2026:MHC:248C.S.No.127 of 2005

IN THE HIGH COURT OF JUDICATURE AT MADRAS

Reserved on 23.10.2025

Pronounced on 23.01.2026

CORAM

THE HONOURABLE DR.JUSTICE R.N.MANJULA

C.S. No.127 of 2005

The Board of Trustees of the Port of Chennai,

Represented by its Chairman,

Rajaji Salai, Chennai - 1. ... Plaintiff

Vs.

M/s.T.N.S.S.STEELS Pvt., Limited,

Rep. by its Managing Director

No.8, Rathinasabapathy Street,

Thondiarpet, Chennai - 600 021. ... Defendant

PRAYER : Civil Suit is filed under Order VII Rule 1 of Civil Procedure

Code r/w. Order IV Rule 1 of Original Side Rules to pass a judgment and

decree directing the defendant to pay the plaintiff a sum of Rs.1,08,84,931/-

(Rupees One Crore Eight Lakhs, Eighty Four Thousand Nine Hundred and

Thirty One only) together with interest thereon at the rate of 15% per

annum, for the balance amount of Rs.1,08,84,931/- from the date of plaint

till the date of realisation and costs of the suit.

For Plaintiff: Mr.R.Karthikeyan

For Defendant: Mr.R.N.Amarnath

JUDGMENT

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The suit has been filed for recovery of a sum of Rs.1,08,84,931/-

(Rupees One Crore Eight Lakhs, Eighty Four Thousand Nine Hundred and

Thirty One only) from the defendant together with interest at the rate of

15% per annum from the date of plaint till the date of realisation and costs

of the suit.

2. The facts pleaded in the plaint filed by the plaintiff in brief:

The vessel "M.V.Island Pride" arrived on 01.11.1999 and berthed at

Coast Guard Berth on "Cold Move" under the Steamer Agency of M/s.

Hauers Lines Pvt. Ltd. On 10.04.2000 M/s. Hauers Lines Pvt. Ltd. sold the

vessel "M.V.Island Pride" to the defendant. On 03.12.1999, M/s. Hauers

Lines Pvt. Ltd. approached the Chairman, Chennai Port Trust to waive the

berth hire charges upto 10.04.2000 i.e. upto the date of disposal of the vessel

to the defendant on the ground that the vessel has been regularly calling at

Chennai Port and has provided a life line service to the Andaman and

Nicobar Islands, over the years and was carrying defence cargo to Port Blair

in Andaman. At the end of October, 1999, the main engine was broken

down near Chennai Port. On the frequent request of M/s. Hauers Lines Pvt.

Ltd., the plaintiff Board had held a detailed discussion and resolved in

Board Resolution No.88 dated 31.08.2000 to allow the waiver of 80% of

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Port Charges on the Vessel "M.V.Island Pride" from 01.11.1999 to

31.03.2000 and to collect 100% charges from 01.04.2000 onwards. In

accordance with the Board Resolution No.88 dated 31.08.2000 necessary

marine services bill was made up to 10.04.2000 on M/s. Hauers Lines Pvt.

Ltd. and agents have paid their dues.

2.1. The defendant who has purchased the vessel had appointed

M/S.AKP Shipping and Chartering Pvt. Ltd., as their Steamer Agent to clear

the above vessel after paying Port Related Charges. The Steamer Agent of

the defendant has not paid even pre-payment of Port charges as per the

practice in vogue. In the mean time, the defendant vide letter dated

30.09.2000 requested the plaintiff, Port Trust to waive the charges, as how it

was given to the previous owners. A suitable reply has been given by the

plaintiff through his counsel on 30.01.2001.

2.2. The Marine Services Bill made towards the vessel related charges

from 10.04.2000 has been sent to M/s.AKP Shipping & Chartering Pvt.

Ltd., and the same has been returned as the above agent was not available in

the given address. So, the defendant who is the owner of the vessel has to

indicate the present address of his agent, but there was no reply. Since

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neither the Agent nor the owner of the vessel has come forward to settle the

dues of the Port Trust, the plaintiff had no other alternate except to invoke

Section 64 of the Major Port Trust's Act 1963 and Regulation 4(5) of

Madras Port Trust (Distraint / Arrest & Sale of Vessel) Regulations to sell

the vessel and recover the charges from the sale proceeds of the vessel. The

proposal has been approved by the Chennai Port Trust Board vide its

Resolution No:11 dated 21.06.2002. The resolution was also communicated

to the defendant on 31.01.2003 in writing and that has been acknowledged.

The action for disposal of the vessel through tender was also undertaken by

the Controller of Stores functioning under the plaintiff.

2.3. There was a tender floated and at the time of finalizing / getting

competent sanction for accepting the highest bid for vessel "M.V. Island

Pride”, the defendant filed a writ petition in W.P.No.14568 of 2003

challenging the letter of the plaintiff dated 31.01.2003 and obtained a stay

subject to a condition of payment of Rs.1,00,000/- within a period of 15

days. Accordingly, the defendant paid a sum of Rs.1,00,000/- on

20.05.2003. He immediately filed an application to vacate the interim stay

along with the counter affidavit. In the meantime ,the defendant has also

filed three other Writ Petitions in W.P.Nos.14268 to 14270 of 2003 for the

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following reliefs:

a) W.P.No.14268/2003 was filed to quash the Tender

No.T/F3/51/02/C relating to sale of "M.V.Island Pride".

b) W.P.No.14269/2003 was filed to grant waiver of Port hire charges

payable for berthing the vessel "M.V.Island Pride".

c) W.P.No.14270/2003 was filed to permit the petitioner to dismantle

the vessel "M.V.Island Pride" respectively.

