' MUSHIR ALAM, C.J.---Petitioner has challenged the authority of KPT to claim "Pipeline Charges" from the petitioner through impugned damand notices, in respect of various vessels that called Karachi Port, under the agency of the petitioner.
2. Petitioner has pitched instant petition on two fold grounds, that needs resolution by this court, firstly that impugned " Pipeline Charges" could neither be imposed nor recovered by the KPT, and secondly even if Pipeline charges are recoverable, then the petitioner as shipping agent is not liable to pay Pipeline Charges for the vessel under its agency, calling at Karachi Port.
3. In order to address the questions posed; brief facts leading to the instant petition are to be kept in sight. Petitioner, Seatrade Shipping' a proprietary concern is engaged in the business of shipping agency, and during course of its business, represented and facilitated various vessels that called at Port of Karachi to load and discharge cargo. The petitioner as a facilitator of vessels maintains Let Pass and Deposit Account (LPD) with respondent No,! To enable them to deduct the amount which may be leviable and recoverable from the respective vessels for the services rendered by the Port Authorities to the vessels. It is the case of the petitioner that about 183 vessels under its agency called at Karachi Port initially to load bulk cement during the period from March, 2009 to June, 2010. It is the case of the petitioner that the vessels could not leave port without clearance of the port dues. On payment of port dues and charges the respondent, KPT issues " No Demand Certificate" (NDC) and it was urged that once NDC is issued the responsibility of the petitioner as shipping agent comes to an end.
4. It is the case of the petitioner that on 12-7-2010 respondent-KPT raised impugned demand in respect of " Pipeline Charges" in respect of 123 vessels under its agency that called at port of Karachi, which amount was unilaterally deducted from the LPD account of the petitioner without any notice. It is urged that Pipeline charges are not leviable under any law and secondly that the petitioner being Shipping Agent is not liable to pay any purported pipeline charges, imposed on the vessels more particularly when NDC were already issued by the respondent No,1 and pursuant thereto vessels have sailed out. It is urged unless respondents are restrained from deducting further amount from the LPD account; the petitioner will be burdened with liability, which is neither due against any vessel nor could be recovered from the petitioner as a shipping agent.
5. Mr. Zafar learned counsel contends that the respondent No,1 in terms of S.R.O. I (KE)/2003 dated 7-1-2003 could claim charges as specified in the notification and the pipeline charges are extraneous to such notification, therefore, same cannot be claimed or demanded. Mr. Zafar further urged that in case any amount was due and outstanding against any vessel the Respondent-KPT could have detained the vessel for non-payment of charges under section 52 of the KPT Act, 1886 and in terms of section 53 of the KPT Act, port clearance should not have been granted without payment of amount due against by the vessel, owner or master of the vessel, according to Mr. Zafar since No demand certificate was issued, therefore, strong presumption is in favour of the petitioner that no amount is due nor payable by the vessel, therefore, same could not be propelled on the petitioner. In support of his contention Mr. Zafar has placed reliance on Global Tradeways Ltd. v. Tsavliris Russ (World Salvage and Towage) Ltd., 2004 YLR 2581 wherein it was urged that a shipping agent is not liable for the payment of port dues. It is, therefore, prayed that impugned demand may be struck down and the petition be allowed.
6. Mr. Muhammad Ahsan Ghani Siddiqui, learned counsel for the respondent, KPT seriously disputed the contention of the petitioner. It is stated that Let Pass Deposit (LPD) Account has been established for the benefit of the vessel and the shipping "agent. It is urged that it is a mechanism whereby the vessel could freely enter and leave port of Karachi, load or discharge cargo and leave the port without entering into dispute and controversy as to the port and shipping services provided by the port authorities and other agencies related and connected thereto. It is stated that such services commence the moment the vessel calls on port from the outer Anchorage till it leave territorial waters of Pakistan and it cannot be expected that a vessel will engage into settlement of the amount that may cause several days to collect data as to the services provided by various department and establishment, in such view of the matter, LPD account facilitate vessel to leave port without any hassle. It is stated that shipping agent in terms of Customs Act, 1969 under section 55 thereof; is responsible for the short landing or otherwise and not for the port dues. It is urged that section 55(1)(b)(c) of the Customs Act, 1969 is attracted in the instant case. Section 55(1)(b)
(c) reads as follows:--
(55) Power to refuse port---clearance to vessels or permission for departure to other conveyance.
