ORDER SHEET

IN THE HIGH COURT OF SINDH AT KARACHI

PRESENT:

Mr. Justice Aqeel Ahmed Abbasi

Mr. Justice Abdul Maalik Gaddi

C. P. No.D-2097 of 2011

Qasim International Container

Terminal Pakistan Limited……………………………………..…….Petitioner

Versus

Port Qasim Authority & 2 others………….……………………..Respondents

Petitioner : Through Mr. Hussain Ali Almani, Advocate alongwith Mr. Sami-ur-Rehman Khan, Advocate.

Respondent No.1&2: Through Mr. M.A. Isani, Advocate.

Respondent No.3 : Through Ms. Lubna Pervez, D.A.G.

Dates of Hearing : 11.04.2017, 23.11.2017 & 12.03.2019

Date of Short Order : 12.03.2019

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J U D G M E N T

Aqeel Ahmed Abbasi, J : -- Briefly, the facts as stated in the memo of instant petition are that the petitioner is a public limited company incorporated in 1994 for specific purpose of tendering for the construction and operation of Pakistan’s first International Container Terminal at Port Qasim. On 17.08.2006, petitioner and the respondent No.1 i.e. Port Qasim Authority into an Implementation Agreement, according to which, petitioner was to build, operate and transfer a second user container at Port Qasim. As per the aforesaid agreement, petitioner was to build and operate the Terminal for a period of thirty (30) years from the date of commercial operation and then to transfer the same to the respondent No.1 in terms of the Article 22 of the Agreement, which reads as follows: -

“….the scope of transfer covers the transfer of the Terminal together with all plant, equipment, machinery, vehicles, spares, infrastructure, installations, buildings, structures, civil works and facilities on the Site, including all other movable and immovable assets…”

In accordance with Section 13(3)(b)(i) of the Port Qasim Authority Act, 1973, respondent No.1 is authorized to frame a scale of tolls, dues, rates and charges in the following manners: -

“For the landing and shipment of goods from and in sea going vessels, and not being sea-going vessels, respectively, at such docks, wharves, quays, stages, moorings, jetties, piers and anchorages as belong to the Authority, or any other agency authorized by the Authority to construct such facilities.”

One of the charges levied by the respondent No.1 is “wharfage”, this is a charge levied on goods and is paid by the person using a wharf or other facilities provided by a port to ship, land, load or unload the goods. Respondent No.1 with the approval of the Federal Government regularly issues a scale of tolls, dues, rates and charges including wharfage. The last such Notification was issued on 17.06.2010, wherein, Section 11 of such Notification provides as under: -

“Unless otherwise notified wharfage will be charged on all goods landed/shipped or passed in and out of Port Qasim bonded premises.”

In accordance with Article 9.2.3 of the Agreement, the petitioner has been authorized by the respondent No.1 to collect wharfage on behalf of the respondent No.1, this arrangement makes practical and commercial sense since the petitioner operates the Terminal on behalf of the respondent No.1 and provides the services and facilities for which wharfage is charged in this regard, therefore petitioner acts as the agent of the respondent No.1. In August 2010, the petitioner was scheduled to import three quay cranes and six rubber tyre cranes which were to be installed in the Terminal. These cranes were to be used to unload and load goods from ships onto the wharf and vice versa and to move containers within the Terminal to facilitate such loading/unloading of containers to and from ships. These cranes are required to provide the services i.e. loading and unloading of goods from and onto the wharf, for which wharfage is charged. Furthermore, in accordance with Article 22 of the Agreement, these cranes are pieces of equipment which will be transferred to the respondent No.2 by the petitioner on the expiry of the agreement. On 12.02.2007, the Hon’ble Supreme Court in Civil Petition No.1103/2006 overturned the judgment of this Court and held that there was no basis whatsoever either in law or in the agreement or any other equitable principle to justify the claim of KPT against KICT for wharfage. In the light of the aforementioned decision of the Hon’ble Supreme Court and the fact that the petitioner regularly imports equipment for use at the port, it wrote to the respondent No.1 on several occasions stating that no wharfage was payable on equipment imported for use at the port by a terminal operator and that this position had been upheld by the aforesaid judgment of the Hon’ble Supreme Court. To this end the petitioner provided the respondent No.1 with a copy of the judgment and no response was received from the respondent No.1. The two ships carrying the cranes arrived at Port Qasim on 12.08.2010 and 23.09.2010 respectively and were unloaded by the petitioner. In accordance with decision of the Hon’ble Supreme Court and the fact that the petitioner had written to the respondent No.1 on several occasions that no wharfage was due on the import of the cranes and the respondent No.1 had not raised any objection thereto, the petitioner did not make any payment towards wharfage. On 15.12.2010 after almost five months, the petitioner received a response from the respondent No.1 through respondent No.2, asking it to provide the bill of lading, bill of entry and invoices of imported items relating to the two ships on which the cranes had been imported. The sole purpose of this exercise was to calculate the wharfage due on the import of the cranes. On 21.12.2010 the petitioner received another letter from the respondent No.1 through respondent No.2, directing it to make payment of the wharfage immediately. On 31.12.2011 the petitioner sent a legal notice to the respondents in which it reiterated that the First and Second impugned notices were in violation of the letter and spirit of the judgment of the Hon’ble Supreme Court, contrary to law and in breach of the agreement. The petitioner requested the respondents to withdraw the same. The respondents, however, have yet to respond to the said legal notice.