2.4. After the vessel was sold to M/s.Duraimurugan & Co., the same

was inspected and found that the keel of the vessel plates were in very

damaged condition and that the vessel might sink at any time. If the vessel

sinks, it would jeopardize the entire Chennai Port Trust navigation

operation. Due to such precarious condition and having no other alternative,

it was allowed to scrap the vessel inside the Port after entering into a

Memorandum of Understanding by the parties i.e. the plaintiff and

M/s.Duraimurugan & Co. In the meanwhile the Hon'ble High Court, by its

order dated 20.10.2003 in W.P.No.14568 of 2003 and W.P.No.14269 to

14270 of 2003, dismissed these writ petitions as withdrawn. In view of that,

on 30.10.2003 the Controller of Stores of the plaintiff’s Board issued

acceptance letter to M/s.Duraimurugan & Co. for disposal of “M.V.Island

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Pride” for the disposal of “M.V.Island Pride” at the auction price of

Rs.27,07,007/- which is the highest tender. M/s.Duraimurugan & Co. after

getting clearance from the authorities, dismantled the vessel and removed it

from the Port premises after the payment of all Port dues.

2.5. Even after the realization of the bid amount of Rs.27,07,007/-

and after deducting a sum of Rs.1,00,000/- deposited by the defendant by a

conditional order of this Court, the balance amount of Rs.1,08,84,931/- is

due from the defendant. The defendant failed and neglected to pay the dues

despite repeated demand made by the plaintiff. Hence, the plaintiff has filed

the suit for recovery of a sum of Rs.1,08,84,931/- due from 10.04.2000 to

29.10.2003.

3. The averments made in the written statement filed by the

defendant in brief:

The defendant has purchased the Vessel on 10.04.2000 from

M/s.Hauers Lines Pvt. Ltd. The application made by M/s.Hauers Lines Pvt.

Ltd. Dated 03.12.1999 to the Chairman of the Port Trust to waive the port

charges from 01.11.1999 to 31.03.2000 was favourably considered by the

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Chairman of the Port Trust and orders were passed waiving 80% of the Port

charges. The reasons given for waiving the Port charges is applicable to the

defendant also. The concession was given to the erstwhile owner of the

vessel, since one of the Trustees of the Port Trust by name Mr. S.N.

Srikanth was one of the Directors of M/s Hauers Lines Pvt. Limited. The

vessel was not in trade worthy condition at the time of purchase. The vessel

was purchased solely for the purpose of dismantling it as scrap. The

defendant made an application dated 30.09.2000 seeking waiver of the Port

charges in view of the fact that for the same vessel 80% of the Port charges

were waived by the Port Trust already.

3.1. Since the defendant was expecting orders on his application

seeking waiver of the Port charges, he could not pay the Port charges. The

plaintiff ought to have granted waiver of the Port charges as it was done in

the case of M/s Hauers Lines Pvt. Limited. It is true that the defendant filed

WP.No.14568 of 2003 challenging the letter of the plaintiff dated

31.01.2003. During the pendency of the Writ Petition, the defendant has also

made a payment of Rs.1,00,000/- to the plaintiff on 20.05.2003 as per orders

of this Court.

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3.2. In view of the critical conditions of the vessel, the defendant

sought for a space in the Port Trust for breaking the vessel. However, the

plaintiff refused to allot a space in the Port area to break the vessel. Though

the defendant purchased the vessel, he could not move the vessel out of the

Port due to the precarious condition of the vessel. On 02.11.2001, the Port

Trust granted permission to the defendant to break the vessel within the Port

area on stringent unworkable conditions which are listed as under:

(1)The vessel should have sufficient mooring ropes for towing and

securing etc. Preferably new coils (3 Nos.) at each end.

(2)The towage will be under taken subject to weather conditions

(Minimum two voith Tugs to be manned additionally by Pilots).

(3)The owner of the vessel to obtain:

(a)Clearance from Tamil Nadu Pollution Control Board for ship

breaking activities to be carried out in the Port.

(b)Clearance from Sales Tax Authorities.

(c)Clearance from Commissioner of Customs for removal of broken

parts out of the Port.

(d)Clearance from Controller of explosives.

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(e)Permission from the Safety Officer/Fire Officer & Assistant Safety

Officer of Chennai Port for hot work etc.

3.3. The defendant approached the Tamil Nadu Pollution Control

Board seeking permission for ship breaking activities in the Port. The Tamil

Nadu Pollution Control Board refused to entertain the request of the

defendant by stating they were not at all concerned with the breaking of

vessel within Port area. The plaintiff has sent a letter dated 31.01.2003

stating that the vessel would be detained and sold for Port charges. Inspite of

the protest made by the defendant, the vessel was sold to a third party by the

plaintiff. The purchaser of the vessel namely M/s.Duraimurugan and Co.

was granted permission by the plaintiff to scrap the vessel inside the Port

area, but the same was not granted to the defendant by the plaintiff due to

some extraneous reasons.

3.4. The vessel was sold to M/s.Duraimurugan and Co. for a throw

away price and the Company was favoured with an order permitting to

dismantle the vessel in the Port area even without getting permission from

the Tamil Nadu Pollution Control Board and without required to do any

other statutory compliance. The plaintiff is not entitled to claim any amount

from the defendant. On the other hand, the defendant is entitled to claim a

sum of Rs. 45,00,000/- from the plaintiff.

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3.5. The defendant is a Private Limited company incorporated under

the Company’s Act and is dealing in Ferrous and Non-ferrous scrap and

they are having a ship breaking yard at Vallinaikkam at Ramnad District.

The defendant is also doing the activities of ship breaking for the purpose of

securing the scrap materials from wrecked ships. Even this vessel was

purchased solely for the purpose of dismantling as scrap. The sale agreement

was signed by one Mr. S.N.Srikanth as Director of M/s Hauers Lines Pvt.