(1) The appropriate officer may refuse to give port clearance to a vessel or permission for departure to any other conveyance until:-)
(a)
(b) all stations or port dues and other charges and penalties payable in respect of such vessel, or by the owner or master thereof, or in respect of such other conveyance by the owner person in- charge thereof, and all taxes, duties and other dues payable in respect of any goods loaded therein, have been duly paid, or other payment secured by such guarantee or by such deposit at such rates as such officer directs;
(c) where any export goods have been loaded without payment or securing payment as aforesaid of all taxes, duties and other dues payable in respect thereof, or in contravention of any provision of this Act or the rules or of any other law for the time being in force relating to export of goods:--
(i) such goods have been unloaded; or
(ii) where the appropriate officer is satisfied that it is not practicable to upload such goods, the person-in-charge or his duly authorized agent has given an undertaking, secured by such guarantee or deposit of such amount as the appropriate officer may direct, for bringing back the goods to Pakistan;
7. By referring to the above provisions it is stated that NDC are issued either when the amount is fully paid or secured by such guarantee or by such deposit at such rates as such officer directs in instant case per Mr. Ahsan Ghani, the amount was since secured by such guarantee or by such deposit at such rates as such officer directs. therefore, " No Demand Certificates" were issued to avoid delays and detention of the vessel till the final bill is prepared, that would cause financial losses to the ship owner. It is urged that NDC are issued at the request of the shipping agent/stevedore against the security deposited by them through LPD account, which account is maintained for the benefit of the vessels and owners of vessel through stevedores or shipping agents for the recovery of the port dues and other dues and charges payable by the vessels, which dues and charges are always adjusted and appropriated against such account maintained by the any other person, which in like cases is shipping agent and such account is under the control of the respondent-KPT.
8. Mr. Ahsan Ghani, learned counsel for the KPT urged that for loading and discharging bulk cargo "silos" is installed in the premises of the KPT, and the pipeline connected with the silos is used by the vessels. According to Mr. Ghani " pipeline charges" is chargeable under S.R.O. 1 (KE)-2003 in terms of its clause No,0417 (b) thereof, were not charged at the time of issuance of NDC, therefore same were deducted from the LPD account maintained by the petitioner, which account is maintained for this very purpose by the petitioner as Shipping Agent.
9. Mr.Ahsan Ghani Siddiqui points out that since the KPT billing system is in the process of automation there was some delay in issuing invoice for Pipeline Charges, which when discovered were billed and deducted from the LPD account maintained for this purpose. Mr. Siddiqui, has contended that this is long drawn and established practice and is being followed by all the shipping agents and other person connected with providing services to vessels and to the ship owners of paying the amount from the LPD account-on behalf of the vessels even in cases where the vessels have left the port as is apparent from various bills placed on record as annexure-D from pages 61 to 67, to urge that port charges were recovered much after the vessels sailed out.
' We have heard the arguments and perused, the record.
10. On examining Karachi Port Trust Act, 1886 and provisions of Ports Act, 1908, the Board of Trustees being competent Authority under sections 43 and 43A of KPT Act, 1886, and sections 33, 34 and 35 of the Ports Act, 1908 with the sanction of the Federal Government to frame Tariff, prescribe scale of tolls, dues, rates and charges.
11. In terms of section 33 of Ports Act, 1908, Government could levy Port Dues, in terms of section 35 ibid; fee for Pilotage and certain other services including hauling, mooring re-mooring, hooking, measuring and other services rendered to vessels could be charged at such rate as the Government may direct. In terms of section 38 thereof, the persons to whom any dues, fees or other charges authorized to be taken by or under. Ports Act are paid is responsible to grant to the person paying the same a proper receipt describing the name of his officer, the port or place, at which the dues, fees or other charges are paid and the name tonnage and other proper description of the vessels in respect of which payment is made.