2. Petitioner being aggrieved by aforesaid two notices dated 15.12.2010 and 21.12.2010, has filed instant Constitutional Petition with a prayer to quash the aforesaid notices for having no basis either in law or in the implementation agreement, as referred to hereinabove, whereas, it has been further prayed that a declaration may be issued to the effect that respondent No.1 i.e. Port Qasim Authority cannot levy wharfage on the equipment, which is imported for the use on the Port by a Terminal Operator.

3. Learned counsel for the petitioner has argued that the machinery (quay cranes) were imported by the petitioner for the purposes of establishing and operating the Terminal to be eventually transferred to the respondent No.1 i.e. Port Qasim Authority alongwith control of the Terminal and their ownership would vest respondent No.1 itself. According to the learned counsel for petitioner, respondent No.1 does not levy any wharfage on the goods imported by it, therefore, cannot levy wharfage on the import of the quay cranes. It has been further contended by the learned counsel for petitioner that in operating the Terminal and collecting the wharfage petitioner acts as the agent of the respondent No.1, who cannot demand wharfage from the petitioner for the services being rendered on behalf of the respondent No.1. According to the learned counsel for petitioner, the facts of the instant case are all force with the judgment of the Hon’ble Supreme Court of Pakistan dated 12.02.2007 passed in Civil Petition No.1103/2006 (Re: Karachi International Container Terminal Limited v. Karachi Port Trust through its Chairman), copy of such judgment has placed on record, according to which, respondent No.1 cannot charge any wharfage on the equipment/machinery imported for the use of the Terminal. It has been prayed that the impugned notices dated 15.12.2010 and 21.12.2010 issued by the respondent No.2 may be declared to be illegal and without lawful authority, whereas, it may be further declared that respondent No.1 i.e. Port Qasim Authority cannot levy “wharfage” on the equipment, which is imported for the use of the port by the Terminal Operator.

4. Conversely, learned counsel for the respondents after having filed comments on behalf of the respondent No.1 has disputed the contentions of the learned counsel for petitioner and has raised objection as to the maintainability of instant petition on the ground that instead of filing instant petition, petitioner could have referred the matter for arbitration in terms of Article 25 of the Implementation Agreement. It has been contended by the learned counsel for respondents that instant petition involves resolution of disputed facts, which cannot be examined by this Court while exercising Constitutional jurisdiction under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, therefore, instant petition is liable to be dismissed in this account. Learned counsel for the respondents has further argued that instant petition is otherwise misconceived and not maintainable, as the matter pertains to the contractual rights and obligations under an Implementation Agreement dated 17.08.2006 and not under any statutes or rules framed thereunder. According to the learned counsel for respondents, petitioner instead of filing instant Constitutional Petition could have referred the matter to the arbitration in terms of arbitration clause available in the implementation agreement. Without prejudice to hereinabove preliminary objection, it has been further argued by the learned counsel for respondents that the wharfage is included in the definition of Port Qasim Authority’s Charges in Article 2 of the Implementation Agreement dated 17.08.2006, but it is leviable and collectable by Port Qasim Authority under Section 13(3)(b)(i) of the Port Qasim Authority Act, 1973 read with Article 9.2.1 of the Implementation Agreement, whereas, Article 9.2.3 of the Implementation Agreement, delegates the collection of the wharfage to the petitioner on behalf of the respondent No.1. According to the learned counsel, the wharfage is incidental to transshipment of goods from vessel to wharf and wharf to vessel or from vessel to vessel, whereas, the loading/unloading of ship cargo is not performed by the petitioner for consignors/consignees on behalf of the respondent No.1, but it is a direct transaction between the petitioner and the consignors/consignees for which petitioner receives container/cargo handling charges under Article 9.2.2 of the Implementation Agreement dated 17.08.2006. According to the learned counsel, petitioner does not act as the agent of the respondent No.1 pursuant to a license granted by the respondent No.1 to the petitioner under Article 4.1, therefore, the status of the petitioner is of a licensee and not of an agent of the respondent No.1. According to the learned counsel for respondents, the rationale for the petitioner to collect the wharfage on behalf of the respondent No.1 in terms of Implementation Agreement, as referred to hereinabove, is not because the petitioner is an agent of respondent No.1 but it is in view of large number of transactions involved, whereas, each container consignor/consignee is separately liable for wharfage. While concluding his arguments, learned counsel for the respondents has submitted that the facts of the judgment dated 12.02.2007 passed by the Hon’ble Supreme Court of Pakistan in Civil Peition No.1103/2006 (Re: Karachi International Container Terminal Limited v. Karachi Port Trust through its Chairman) are distinguishable, therefore, the ratio of the aforesaid judgment is not applicable in the instant case. It has been prayed by the learned counsel for respondents that instant petition is not maintainable, which may be dismissed alongwith listed application.