Limited and he was also the trustee of the Chennai Port Trust at the time of

the sale. As the vessel could not be moved out of the Chennai Port Trust and

was unfit for trading, the Chennai Port Trust granted waiver of the 80% of

the berth hire charges payable by M/s Hauers Lines Pvt. Limited, at the

instance of Mr.S.N.Srikanth.

3.6. The defendant informed the Chennai Port Trust by his letter dated

04.04.2000 regarding the purchase of the vessel by him and sought for

allotment of space in timber pond area for breaking the said vessel. The

defendant made the request on the basis that the engine of the ship was fully

opened and dismantled and that there was no sludge oil, fuel or explosive

items in the ship and on the basis that two ships (Tugs) were broken in the

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same area with the permission of the Port Trust. By a letter dated

24.04.2000, the plaintiff informed the defendant to obtain clearance from the

Central Pollution Board (Ministry of Environment and Forest), Collector of

Customs, Collector of Explosive, Commissioner of Police (Traffic) and they

also required the defendant to sign a Memorandum of Understanding. In

those letters a diametrically opposite stand was also taken by the plaintiff.

3.7. The defendant made efforts to tow the vessel to Vallinaikkam or

Kakinada. Due to the defaults on the part of the tug owners, the vessel could

not be towed out of Chennai Port. When the survey report was in favour of

towing, the Mercantile Marine Department refused to give permission to

tow the vessel on the ground that the weather was not conducive for towing

the vessel.

3.8. In such circumstance, the plaintiff by letter dated 27.09.2000

informed the defendant to pay a sum of Rs.9 lakhs towards pre-payment of

Port charges. By a letter dated 30.09.2000, the defendant informed the

plaintiff about his difficulty and also requested the plaintiff to grant waiver

of the Port charges as it was done to the erstwhile owner of the vessel. The

plaintiff rejected the request of the defendant. The defendant sent a notice

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dated 02.11.2000 requesting the Port Trust to waive the hire charges. But

without doing the needful, the plaintiff granted permission on 02.11.2001 to

the defendant to break the vessel within the Port area on stringent conditions

which are incapable of compliance. When the Tamil Nadu Pollution Control

Board was sought for permission for breaking the ship, the Tamil Nadu

Pollution Control Board themselves have stated that they are not concerned

with the breaking of the vessels inside the Port area. Without taking note of

all these facts, the tender has been called for by fixing the date of disposal of

the vessel on 10.04.2003. The tender notice does not incorporate stringent

conditions, which were incorporated while considering the request of the

defendant. Had the defendant been allowed to break the vessel without such

stringent conditions, he would have initiated steps to dismantle the vessel

either in the Port area or in any other area as may be specified.

3.9. There are other vessels which have been dismantled in the Port

area. The plaintiff stated in the tender notification that they will allow the

buyer to dismantle the vessel inside the Port area after getting a

Memorandum of Understanding from the purchaser.

3.10. Had the Port Trust granted waiver of the Port charges as given

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to M/s.Hauers Lines Private Limited, the defendant would not have put to so

much hardship. The defendant is entitled to claim a sum of Rs. 1,00,000/-

(Rupees one lakh only) deposited to the plaintiff pursuant to the interim

order passed by this Court. The defendant would have earned a sum of Rs.

15,00,000/- (Rupees fifteen lakhs only) by breaking the vessel and by

scraping and selling the scrap. Hence, the plaintiff is liable to compensate

the loss to the defendant. In the Ports under the Major Port Trust Act, the

ships for breaking are charged with only bed water charges due to the fact

that no services as rendered to trading vessels need be rendered for scrap

ships. Except bed water charges, usual berth charges are not liable to be

levied for scrap ships in the ordinary course. In a similar condition for a ship

by name “M.V.Eleni” the plaintiff only collected bed water charges from the

owner of the vessel. The plaintiff misused their powers and sold the vessel

for a rock bottom price and hence the plaintiff is liable to pay a sum of Rs.

35,07,007/- (Rupees Thirty five lakhs seven thousand and seven only) to the

defendant. By raising such a claim in the written statement filed by the

defendant, he raised the above counter claim.

4. The reply to the counter claim in brief:

The counter claim is devoid of merits. The Plaintiff Board has

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resolved to waive 80% charges for the period from 01.11.1999 to

31.03.2000 i.e. for 4 months to the erstwhile owner only by considering the

life line services rendered by the vessel over the years by carrying defence

cargo to Port Blair in Andaman and it has been decided to collect 100%

charges from 01.04.2000 onwards. As the vessel is unfit for lifeline services,

the defendant has purchased the same only for scrap purposes as he is

dealing in Ferrous and Non-ferrous scrap. Hence, 100% waiver of the

charges cannot be claimed as a matter of right. Being in a Public domain, the

Chennai Port Trust, cannot forgo the legitimate charges due to them.

4.1. The pre-payment of vessel related charge is mandatory before

sailing of the vessel. Even, the erstwhile owner had paid 100% charges from

01.04.2000 to 10.04.2000 i.e till the date of purchase of the vessel by the

defendant. The defendant vide their letter dated 13.06.2000 had accepted to

make payment from 11.04.2000 through their agent M/s. AKP Shipping and

Chartering Pvt. Ltd. But, without making any payment and without taking

any steps to remove the vessel even during the monsoon season, the

defendant had simply requested to waive the charges vide letter dt.

30.09.2000.