12. In terms of section 43 of the Ports Act, 1908, the officer of the Government whose duty is to grant port clearance for any vessel is not authorized to grant port clearance for any vessel unless the owner or master or some other person, has paid or secured to the satisfaction of such officer the amount of all port dues and other incidental charges. Section 43 of the Ports Act, 1908 reads as follows:--
43. No Port-Clears to be Granted Until Port Charges are Paid. The officer of the Government whose duty it is to grant a port-clearance for any vessel shall not grant such clearance--
(a) until her owner or master, or some other persons, has paid or secured to the satisfaction of such officer the amount of all port-dues, fees and other charges, and of all fines, penalties and expenses to which the vessel or her owner or master is liable under this Act;
(b) until all expenses, which by the Merchant Shipping Act, 1894, section 207, are to be borne by her owner, incurred since her arrival in the port from which he seeks clearance, have been paid.
13. Non-payment of the port dues entails penalty in terms of section 45 of the Ports Act, 1908.
14. Under sections 43, 43A, of the Karachi Port Trust Act, 1886 the Board of Trustee subject to sanction of Federal Government, is competent to prescribe and alter scale of tolls, dues, charges etc. For the services provided to the vessels calling at the Port of Karachi.
15. The Board of Trustees in exercise of authority conferred under the Ports Act, 1908 and Karachi Port Trust Act, 1386 through S.R.O. 2003 dated 7-1-2003 prescribed scale of tolls, dues, rates and charges, subject S.R.O. Reads as follows:- ' In pursuance of section 43B of the Karachi Port Trust Act, 1886 (Bombay Act VI, 1886) and in supersession of the Ministry of Communication's Notification No, S.R.O. 129 (KE)/94 dated 12th July, 1994, and other notifications altering the scale of rates, dues and charges notified thereunder, it is hereby notified that the Trustees of the Port of Karachi have, with the sanction of the Federal Government, framed under sections 43, 43A and 43B of the said Act, the scale of tolls, dues, rates and charges effective from seven days after the date of publication in the official Gazette of Pakistan as shown in the respective sections herein. AND ' In exercise of powers conferred by subsection (1) of section 35 of the Ports Act, 1908 (XV of 1908), and in supersession of the Ministry of Communication's Notification No, S.R.O. 130 (KE)/94 dated 12th July, 1994, and all its subsequent notifications on the subject and in exercise of the powers conferred by subsection (1) of Section 33 of the Ports Act, 1908 (XV of 1908), and in supersession of the Ministry of Communication's Notification No, S.R.O. 131 (KE)/94 dated 12th July, 1994 and all its subsequent notifications on the subject, the Federal Government is pleased to direct that the charges for the pilotage and the port dues on the vessels entering F the Port of Karachi shall be levied as shown in the respective sections herein effective from seven days after the date of publication in the official Gazette of Pakistan.
' Subject S.R.O. Runs into 10 sections and Pipeline Charges fall under section 4 (Dry Charges, Wharfage) and relevant clause No, 0417 pertaining to Pipeline Charges reads as follows;-- 0417. Pipeline Charges.
(a) Bunkering vessels: US $ 47 per hour or PTO an hour from the time of connection to that of disconnection of pipes.
(b) Discharging or Loading vessels: US $ 120 for every 24 hours or. PTO from the time of arrival alongside the wharf till completion.
' Amplifying Note ' PAN-1. In the case of vessels using pipelines belonging to the oil companies a rebate of 25 per cent will be allowed in the aforesaid charges. For complete S.R.O. See < http : //www . Kpt .Gov.Pk/2002/kpt/sro/kptsro2002.Htm >
16. In view of the above it cannot be said that the Pipeline charges are extraneous to the authority or beyond the competence of Board of Trustees of KPT, same are legally and validly imposed in exercise of authority conferred under the law, therefore, contentions of Mr. Zafar that the Pipeline Charges are neither legal nor recoverable is not sustainable; is accordingly repelled.
