Bombay High Court Orders MPT To Refund ₹4.09 Crore To JSW Steel Over Sunken Barge

The Bombay High Court on Friday held that liability for the removal of a wrecked vessel under Section 14 of the Indian Ports Act, 1908 applies to the owner of the vessel and directed the Mumbai Port Trust (MPT) to refund Rs 4.09 crore to JSW Steel after finding it was not the owner of the sunken barge.

Allowing the writ petition, a bench of Justices Manish Pitale and Shreeram V. Shirsat directed MPT to return Rs 4,09,25,764, comprising Rs 70 lakh deposited by JSW Steel along with accrued interest, within six weeks.

“In view of the above, the writ petition is allowed in the above terms. We find that respondent No.1 – MPT had withdrawn an amount of ₹ 4,09,25,764 (₹ 70 lakhs deposited by the petitioner along with accrued interest), after this writ petition was earlier disposed of by this Court on 13.08.2021. As a consequence of this writ petition being allowed in above terms, the respondent No.1 – MPT is directed to pay the said amount to the petitioner within a period of six weeks from today,” the court said.

The court held that liability under Section 14 applies to the “owner” of the vessel.

“As a matter of fact, since the petitioner was not the owner of the vessel i.e. barge M. V. Satyam, in the first place, the respondent No.1 – MPT could not have issued the said notice to the petitioner under Section 14 of the said Act. The failure on the part of respondent No.1 - MPT, as the Conservator, to proceed strictly in terms of the statutory provisions, deprived the parties to invoke Section 57(1) of the said Act to raise any dispute before the competent Magistrate, thereby showing the arbitrary and unsustainable approach adopted by the said respondent.,” the bench held.

The dispute dates back to April 11, 1995, when the barge M.V. Satyam, carrying iron ore meant for JSW Steel, sank in Mumbai harbour, obstructing navigation. On April 19, 1995, the Mumbai Port Trust issued a notice to JSW Steel and others under Section 14, directing them to remove the wreck and deposit Rs 70 lakh as security.

JSW challenged the action, contending that it was not the owner of the vessel, which was owned by a third party and engaged through a time charter arrangement via an intermediary.

Examining the contractual structure, the court found that the barge was owned by respondent No.3 and chartered to respondent No.2, while JSW had engaged its services for transporting cargo. Rejecting MPT's argument that JSW was a “disponent owner,” the court held that such a position was not borne out from the record.

“The contents of the MOU show that the master was provided by respondent No.3 and the charges of hire were payable by respondent No.2 as the charterer. Thus, by no stretch of imagination, can the petitioner be covered under the expression 'disponent owner'. It cannot be said that the petitioner had complete control over the commercial operations of the vessel i.e. barge M. V. Satyam.,” the court observed.

The court further held that the port authority could not justify its action under other provisions of the Indian Ports Act or under Section 402 of the Merchant Shipping Act, particularly in the absence of compliance with the prescribed statutory mechanism.

Setting aside the impugned action, the court held that JSW Steel could not be saddled with liability for wreck removal costs and directed refund of the Rs 70 lakh deposit along with interest, totalling Rs 4.09 crore.