4.2. Even when there was a threat to the vessel sinking, the defendant

was insisting to waive the berth hire charges without opting to the same. The

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defendant has been informed through a reply sent by the plaintiff on

10.11.2000 that the Port will be constrained to take action as per section 64

to recover rates and charges by distraint of vessel, if 100% charges are not

paid. Neither the agent nor owner of the vessel i.e. defendant, came forward

to settle the Port Marine dues. Hence, there was no alternative for the

plaintiff, except to invoke section 64 of the Major Port Trusts Act, 1963 and

Regulation 4(5) of Madras Port Trust (Distraint/Arrest & Sale of Vessel)

Regulations, to sell the vessel and to recover the charges from the sale

proceeds of the vessel. Accordingly a resolution was passed in Resolution

No.11 dated 21.06.2002 to take action for disposal of vessel through tender

and the same was also communicated to the defendant on 31.01.2003 in

writing and the same was acknowledged by him. The defendant was not paid

the port marine dues between the period from 11.04.2000 to 31.01.2003, for

nearly 3 years. At the time of finalizing the tender to the highest bidder, the

defendant had filed writ petition No.14568 of 2003 and thereafter on the

condition made by this Court, he had paid Rs.1,00,000/-.

4.3. In the letter dated 02.11.2001 itself, it was clearly informed that

allotment of space for breaking may be considered subject to the payment of

charges and compliance to the conditions stipulated therein. Further, it has

informed that if no reply is received within 15 days from the date of receipt,

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it will be presumed that they are not interested to pay dues and further action

will be taken in accordance with Section 64 of the Act. The notice was

received in person by the defendant on 02.11.2001 itself and thereafter

various reminders have also been sent to the defendant. But the defendant

neither replied nor taken any steps to remove the vessel. Hence, as a last

resort, the vessel was sold through tender to M/s. Duraimurugan & Co., on

the same conditions as stipulated to the defendant. It is submitted that after

the sale, the vessel was inspected and found that the keel of the vessel plates

was in very damaged condition and vessel would sink at any time. As it

would jeopardize the entire Chennai Port Trust Navigation operation, without

any alternative, it was allowed to scrap the vessel inside the Port after

entering into a Memorandum of Understanding. Had the defendant paid the

entire Berth Hire charges, they may be allowed to scrap as allowed to M/s.

Duraimurugan & Co.

4.4. Without any basis the defendant has made a counter claim for

Rs.45,00,000/- and for which the plaintiff is not liable to pay. The writ

petition filed by the defendant for waiving the port charges have been

subsequently withdrawn. The legitimate charges payable by the defendant

could not have been waived by the plaintiff. The vessel M.V.ELENI was

allowed to dismantle inside the Port only on payment of necessary berth hire

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charges as per the Hon’ble High Court’s direction in C.S.97 of 1997.

5. On the basis of the above pleadings, this Court has framed the

following issues:

“1. Whether the plaintiff is entitled to claim berth hire

charges from the defendant ?

2. Whether the plaintiff is entitled to get the suit claims

from the defendant ?

3. Whether the plaintiff is right in entering into

Memorandum of Understanding with M/s.Duraimurugan and

Company for scrapping the vessel inside the port area ?

4. Whether the plaintiff is liable to refund the sum of

Rs.28,07,007/- collected from the defendant ?

5. Whether the plaintiff is liable to pay damages to the

defendant towards loss of profit ?

6. Whether the defendant is entitled to get waiver of 80%

of the port charges as waived in the case of M/s.Hauers Lines

Pvt. Ltd., with respect to the same vessel in “M.V Island

Pride” ?

7. Whether the plaintiff is right in imposing the conditions

including the prior permission from Tamil Nadu Pollution

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Control Board for breaking the vessel in Port area as

contained in the plaintiff's letter dated 02.11.2001 while such

conditions were not imposed when the same vessel was

dismantled by M/s.Duraimurugan and Co.?”

6. During the course of the trial, one witness was examined on the

side of the plaintiff as P.W.1 and Exs.P1 to P22 were marked. On the side

the defendant, no witnesses were examined and Exs.D1 to D5 were marked.

Discussion:

7. The suit has been filed by the plaintiff for recovery of a sum of

Rs.1,08,84,931/- which is claimed to be the due to be paid by the defendant

towards marine services bills raised on account of the unpaid berth hire

charges for the period from 10.04.2000 to 20.10.2003 in respect of a vessel

by name “M.V.Island Pride”. The above vessel has been regularly calling in

Chennai Port for carrying the defence cargo to Port Blair in Andaman. The

vessel had arrived on 01.11.1999 and berthed at Coast Guard Berth on

“Cold Move” under the steamer agency M/s Hauers Lines Pvt. Limited.

The main engine of the vessel was broken down during the month of

October 1999.

8. M/s Hauers Lines Pvt. Limited requested the plaintiff to waive the

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port charges for the period between 01.11.1999 and 31.03.2000.

Considering the long life services rendered by the vessel for the defence at

Andaman, the plaintiff Board allowed the waiver of 80% of the Port charges

for the period between 01.11.1999 to 31.03.2000. The board has also passed

a resolution to that effect. It is resolved that 100% charges should be

collected from 01.04.2000 onwards. In accordance with the resolution

passed to collect the marine service charges, M/s Hauers Lines Pvt. Limited

had paid the dues until 10.04.2000 and thereafter, sold the same to the

defendant.

9. The defendant has appointed M/s.AKP Shipping and Chartering

Pvt. Ltd., as their steamer agent. After the purchase, the defendant has also

requested the plaintiff to waive the port charges by stating that the vessel is

not marine worthy and he has purchased the same for the purpose of

breaking it. The plaintiff was also aware of the fact that the vessel has been

berthed at Chennai Port from 01.11.1999, in view of its break down of the

main engine during the end of October 1999.

10. Obviously, the defendant could have purchased the vessel just for

breaking and not for sailing. As the defendant intended to dismantle the

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vessel as scrap and realise the purpose for which he has bought the vessel,

he requested the plaintiff to accord him permission to carryout the breaking

activity in Chennai Port itself. But unfortunately, the defendant was not

given permission to break the vessel in the Chennai Port and neither was he

given with any waiver of the port charges which accrued from the date of

his purchase.