17. This brings us to other challenge thrown by Mr. Zafar that the petitioner being shipping agent is not liable to pay Pipeline charges for the vessel under their agency, for which reliance was placed on Globle Tradeway Limited 2004 .YLR 2581. In the cited case the issue for the consideration of the Court was whether Port Charges and due payable by the offending vessel could be recovered by detaining other vessel under the agency of same Principal/Shipping Agent. In cited case port clearance was. Denied to the detained vessel `M.T. Sea Angel' by the KPT on the ground of sistership, inter alia, that it is under the ownership of a person who owned vessel `M.T Tasman Spirit', which vessel was under gross liability, in cited case same shipping agent acted as agent for both the vessels. NDC was denied to vessel `M.T Sea Angel' for want of clearance of liability of Tasman Spirit under same principal/shipping agent and in this context it was held as follows:-- "From the discussion made above I am of the view that shipping agent of various vessels is not responsible for payment of the dues of the vessel unless it is otherwise undertaken by such agent undertook to pay dues of on behalf of any particular principal or Vessel, such undertaking on behalf of one Principal or vessel cannot be enforced against another Principal or vessel owned by differed person. Any other vessel may be arrested, under the Admiralty jurisdiction of this Court only when it is prima facie shown that other vessel is also beneficially owned by the same owner against whom a maritime line exist, no such plea was raised nor it is shown that M. T. Sea Angel is beneficially owned by the owners of M.T. Tasman Spirit. " (Underlined to emphasise)
18. In cited case Globle Tradeway Limited 2004 YLR 2581 obligation of a shipping agent in the context of sections 207 and 208 of the Customs Act, 1969 was also examined in the light of section 55(d) and subsection (2) of Customs Act, vis-a-vis to the claim of short landing of the cargo carried on board by the vessel or the liability for any penalty imposed under Clause-24 of the table under subsection (1) of section 156 of the Customs Act. Even under the Customs Act, 1969 initial liability to pay port dues and other charges and penalties payable is on the vessel, by the owner or master thereof, and port clearance could be refused by the appropriate officer unless all stations or port dues and other charges payable in respect thereof " have, been duly paid or other payment secured by such guarantee or by such deposit at such rates as such officer directs." (see section 55(1)(b) of the Customs Act, 1969) underlined to emphasize.
19. In the cited case Globle Tradeway Limited 2004 YLR 2581 nothing was brought on record to show that the shipping agent assumed any liability to pay dues on behalf of the offending vessel or for that matter dues payable by the offending vessel could not be recovered from any other detained vessel under the same agency.
20. Section 43 of the Ports Act, 1908, provide that port clearance could be denied by the port authority until the owner of the vessel or master, "or some other persons" has paid ' or "secured" to the satisfaction of such officer the amount of all port-dues, fees and other charges, and of all fines, penalties and expenses "to which the vessel" or her owner or master " is liable under this Act;
21. It can be seen both under the Customs Act, 1969 and under the Ports Act, 1908 if to the satisfaction of concerned officer the port dues and charges or customs dues and charges to which the vessel, her owner or master is liable are either paid or "secured" by " some other person" and per Customs Act, 1969 payment secured by such guarantee or by such deposit at such rates as such officer directs, then NDC or the Port Clearance is granted. Now to examine the contentions of Mr. Ahsan Ghani, that the petitioner is the other person who assumed the liability and who has secured the payment by such guarantee or by such deposit at such rates as such officer directs.
Respondents were directed to place on record any material to show that petitioners have given any such assurance or guarantee or authority to recover the amount on behalf of the vessel under the agency of the petitioner. Mr. Ahsan Ghani Siddiqui; placed on record the " Debiting Instructions" issued by the petitioner, to its bankers, dated 22-11-2007, in favour of the KPT. Reference to such Debiting Instructions is relevant for the determination of present controversy, which reads as follows:-- Date: 22-11-2007 The Manager Habib Bank Limited KPT Branch Karachi.
Co:- The Chief Accounts Officer KPT, Karachi.
