Judgment Update | Levy of penal charges by Container Freight Stations
This is to apprise you regarding recent judgment of the Delhi High Court in case of Polytech Trade Foundation v. UOI, 2020-TIOL-959-HC-DEL-CUS. In this case, the Court dealt with the guidelines issued by the Central Government to major Ports and Container Freight Stations (‘CFS’) to waive-off penal charges in the nature of demurrage, ground rent, container detention charges etc. (‘penal charges’) in the light of COVID-19 pandemic. The relevant facts of the case, decision of the High Court and our comments are outlined hereunder:
- The Petitioner was an association of traders who imported plastic / polymer. Due to COVID-19 pandemic, several shipments / containers could not be lifted within time from respective ports due to non-availability of transport and labour.
- CFS proposed to impose penal charges and did not permit importers to lift their shipments without such payment. Thus, the Petitioner filed Writ Petition challenging recovery of penal charges and sought interim stay on collection of the same till the continuation of lockdown basis the Circulars / Guidelines / Advisories issued by the Central Government and the Ministry of Shipping.
The High Court dismissed the Writ Petition and held that there was no violation of rights of the Petitioner for the following reasons:
- Circulars / Guidelines / Advisories issued by the Central Government are directory in nature. It was only an advice and not a mandatory direction to the concerned ports to adopt a sympathetic and humanitarian approach while levying penal charges during the lockdown period.
- Ministry of Shipping does not have control and supervision over private CFS and the Circulars / Guidelines / Advisories issued by the Ministry are not applicable to them. Accordingly, private CFS can legally recover penal charges from importers.