11. The allegation of the defendant is that the waiver benefit has been

given to the earlier period from 01.11.1999 to 31.03.2000, just because one

of the Port trustees was holding a directorship of M/s Hauers Lines Pvt.

Limited. It is not denied by the plaintiff that one of the trustees was a

director of M/s Hauers Lines Pvt. Limited. But, it is stated by the plaintiff

that the waiver was accorded on routine fashion as how it was being given

to many vessels and there is no favouritism shown in granting of waiver.

12. So far as the defendant is concerned, he was aware of the

condition of the vessel when he purchased it from the earlier owner. But his

only intention for purchasing is to dismantle the vessel and sell the scrap on

profit. As the said purpose could not be accomplished and the vessel was

also not seaworthy, he is not able to shift it to some other Port. However, the

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defendant was receiving the marine bills towards Port charges continuously.

13. The dock master who was examined as P.W.1 has admitted in his

evidence that the vessel had lost the seaworthiness on and from 01.11.1999

when it was docked in the Port area. The evidence of P.W.1 also reveals that

the plaintiff was aware of the fact that the defendant has purchased the

vessel just for breaking. In such case, it would have not been possible for

the defendant to shift his vessel to any other Port. The defendant would have

purchased it with a strong belief that the breaking of the vessel could be

done at the earliest and hence, he need not pay the marine service charges

by docking the vessel in the Port for long. The previous agent M/s Hauers

Lines Pvt. Limited had availed 80% waiver of marine bill charges and had

also sold the vessel subsequently to the defendant without burning his

fingers.

14. The defendant was compelled to remove the vessel from Chennai

Port, despite it was within the knowledge of the plaintiff that it is not

possible. The plaintiff has taken a stand that waiver has already been

granted to the vessel for the earlier period and hence, no further waiver

could be granted. The defendant could have been aware of the risk of buying

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the vessel which has lost its seaworthiness and which was berthed idle at the

Port on charges.

15. The plaintiff's witness P.W.1 has stated that the vessel owner had

to keep his vessel in a seaworthy condition. Since the defendant has

purchased the vessel not for sailing, but for scraping, he cannot be expected

to keep the vessel in a seaworthy condition by spending huge money. From

the evidence on record, it is learnt that even the main engine of the vessel

got damaged and its condition was beyond resurrection. As the only option

open to any owner of the vessel is to make it a scrap, it was a burden for the

defendant to meet out the marine bill charges or to restore the vessel to

seaworthy condition. As the plaintiff was aware that the main engine was

not available in the vessel, the pressure given by the plaintiff to the

defendant appears unnatural. No doubt, the plaintiff is only a facilitator and

service provider for the vessels and he does not have the obligation to keep

the unseaworthy vessel to be berthed and that too, at free of cost. But the

plaintiff who is very sensitive about the Port safety and the environmental

hazard that might be caused by the retired Island Pride, could have been

vigilant while according waiver on the vessel to the benefit of the earlier

owner and he should have imposed a condition on the earlier owner himself

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that the ship should be dismantled without causing any environmental

hazard to the Port. Mere waiver without any such condition had allowed

M/s.Hauers Lines Pvt. Limited to get rid off the vessel and escape from any

liability.

16. At some point, the vessel had reached the terminal stage and the

danger was inevitable. Only at that stage, the plaintiff had invoked

distraint/arrest of the vehicle. When the power to distrain the vessel was

always available for the plaintiff to exercise even when the charges on the

vessel was not paid and became due, the plaintiff did not prefer to take such

action and waited until the vessel reached the stage of ‘about to wreck’. At

that stage, and after giving notice to the defendant and his agent to take steps

to remove the vessel, the plaintiff had invoked the provisions for distraint /

arrest and sale of the vessel under Section 64 of the Major Port Trust Act,

1963 read with Regulation 4 (5) of the Madras Port Trust. Even thereafter,

the defendant was not able to settle the dues and the tender was floated for

auction sale by incorporating the terms for dismantling the vessel inside the

Port itself by any successful bidder. Even when the tender was floated for

sale of the vessel, the defendant filed a writ petition in W.P.No.14568 of

2003 and got an order of interim stay by complying with the condition of

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payment of Rs.1,00,000/- on 20.05.2003. However, the said writ petition

was later withdrawn in view of the critical condition of the vessel.

Thereafter, the vessel was sold to M/s. Duraimurugan and Co. for a price of

Rs.27,07,007/-.

17. The new purchaser of the vessel had the advantage of breaking the

vessel inside the Port itself because of the about to sink condition of the

vessel. Despite the vessel was subject to encumbrance of large marine

service charges, the tender was floated without showing the encumbrance on

the vessel. When the vessel was sold to a third person, the purchaser was not

forced to take charge of the dues before taking delivery of the vessel. In fact,

as per the provisions of the Port Trust Act, the vessel could not be delivered

or moved out of the Port unless the charges due to the Port are settled. Still,

the above encumbrance on the vessel was not passed on to the new

purchaser. So, there is a possibility to presume a constructive waiver of the

Port charges, even though the parties have not entered into any terms

between themselves for waiver in accordance with Section 63 of the Indian

Contract Act.

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18. Though the defendant has not taken a specific plea that the Port

charges have been waived and hence, he was not liable to pay, the fact

remains that the Port charges are on the vessel which has been docked at the

plaintiff's Port and which has been sold and delivered to a third party auction

purchaser for a price less than the pending Port dues for which the vessel

was distrained. And further, the third party was permitted to move the vessel

from its original position at the Port and as per the terms of the tender and as

directed by the plaintiff even before the Port dues in respect of the vessel has

not been settled fully. As the regulation of the plaintiff’s Trust does not

allow such a movement of the vessel before the charges are paid and if the

plaintiff allows it to happen, then it has to be presumed that the plaintiff has

waived his right to claim the Port charges then remained after appropriating

the sale price against the pending dues. Or that the plaintiff has chosen to

accept the sale price offered by the third party auction purchaser as the full

quit towards the Port charges due for the vessel.