5. We have heard the learned counsel for the parties, perused the record with their assistance and have also examined the provisions of the Implementation Agreement executed between the parties as well as the judgment passed by the Hon’ble Supreme Court of Pakistan in the aforesaid Civil Petition.

6. It is an admitted position that the machinery (quay cranes) imported by the petitioner on 12.08.2010 and 23.09.2010 were meant for the purposes of establishing and operating the Terminal at Port Qasim as per Implementation Agreement, whereas, all duty and taxes were paid. The first agreement executed between the petitioner and respondents on 25.07.1995 was for a period of thirty (30) years, whereafter, it was amalgamated with second BoT Agreement, according to which, it was extended for another thirty (30) years. Since the learned counsel for the petitioner has heavily placed reliance on the judgment dated 12.02.2007 passed by the Hon’ble Supreme Court of Pakistan in the case of Karachi International Container Terminal Limited v. Karachi Port Trust through its Chairman in Civil Petition No.1103/2006, wherein, according to learned counsel for petitioner, similar legal issue has already been decided in favour of the petitioner, whereas, learned counsel for the respondents has not been able to distinguish either the facts or the legal issue decided by the Hon’ble Supreme Court in the aforesaid Civil Petition, from the facts and legal issue agitated through instant petition, therefore, we would refer to the relevant findings of the Hon’ble Supreme Court relating to the collection of wharfage by Port Qasim Authority from the Terminal Operator.

7. It will be advantageous to reproduce the findings of the Hon’ble Supreme Court, as referred to hereinabove, in Para 6 of the aforesaid judgment, which reads as follows: -

“6. The above definition of wharfage clearly shows that the liability of wharfage is that of the importer or his clearing agent or shipper or forwarding agent of the goods imported or shipped and the charges levied against the merchandise for the use of the wharfage or other facilities that have been provided by the port authorities in loading or shipping the goods. The definition clearly excludes payment of any wharfage on the equipment which is necessary to provide these services. In fact according to items 3 and 4 of schedule III of the agreement, installation of the cranes at the wharf was one of the responsibilities of the petitioner and it was in discharge of that responsibility that the cranes were installed. These cranes, as per our plain reading of the definition of wharfage, are not the goods imported or shipped against the “merchandise” to attract the wharfage. These cranes had landed at the port and remained there till they were installed. This period at best would be a period of storage, from which according to clause VI of paragraph 3.3 the petitioner company was exempt. Ao perusal of the agreement further shows that as per clause 8.3.1 the Karachi Port Trust charges are being received by the petitioner as Terminal Operating Company on behalf of Karachi Port Trust. We have no doubt in our mind that the agreement of the Karachi Port Trust with the petitioner constitutes an agency agreement and the situation which merges by the stance of the respondent is that the principal is asking his agent to pay wharfage for the services being rendered on behalf of the principal. Para 18 of the agreement provides for the taxes to be paid by the petitioner company and it is not disputed that all the taxes such as custom duty, sales tax etc. have already been paid on the equipment imported. This clause does not contemplate any fee for the use of wharf for providing services on behalf of the Karachi Port Trust. We specifically questioned the learned counsel for the Karachi Port Trust whether the wharfage would be leviable if the cranes were imported by the Karachi Port Trust itself and installed for operation it directly. His frank answer was in the negative. We are not able to find any basis whatsoever either in law or in the agreement or any other equitable principle to justify the claim of the Karachi Port Trust against the petitioner for wharfage.”

