did not press this point as a preliminary objection to bar further proceedings, it will be necessary to deal with this issue specifically here in view of its substantive significance. It will also be relevant here to note that the Managing Director of the Indian Ports Association, responding on behalf of all the Port Trusts, had also raised the same point.
4.3. It is true that ordinarily the orders of this Authority are expected to have prospective operation. But, we have been advised by the MOST, on the strength of a legal advice given by the Ministry of Law, that, in extraordinary circumstances, the Authority can give retrospective operation to its orders. What is relevant for consideration in this context is whether there are any such extraordinary circumstances governing this case.
5. The Applicant-Firm has advanced seven main arguments in support of his representation:
(i). Berth hire charge is levied with reference to the registered GRT of the vessel to be broken. In ship-breaking, GRT cannot be constant; it progressively declines. It will be illogical, therefore, to estimate berth hire charges with reference to a constant GRT figure.
It has, nevertheless, to be recognised that decline in the GRT figure cannot be estimated every day. That being so, from a practical point of view, an average figure of 50% of the registered GRT can be adopted as a reasonable basis for calculation.
(ii). For levy of berth hire, a ship to be broken is equated with an ocean-going vessel in the sense that the same rate is charged. This is absurd.
(iii). The CPT charges very high rates when it does not provide any facilities at all.
(iv). The CPT levies berth hire charge, wharfage, and ground rent in the course of a ship-breaking operation. In other words, the vessel in reference is treated at the same time as a ship, as a cargo, and as material other than cargo. This is totally untenable.
(v). As can be seen from the Survey Report of an Expert (M/s. Norman, Stewart & Co. Pvt. Limited), produced by the Applicant-Firm, GRT represents space and not weight. It will, therefore, be illogical to levy berth hire charge with reference to the constant figure of weight.
(vi). In a case of ship-breaking, the Certificate of Registration will be cancelled before commencement of the dismantling operation. That being so, how can the GRT of the vessel be assessed at all?
(vii). The Shipping Corporation of India, the Indian National Shipowners Association, and (even) the Indian Ports Association have all endorsed the Applicant-Firms proposition.
6. Before proceeding further, it will be necessary to deal with these issues. They can be disposed of seriatim as under:
(i). The practice of calculating, with reference to the registered GRT of the vessel, the berth hire charge leviable in such cases has been in vogue at the CPT since very long. The other major port which caters to ship-breaking activity (viz., the Mumbai Port Trust) also follows the same practice. The CPT has not done anything new in this case.
The GRT of the broken ship may be declining; but, its base remains the same. In other words, it continues to occupy the same length of the berth. Consequently, the berth will not be available for any other use. What will be relevant, therefore, will be the opportunity cost of the berth.
Had the berth been available, the CPT could have used it to bring in other ships. It is possible that other vessels (even) of greater GRT may have arrived to yield higher revenue earnings.
The Applicant-Firm has urged (in Ground III of the Writ Petition) that GRT represents space and not weight. This argument, perhaps, inadvertently reinforces the CPT claim about the broken ship occupying the same length of space. This apart, the CPT has sought to expose the fallacy of the Applicant-Firms contention with the argument that, if GRT is to signify a covered space, then, removal only of the ships roof must reduce the GRT to zero!
In the light of what has been stated above, the practice of adopting a constant GRT figure for calculation purposes cannot be said to be erroneous. In any case, reckoning with a series of varying figures may not be a practicable proposition. And, there is no rational basis in adopting a figure of 50% of the GRT; it can only be seen to be ad hoc and arbitrary.
(ii). The comparison of a ship (to be broken) with an ocean-going vessel cannot be said to be very relevant. The charge to be levied is for berth hire which is separately notified in the Scale of Rates. What is relevant, therefore, is occupancy of the berth. Since, as explained in (i) above, the bottom of the ship (to be broken) continues to occupy the (whole) berth thereby rendering it unavailable for berthing other ships, there is nothing absurd about the charge levied.
(iii). The Applicant-Firms complaint about the CPT charging very high rates even when it gives no facilities appears to be an afterthought. Firstly, the charge is for a berth and not for facilities. Secondly, the Applicant-Firm did business with the CPT in full knowledge of the terms and conditions applicable. There was no demur from its side about the payments to be made. There was no protest from its side about lack of facilities. It cannot, therefore, be allowed suddenly now to come up with various objections.
It is noteworthy in this connection that, in each case of ship-breaking, the CPT held detailed discussions with the Applicant-Firm about the levy of berth charges, in accordance with the prevailing Scale of Rates. Furthermore, formal Agreements specifying clearly the Terms and Conditions of the operation (especially about application of berth hire charges with reference to the certified GRT of the vessel) were concluded between the two parties in respect of every ship to be broken. The Applicant-Firm was free to raise any objection at the time of conclusion of such Agreements; or, better still, the Applicant-Firm need not have entered into any such Agreement at all. Having gone ahead with conclusion of such Agreements, without any trace of protest/ objection, (and, even made advance payments as stipulated therein) it cannot at this stage be allowed to re-open such basic issues. The principle of estoppel must be held to be operative in this case.