19. Though the defendant has not pleaded for waiver of the Port

charges on the vessel and eventually against him, he has been continuously

disowning the liability of the Port dues in view of the sale made by the

plaintiff to a third party auction purchaser for a sale price much less than the

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pending Port dues. The plaintiff while accepting such a sale price from a

third party purchaser was aware about the pending Port charges due on the

vessel and the consequences of his action of allowing the third party to

move the vessel for scrapping it after it was sold to him. In this regard, it is

appropriate to refer the judgment of the Hon'ble Supreme Court held in

Bhagwati Prasad vs. Chandramaul, reported in 1965 SCC Online SC 111.

In the said judgment, the Hon'ble Supreme Court has observed that the

general rule is that the relief should be founded on pleadings made by the

parties, but where the substantial matters relating to the title of both parties

to the suit are touched, though indirectly or even obscurely, in the issues,

and evidence has been led about them, then the argument that a particular

matter was not expressly taken in the pleadings would be purely formal and

technical and cannot succeed in every case. It is further observed that the

Court has to consider whether the parties know that the matter in question

was involved in the trial, and whether they had led evidence on the same. If

it appears that the parties did not know about the matter in issue and if one

party did not have the opportunity to lead evidence in respect of the same,

then the relief granted should be strictly on the basis of the pleading made

by the respective parties. For a better understanding, the essential part of the

above judgment is extracted as under:

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“10. But in considering the application of this doctrine

to the facts of the present case, it is necessary to bear in mind

the other principle that considerations of form cannot over-

ride the legitimate considerations of substance. If a plea is not

specifically made and yet it is covered by an issue by

implication, and the parties knew that the said plea was

involved in the trial, then the mere fact that the plea was not

expressly taken in the pleadings would not necessarily

disentitle a party from relying upon it if it is satisfactorily

proved by evidence. The general rule no doubt is that the relief

should be founded on pleadings made by the parties. But where

the substantial matters relating to the title of both parties to the

suit are touched, though indirectly or even obscurely, in the

issues, and evidence has been led about them, then the

argument that a particular matter was not expressly taken in

the pleadings would be purely formal and technical and cannot

succeed in every case. What the Court has to consider in

dealing with such an objection is : did the parties know that

the matter in question was involved in the trial, and did they

lead evidence about it? If it appears that the parties did not

know that the matter was in issue at the trial and one of them

has had no opportunity to lead evidence in respect of it, that

undoubtedly would be a different matter. To allow one party to

rely upon a matter in respect of which the other party did not

lead evidence and has had no opportunity to lead evidence,

would introduce considerations of prejudice, and in doing

justice to one party, the Court cannot do injustice to another.

11. Therefore, in dealing with Mr Setalvad's argument,

our enquiry should not be so much about the form of the

pleadings as their substance; we must find out whether the

ground of licence on which the plaintiff's claim for ejectment

has been confirmed by the High Court was in substance the

subject-matter of the trial or not; did the defendant know that

alternatively, the plaintiff would rely upon the plea of licence

and has evidence been given about the said plea by both the

parties or not? If the answers to these questions are in favour

of the plaintiff, then the technical objection that the plaint did

not specifically make out a case for licence, would not avail

the defendant.

12. Turning then to the pleadings and evidence in this

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case, there can be little doubt that the defendant knew what he

was specifically pleading. He had admitted the title of the

plaintiff in regard to the plot and set up a case as to the

manner in which he spent his own money in constructing the

house. The plaintiff led evidence about the tenancy set up by

him and the defendant led evidence about the agreement on

which he relied. Both the pleas are clear and specific and the

common basis of both the pleas was that the plaintiff was the

owner and the defendant was in possession by his permission.

In such a case the relationship between the parties would be

either that of a landlord and tenant, or that of an owner of

property and a person put into possession of it by the owner's

licence. No other alternative is logically or legitimately

possible. When parties led evidence in this case, clearly they

were conscious of this position, and so, when the High Court

came to the conclusion that the tenancy had not been proved,

but the defendant's agreement also had not been established, it

clearly followed that the defendant was in possession of the

suit premises by the leave and licence of the plaintiff. Once this

conclusion was reached, the question as to whether any relief

can be granted to the plaintiff or not was a mere matter of law,

and in deciding this point in favour of the plaintiff, it cannot be

said that any prejudice has been caused to the defendant.”

20. The plaintiff was aware that if any upset price for the vessel

during the auction is notified by including the pending Port charges due, no

one will come forward to purchase the vessel. As the keel of the vessel

plates were found in a very damaged condition, the vessel was expected to

sink at any time. The plaintiff has taken urgent measures to get rid off the

vessel. Because it was strongly believed by the plaintiff that the vessel

would jeopardize the entire Port Trust navigation operation, if it was

allowed to sink. Such an eventuality was averted by accepting the auction

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price offered by M/s. Duraimurugan and Co. at Rs.27,07,007/- and allowing

him to take delivery of the vessel even without the Port charges on the

vessel was cleared. Such a gesture on the part of the plaintiff can only be

construed as limiting the Port charges for the price for which the vessel was

sold in the auction and the waiver of the remaining Port charges on the

vessel.