8. From perusal of the facts and circumstances of the instant case and the legal controversy agitated through instant petition relatable to charge and collection of wharfage from the Terminal Operator, it appears that the Hon’ble Supreme Court in the aforesaid judgment has been pleased to hold that collection of wharfage from the terminal operator in respect of equipment (cranes) imported for the purposes of establishing and operating the Terminal at Port under Implementation Agreement, is illegal and without lawful authority. Learned counsel for the respondents was confronted to assist this Court as to whether the machinery/equipment, if imported by the Port Qasim Authority for the aforesaid purposes, would have been subject to wharfage or not? In response of such query, learned counsel for the respondents has candidly stated that the machinery imported by the respondent No.1 would not have been subject to collection of the wharfage, however, submitted that since the petitioner is not an agent of the respondent No.1, therefore, the machinery (quay cranes) imported by the petitioner were subject to collection of the wharfage. We do not find any substance in the submission of the learned counsel for the respondents keeping in view the nature of relationship between the petitioner and the respondent No.1, more particularly when the Hon’ble Supreme Court in aforesaid judgment has already held that imported equipment (cranes) by terminal operator to be installed at port for providing services is not a merchandise, therefore, not subject to wharfage. The legal issue already stands decided by the Hon’ble Supreme Court in the afore-referred judgment.

9. It will be advantageous to examine some of the relevant Articles of the Implementation Agreement executed between the petitioner and the respondent No.1 to ascertain the nature of the relationship between the petitioner and the respondent No.1 and also to examine as to whether the facts of instant case are distinguishable from the facts of above referred judgment, as stated by learned counsel for the respondents. Such Articles are reproduced hereunder: -

“7.1 Construction of Phase I of the Project

QICT shall proceed with the implementation of Phase I of the Project in accordance with the Implementation Schedule and complete the same within the time limits provided in Clause 19.1.1. PQA shall provide adequate space for establishment of work site adjacent to the Site prior to commencement of construction.

9.2.3 QICT will be authorized to collect “wharfage” on behalf of PQA. QICT will pay PQA wharfage charges at the rate of Rs.440 per TEU handled on the weekly basis. Such payment by QICT will be subject to proportionate revision upon change in PQA Gazetted tariff regarding wharfage duly notified by the GOP.

9.2.4. Any proposal for an increase in wharfage charges on cargo over the Terminal will be made by PQA in consultation with QICT, with a view that such increase will be in line with wharfage charges applicable at Karachi Port Trust in order to ensure competitiveness.

9.4. Collection of PQA Charges

Subject to mutual agreement of the Parties, QICT shall collect the PQA Charges connected with the operations at the Terminal according to the Tariff. In such event QICT shall ensure that all PQA Charges collected by it on behalf of PQA are paid directly into a Bank Account nominated by PQA for the purpose, within seven (07) Days of the following month. Detailed procedures and collection fees shall be jointly agreed.”

10. From perusal of hereinabove provisions of the articles, it transpires that under similar facts and circumstances and also the identical terms of agreement executed between Karachi International Container Terminal Limited and the Karachi Port Trust, the Hon’ble Supreme Court of Pakistan has been pleased to hold that the liability of wharfage is that of the importer or his clearing agent or shipper or forwarding agent of the goods imported or shipped and the charges levied against the merchandise for the use of the wharfage or other facilities that have been provided by the port authorities in loading or shipping the goods. It has been further held by the Hon’ble Supreme Court that the above definition of “wharfage” clearly excludes payment of any wharfage on the equipment which is necessary to provide these services. Admittedly, the quay cranes imported by the petitioner were to be installed by the petitioner at the wharf as per Implementation Agreement, and therefore, cannot be treated as goods imported or shipped against the merchandise to attract the wharfage.

11. In view of hereinabove facts and circumstances of the instant case, we are of the considered opinion that the legal controversy agitated through instant petition relating to charge wharfage on the machinery (quay cranes) imported by the petitioner to be installed at Wharf for the purpose of the operation at the Terminal was not subject to wharfage. Accordingly, instant petition was allowed vide our short order dated 12.03.2019 and these are the reasons of the same.

J U D G E

Farhan-PS