The facts of the case were as follows: The importer had imported variousconsignments of woollen rags. There was a dispute about this and importedgoods were confiscated by customs authorities. After a considerable periodthe importer secured orders to get the goods released on payment of fine.During the period when goods remained at the docks, the port authoritiesissued notices for payment of demurrage etc. The importer denied liability.Thereafter he imported consignments of acrylic fibre for which he filedbills of entry for clearance of good for home consumption. When necessarypermission was granted by customs authorities, the port authorities did notrelease the consignments insisting on payment of demurrage due fromimporters for earlier consignments of woollen rags imported by them.

The refusal by port authorities to release the consignments of acrylic fibreimported till the past dues were cleared by importers was based on acircular dated October 2, 1979, which inter alia stated "under Section 171of Indian Contract Act 1972, the port authorities have a general lien whichthey can exercise on the goods, which came into their custody, of importers,exporters, owners, consignees, who have for any reason whatsoever have notpaid the port trust charges such as wharfage storage demurrage etc or anyother dues in respect of earlier consignments imported exported".

The importers filed a writ petition under Article 226 of the Constitution inthe Bombay high court seeking declaration that the aforesaid circular wasultra vires of the Major Port Trusts Act and violative of Articles 14, 19,265 and 300A of the Constitution.

In his judgment of November 24, 1982, the single judge allowed the writpetition and granted the relief sought. An appeal was made to the divisionbench of high court against the above order and after hearing the divisionbench held: (i) There is no right of general lien in favour of the porttrust under the provisions of Port Trust Act (ii) The port trust does nothave a right of general lien under Section 171 of the Indian Contract Act(iii) The right of the port trust flows only from the provisions of the PortTrust Act and thus the claim of general lien by reason of possessorybailment was negated by the high court (iv) The general lien in favour ofport trust is excluded by the Port Trusts Act which is a complete codeitself and is comprehensive in respect of collection and recovery ofcharges". The present appeal is against the judgment of the high court.

The Supreme Court examined in detail provisions of Section 59 and 61 of theMajor Port Trusts Act and stated that "reading the two sections together itis clear that goods which can be sold in exercise of it lien are only thosein respect of which amount is due and payable to the board. The words "suchgoods" in Section 61(1) has reference to those goods in respect of whichrates due to the board have not been fully paid." The amount claimed by porttrust authorities pertained to earlier consignment of woollen rags and notto present consignment of acrylic fibre. The Supreme Court concluded: "TheMPT Act is not an exhaustive and comprehensive code and the said Act has tobe read together with other Acts wherever the MPT Act is silent in respectof any matter. The MPT Act itself refers to other enactments which wouldclearly indicate that the MPT Act is not a complete code in itself whichousts the applicability of other Acts." The Supreme Court concluded it ispermissible to read the provisions of MPT Act and the Contract Act togetherwhen the same are complementary to each other. The enactment of MPT Act doesnot ipso facto exclude the operation of other laws which may be applicable.

Wherever a departure has to be made from application of general law the MPTAct specifically provides for it as in Sections 29(2), 47, 68, 70 and 71 ofMPT Act. Since the MPT Act does not provide for a general lien that the portauthorities are relying on the provisions of Section 171 of the ContractAct, which is permissible, the Supreme Court declared that "it is notpossible to hold that the MPT Act ousts the applicability of the provisionsof Section 171 of the Contract Act under which the board is claiming aright of general lien as wharfinger. The general lien of a type contemplatedby Section 171 of the Contract Act in respect of past dues is not providedfor by MPT Act.

The Supreme Court examined in detail the provision of Section 171 ofContract Act which inter alia enables wharfinger to retain the goods assecurity in the absence of the contract to the contrary, as bailee of thegoods now imported, namely acrylic fibre, the said consignment could beretained by the appellants as security for the amount due to them towardswharfage and demurrage charges in respect of earlier consignment of woollenrags. The Supreme Court after examining provisions of Section 42, 43 and 48of MPT Act it was abundantly clear that the appellants are wharfingers whoalso provide services for storage of goods till the same are removed forsuch storage of goods port trust authorities issue receipt in a prescribedformat.

Hence consignee of the goods is bailor with the port trust authorities. TheMPT Act including Chapter VI nowhere provides that the general lien underSection 171 of the contract would not be available to the wharfingers incase where MPT Act is applicable. The appellants come in the category ofwharfingers, namely the owners of wharf. The services which are under takenunder Section 42 have to be paid for and any amount due in respect thereofwill be regarded as "general balance of account".

There is no reason to give a restricted meaning to the expression " generalbalance of account" to mean only wharfage charges but would extend todemurrage charges. The Supreme Court declared "once goods are taken chargeof by the appellants as a wharfingers, then in respect of services renderedas contemplated under Section 42, if there is any amount due and payable toit, the same would be regarded as " general balance of account" in respectof which it has a general lien over the goods bailed to it. The SupremeCourt concluded circular dated October 20, 1979 issued by appellants wasvalid and appellants could retain the goods which were in their possessionas bailees as security for realisation of the amount of wharfage, demurrageand other charges which were due to them. The Supreme Court allowed theappeal and set aside the judgment of the high court.

The author is a Mumbai-based chartered accountant