21. Section 64 of the Madras Port Trusts Act prescribes that the owner

of any vessel on which dues are payable under the Act, neglects to pay the

same, on demand the Board may distraint / arrest such vessel and detain the

same until the amount due to the Board has been paid. If such dues are not

paid within 5 days from the date of such distraint / arrest, the vessel or thing

so distrained can be sold and the sale proceeds can be utilised to satisfy the

dues and the surplus remainder of the sale proceeds, if any, shall be payable

to the owner of the vessel as per the regulations. No master of the vessel can

move away the vessel from the dock without paying the Port charges. The

auction sale purchaser M/s.Duraimurugan and Co. had the advantage of

delivering the vessel and move it for scrapping even when the Port charges

on the vessel was due. Hence, a constructive waiver granted by the plaintiff

to M/s.Duraimurugan and Co. has to be presumed. In fact,

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M/s.Duraimurugan and Co. was given with immediate permission to

dismantle the vessel on account of the emergency.

22. The defendant was all along writing to the plaintiff about his

inability to shift the vessel and necessity to accord immediate permission to

dismantle the vessel inside the Port area. The auction purchaser was allowed

to break the vessel, because the ownership of the vessel was passed on to

him through auction sale. Anyone who purchases the vessel whose dues are

yet to be paid, is presumed to be purchasing the vessel subject to the dues on

the same. The defendant had purchased the vessel from M/s Hauers Lines

Pvt. Limited only because as on the date of the sale, M/s Hauers Lines Pvt.

Limited had paid the remaining 20% service charges along with other Port

charges concerning “M.V.Island Pride” and the delivery of the vessel

without dues had been given in favour of the defendant. Despite the charges

payable for the vessel as claimed by the plaintiff was at a hefty sum of

Rs.1,08,84,931/-, the plaintiff had chosen to accept Rs.27,07,007/-, as the

highest tender. It appears as though the waiver for the pending charges

beyond the sale price of the vessel has been waived in favour of

M/s.Duraimurugan and Co, when he took charge of “M.V.Island Pride”.

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23. In other words, despite M/s.Duraimurugan and Co., bought the

vessel, the Port charges due on the vessel have not been passed on to

M/s.Duraimurugan and Co. In case, the defendant had purchased the vessel

from M/s Hauers Lines Pvt. Limited before they paid the Port charges, then

the defendant would not have been allowed to take delivery of the vessel

before its Port charges are cleared. Hence, the incidental dealing on the

question of waiver and the finding is very much based on the materials

available and the evidence led by both parties. Hence, the plaintiff will not

be prejudiced for taking up this issue incidentally and rendering an answer

for the same in the interest of substantial justice.

24. When a specific question was put to P.W.1 whether it is

mandatory for the Port Trust to collect berth charges in case of erect vessel,

he has answered in affirmative and said that any vessel inside the port either

wreck or floating has to pay the charges as prescribed in the scale of rates.

The condition of “M.V.Island Pride” has almost reached the stage of

wrecking and it was expected even by the plaintiff that the vessel was about

to sink and endanger the whole Port area.

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25. M/s.Duraimurugan and Co. was allowed to purchase “M.V.Island

Pride” at such a terminal stage and they were also given with the benefit of

dismantling the vessel inside the Port area. Even though the plaintiff was

aware that the defendant had also purchased the vessel from M/s.Hauers

Lines Pvt. Limited only for the purpose of breaking and scrapping, he was

not allowed to do that in any reasonable time and he was made to run pillar

to post. In fact, on 10.04.2000 when the vessel was sold, it was not in a

seaworthy condition. When the main engine itself was not available in the

vessel, it is unnatural to expect the defendant to make it seaworthy.

26. P.W.1 has stated in his evidence that as per Merchant Shipping

Act, the vessel needs to be docked twice in five years, but, this vessel was

neither done with any such dry docking nor any underwater inspection and

hence, its condition got deteriorated. Various conditions have been laid

down for granting permission to the defendant to scrap the vessel. As the

defendant could not meet out the same, the vessel could not be scrapped and

it needed to be docked idle for nearly three years. Though the plaintiff had

the power to distraint the vessel and sell it on auction to realise the Port

charges payable on the vessel, that was not done at the earliest point of time

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when the charges were kept due and the charges were allowed to accumulate

for nearly three years.

27. P.W.1 has stated that Ex.P19 bills spread across the period from

16.09.2000 to 16.03.2005. As the demand has also been made for advance

payment for the future period also, the invoices is seen to have been made

till 16.03.2005. However, the plaint does not exhibit any break up figures to

show how the total claim of Rs.1,08,84,931/- has been arrived at.

Undoubtedly, the plaintiff has got the right as per the regulations to distraint

the vessel in the event of Port charges not paid. As stated already, such an

option was not exercised by the plaintiff at the earliest opportunity. As the

plaintiff was aware of the complete lack of seaworthiness of the vessel, the

plaintiff could not have expected the vessel to sail and earn any profit for its

owner and enable him to pay the dues of the Port charges. So, it was

unreasonable to delay the distraint proceedings for nearly three years by

adding up the charges for all that period.

28. It is stated already that the vessel was sold to the auction

purchaser M/s.Duraimurugan and Co. for scrapping and not for sailing.

Even the defendant had purchased the vessel for only scrapping purpose.

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Had the defendant been given with the permission at the earliest point of

time by considering the deterioration of the vessel and its unseaworthy

condition, the Port charges would not have got accumulated.

29. When a specific question was asked whether M/s.Duraimurugan

and Co. was asked to get clearance from the Tamil Nadu Pollution Control

Board as how the defendant was required to do, P.W.1 has stated that these

details are known to Controller of Stores. But the Controller of Stores was

not examined as a witness to depose on this aspect. The precarious condition

of the vessel has been briefed by the defendant in all his communications. In

fact, in Ex.P15, which is also a plaintiff’s document, it is alleged that the

vessel was in a precarious condition. In such case, the plaintiff could have

shown indulgence in according permission by anticipating the impending

danger that might cause to the Port shortly.

30. One of the reasons for denying the permission to break

“M.V.Island Pride” is that the defendant did not pay the Port charges in

advance. Such liability was not imposed on M/s.Duraimurugan and Co.