As has been contended by the CPT in their arguments at the joint hearing, the Applicant-Firm apparently did not wish to annoy the CPT while doing business with it. Now that the Applicant-Firm has given up the business, it has come up with a purely speculative demand for refunds in an attempt to make undue gains.
(iv). The Applicant-Firms argument about the ship (to be broken) being treated simultaneously as a vessel, as a cargo, and as a material other than cargo appears to be an attempt to sensationalise an otherwise routine sequence of activity. As has been explained by the CPT, when the ship (to be broken) occupies the berth, it is treated as a ship for the purpose of levy of berth hire charge; when the broken material is placed on the wharf, it is treated as cargo for the purpose of levy of wharfage; and, when the broken (or, any other) material occupies any other part of the port, it is treated as material other than cargo for the purpose of levy of ground rent.
Here, again, the Applicant-Firm has compared its case with an ocean-going vessel to allege discrimination against it in the matter of levy of charges. This is not factually correct. Any vessel occupying the berth is charged for berth hire; any vessel using the wharf for cargo operation is charged with wharfage; and, any vessel occupying other space at the port for purposes of vessel-related or cargo-related operations is charged ground rent.
(v). Production by the Applicant-Firm of a Survey Report by M/s. Norman and Stewart & Co. Pvt. Limited does not appear to be very relevant. As has been explained in (i) above, the quibbling about space and weight is misconceived.
(vi). It is true that in a case of ship-breaking, the Certificate of Registration will be cancelled before commencement of the dismantling operation. But, the Applicant-Firms objection about there being no basis thereafter for estimation of the ships GRT can only be seen to be a rigid technicality. The requirement about prior cancellation of the Certificate is a legal stipulation to guard against other eventualities. Nothing extraordinary happens between cancellation of the Certificate and commencement of the dismantling operations to drastically alter the GRT of the ship in reference. There is, therefore, no reason why the entry in the Certificate cannot form a valid basis for assessment of the GRT of the ship in reference.
It is relevant here to recognise that, when the Applicant-Firm proposes levy of berth hire charges @ 50% of the GRT, the Applicant-Firm itself chooses to rely on the cancelled Certificate of Registration!
(vii). It is true that the Shipping Corporation of India (SCI) and the Indian National Shipowners Association (INSA) have endorsed the Applicant-Firms proposition. It is not true that the Indian Ports Association (IPA) has endorsed it; the Managing Director of the IPA has only stated that the TAMP cannot alter the rates retrospectively; if at all, it can keep the Applicant-Firms contention in view while fixing tariffs for ship-breaking in future.
As has been agued by the CPT, the SCI and the INSA are interested parties in the sense that acceptance of the Applicant-Firms contention will have a favourable monetary impact when they get to scrapping their vessels in future. To say that their views cannot be relied upon in this context does not amount to questioning their credentials as lamented on behalf of M/s. MJR Steels. What is of significance is the fact that neither the SCI nor the INSA has advanced any arguments that irrefutably question the system in vogue or demolish the logic advocated by the CPT in support of its stance.
7.1. The Applicant-Firm has claimed that it could not file this case earlier as it came to know about the defective levy of charges only upon receipt of the provisional statement of accounts in February 98. An examination of the records will show that, as has been explained earlier, this is not a factually accurate statement. Details are established by the CPT separately for each ship to be broken. Discussions are held, minutes are drawn up, Agreements are concluded, and accounts are settled vessel-wise. In this case, as explained by the CPT, a consolidated final account statement was sent on request. In this backdrop, it is difficult to believe that the Applicant-Firm was not aware earlier of the details, especially when advance payments were made by it in accordance with the calculations shown in the Agreements. It is also noteworthy that the consolidated final accounts statement gives only details of calculations and not any new basis therefor. The basis of calculation, as explained earlier, had remained the same over the years and was well-known to all concerned.
7.2. In the light of what has been stated above, it cannot reasonably be alleged that there has been miscarriage of justice in this case. It has been the Authoritys stated position that it will function with transparency, impartiality, and objectivity. That being so, the Authority will like to endorse the plea of M/s. MJR Steels that the mere fact of a substantial implication for a Port Trust shall not bar a petition seeking justice. There has been no injustice in this case. And, there are no extraordinary circumstances governing this case to warrant retrospective alteration of well-established practices and duly notified rates.
8.1. In the backdrop of the analysis given above, with reference to the totality of information collected during the processing of this case, and based on a collective application of mind, the Authority rejects the representation of the Applicant-Firm (M/s. Shruti Steels Limited).
8.2. A copy of this Order shall be submitted to the Honble High Court of Calcutta by way of reporting compliance of its direction to this Authority.
8.3. Since it has not been possible for us to conclude these proceedings even within the extended time limit allowed by the High Court, while reporting compliance, the Honble High Court may be requested to condone the delay. It is relevant here to point out that the delay was not on account of any casualness on our part but, on account of time taken by the two parties to give their responses.
9. In the light of the basic soundness of the pricing system adopted in this matter, it does not appear to be necessary for this Authority to take any further action suo motu to rationalise tariff setting for ship-breaking operations. This subject can be taken up for further consideration, if necessary, if and when any proposal/representation is received for a change in the system on a prospective basis.