SUBJECT: DEBITING INSTRUCITONS IN FAVOUR OF KPT RE: ACCOUNT NO.0016-79000059-03 Dear Sir, This is with respect to our arrangement with KPT, whereby in order to obtain the requisite disembarking permission from KPT we are required to pay certain dues to KPT prior to the departure of each Vessel that departs from the Karachi Port limit. To this end, we are obligated to clear the estimated vessel wise amount of dues as per KPT's Estimated Dues, save for pecuniary penalties which as per our agreement with KPT may be adjusted against the Final Invoice (defined below) ("Estimated Dues') in respect of the each concerned vessel before it leaves the Karachi Port Limit. The amount so charged may subsequently be adjusted upwards or downwards upon receipt of a detailed invoice from KPT ("Final Invoice"). In view of the above we hereby irrevocably authorize and instruct you to debit the above referred account with the vessel wise amounts as notified in writing by KPT to you from time to time representing the aggregate vessel wise amount due by us toward KPT as per KPT's vessel wise Estimated Dues raised in respect of our vessel(s).
The vessel wise amount(s) mentioned in the Estimated Dues may be adjusted against the Final Invoice, raised in respect of each Vessel.
' Furthermore you are requested to retain the amount(s) mentioned in the Estimated Dues in a Collection Account, till you are in respect of the Final Invoice from KPT, upon which receipt you may credit the account of KPT with the actual amount mentioned in the Final Invoice and if applicable credit the remaining balance back to our above reference amount. In case the amount stated in the Final Invoice is more than the amount quoted in the Estimated Dues, you are authorized to debit our account with the deference in avour KPT.
' We hereby confirm that we shall at all times be liable for any amounts due towards KPT by us in respect of our vessels and no Liability in this regard shall fall upon you under any circumstances.
' Notwithstanding anything to the contrary stated hereinabove, we confirm that the above authorization does not constitute a transfer of our liabilities towards KPT to you in any way, whatsoever. Your obligation to carry out the instructions under this Letter of Authority is subject to availability of cleared and available balance, sufficient funds in the above referenced account.
' We undertake to indemnify and hold you harmless from and against any claims, actions, costs, expenses, damages or legal proceedings incurred by or instituted against you on account of your compliance with or reliance on the instructions contained in this Letter of Authority.
' Yours faithfully ' For Seatrade Shipping ' Muhammad Rafiq (Manager Shipping)
22. On perusal of the above debiting instruction it could be seen that the petitioner had given an authority to the bank to debit the account maintained for the said purpose on demand being raised by the KPT it is further provided that In case the amount stated in the Final Invoice is more than the amount quoted in the Estimated Dues, you are authorized to debit our account with the difference in favour of KPT. Petitioner also undertook to indemnify the bank against recovery made by the KPT. From the "DEBITING INSTRUCITONS IN FAVOUR OF KPT" as reproduced above in extenso, it could be safely concluded that the petitioner shipping agent is "the other person" in terms of section 43 of the Ports Act 1908 and is a person who assumed the liability and who secured the payment by such guarantee or by such deposit at such rates as such officer directs in terms of section 55(1)(b) of the Customs Act 1969, therefore, there is no escape from the demand of pipeline charges claimed and deducted from the LPD account maintained by the petitioner as shipping agent for the vessels under its agency, that called port of Karachi and utilized the services of the Port of Karachi.
23. From the discussion made above and material placed on record it is established that the petitioner as a shipping agent is the other persons within the contemplation of section 43 of the Ports Act, 1908 who has "secured" payment of all port-dues, fees and other charges, and of all fines, penalties and expenses "to which the vessel" or her owner or master "is liable under the Ports Act, 1908 by establishing LPD Account and issuing Debiting Instruction, to the satisfaction of such officer had assumed the responsibility and liability to pay all Port tolls, dues, rate and charges per prescribed tariff and scale for the use of port facilities and services performed by the Board or its servants or for the use of any works or appliances provided by the Board. In view of discussion above, petition does not merit consideration and is accordingly dismissed with costs.