This is probably because the plaintiff has seen M/s.Duraimurugan and Co.

as a saviour and hence, he was allowed to exercise his right to dismantle the

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vessel inside the Port itself. Even though P.W.1 has stated that he was not

aware of the terms imposed for dismantling, it is seen from Ex.P22, note

order of the plaintiff that the top portion of the vessel as much as possible

will be dismantled in the present position itself and the bottom portion will

be taken to a place as directed by Deputy Port Conservator without any

hindrance to the Port Trust. The above office note would only convey that

for the successful bidder, prior approval has been accorded to break it

partially in a very same position where the vessel was docked. Even for

further dismantling, reasonable assistance had been given by earmarking a

place by the Deputy Port Conservator. However, such a facility has not been

offered to the defendant, though he was all along approaching the plaintiff

by highlighting the worst condition of the vessel.

31. When P.W.1 was confronted with the details in terms of the

tender, P.W.1 has stated that the tender was floated by the Controller of

Stores and he was not aware of its terms. The tender for disposal of

“M.V.Island Pride” issued by the Controller of Stores of the plaintiff has

been produced as Ex.P17. On perusal of the same, it is seen that an

exhaustive safety plan has been laid down by allowing the successful bidder

to complete the breaking of the vessel inside the Port under the supervision

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of the plaintiff's officers. As the plaintiff was aware of the unseaworthy

condition of “M.V.Island Pride” for sailing, the plaintiff could have

accorded immediate permission to scrap the vessel and thereby avoided the

Port charges from getting accumulated. Even though the plaintiff is a

facilitator and service provider for vessels called at the Port, some

humanitarian consideration could have been shown at the earliest in order to

avoid imminent danger arose due to the long idle docking of “M.V.Island

Pride”. Many unreasonable and untimely decisions taken by the plaintiff

were also contributed to the escalation of the Port charges from time to time.

32. As the plaintiff was aware of the deteriorating condition of the

vessel, it would have been possible for the plaintiff to visualise the danger

and also the inability of the defendant. It was not only the vessel which had

reached the terminal stage, but also the defendant who was loitering in the

office of the plaintiff to get approval or waiver for dismantling the vessel.

33. As the vessel has lost the main engine and the rest of the engine

parts also got damaged, there would have been no scope for rehabilitation of

the vessel and make it fit worthy for sailing. The defendant did not have any

money out of the sale after he purchased the vessel, rather he had spent more

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money on litigation. The plaintiff could have exercised reasonable discretion

to waive the Port charges in view of the extraordinary situation arose in the

transactions concerning “M.V.Island Pride”. But it was done constructively

by accepting a sale price from a third party bidder though it was much below

than the pending Port charges due.

34. As stated already, the plaintiff has not given any breakup figures

to substantiate the claim of Rs.1,08,84,931/- except by producing the bunch

of bills raised from time to time. Since the plaintiff's unreasonableness and

inaction was the reason for the accumulated higher charges, no liability can

be fixed upon the defendant to bear the same. This is especially so, the

auction purchaser M/s.Duraimurugan and Co. was allowed to scrap the

vessel in the Port area without having obligation to pay Port charges

accumulated on the vessel. The act of the plaintiff to accept any auction

price below than the pending dues to be paid on the vessel would amount to

constructive waiver of the remaining charges by act of parties. Hence, the

issues Nos.1 and 2 are answered against the plaintiff.

35. So far as the issue raised under issue No.3 is concerned, it is about

the right of the plaintiff to enter into a memorandum of understanding with

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M/s.Duraimurugan and Co. to scrap the vessel inside the Port area. But,

giving an answer to this question will not in any way help either the plaintiff

or the defendant to assert their respective rights or claim. Further, this issue

cannot be effectively answered in the absence of M/s.Duraimurugan and Co.

being a party and his stand on the issue is heard. For the claim made in the

plaint and the counter claim made by the defendant, this issue is not

relevant. Thus, the issue No.3 is answered.

36. The issue Nos. 6 and 7 are about the entitlement and relative

reasonableness of the defendant to get waiver. The defendant's claim is not

only about waiver, but, it is also about granting permission to dismantle the

vessel inside the Port area. Considering the inaction on the part of the

plaintiff in according permission to the defendant to scrap the vessel inside

the Port area in its existing position and the relative facility accorded to the

third party auction purchaser, it has been held already that the plaintiff is not

entitled to claim the suit amount from the defendant. So, to deal with any

issue on waiver at this remote point is superfluous. This is especially so

when it has been already held that the plaintiff is not entitled to get the

decree for the suit amount. Thus, the issue Nos.6 and 7 are answered.

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37. The defendant has made a counter claim showing that he

sustained a loss in view of the inaction on the part of the plaintiff and that

the plaintiff has to refund a sum of Rs.28,00,000/- collected from the

defendant. The defendant knows the risk of the transaction involving

“M.V.Island Pride” and its condition when he purchased the same. No

assurance was given by the plaintiff that the defendant will be accorded with

permission to dismantle the vessel in the very same existing position. So, it

would be unreasonable on the part of the defendant also to make any counter

claim. Disallowing the claim of the plaintiff itself is an equitable relief

granted to the defendant. Hence, the defendant is not entitled to claim any

other amount as shown in his counter claim. Thus, the issue Nos.4 & 5 are

answered.

38. In the result, both the Civil Suit of the plaintiff and the counter

claim of the defendant are dismissed. No costs.

23.01.2026

Index : Yes

Speaking Order : Yes

Neutral Citation : Yes

gsk

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R.N.MANJULA, J.,

gsk

To

M/s.T.N.S.S.STEELS Pvt., Limited,

Rep. by its Managing Director

No.8, Rathinasabapathy Street,

Thondiarpet, Chennai - 600 021.

C.S.No.127 of 2005

23.01.2026

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