“Unjust Enrichment from Interim Relief Cannot Be Permitted”: Calcutta High Court Upholds Carrier’s Right to Detention Charges, Orders Encashment of Bank Guarantee
Safiya Malik
The High Court of Calcutta Division Bench of Justice Rajasekhar Mantha and Justice Ajay Kumar Gupta directed the encashment of a bank guarantee amounting to ₹68,42,844 in favour of the defendant, allowing the counterclaim for detention charges. The Court upheld the Single Bench's decree and found the plaintiff liable for the payment of such charges accrued due to delay in berthing of the vessel at Kolkata port during a pilot strike. The Division Bench dismissed the appeal and allowed the cross-objection, further awarding interest at the rate of 11% per annum from the date of filing the suit until payment. The Court concluded that the defendant’s entitlement was established in law and contract, and the conduct of the plaintiff in abandoning its claim after benefiting from interim relief amounted to unjust enrichment.
The dispute arose from a shipment of 263 coils of tin mill blackplates consigned to the appellant under a Bill of Lading dated 28 December 1995. The goods were to be transported aboard the vessel M.V. Esperanza III from Antwerp, Belgium to Kolkata, India. A time charter party agreement had been executed on 19 December 1995 between the vessel’s owners and an entity named Cargo Levant. The ship arrived at the Kolkata Sandheads on 5 February 1996 but could not berth at the port due to an ongoing river pilot strike.
On 8 February 1996, the carrier’s agents informed the appellant about the berthing delay and inquired whether the cargo could be delivered at a nearby port. It was also stated that, absent alternate discharge instructions, the cargo would be delivered at Kolkata upon payment of detention charges as per the Bill of Lading’s Clauses 11 and 12. The appellant did not respond with any such alternate port, and the vessel eventually berthed at Kolkata on 28 February 1996.
The carrier subsequently raised an invoice dated 27 February 1996 for ₹68,42,844 towards detention charges, citing the vessel’s wait from 16 to 26 February 1996. Five other consignees on the same shipment paid their apportioned charges and received delivery orders. The appellant, however, disputed the charges and threatened legal action.
On the same day, the appellant initiated proceedings before the Admiralty Side of the Calcutta High Court, seeking arrest of the vessel, injunction against its departure, delivery of goods, and compensation. The Single Judge passed an interim injunction restraining the vessel’s movement until the plaintiff’s cargo claim was secured. The next day, the Court directed the appellant to secure the respondent’s claim for detention charges via bank guarantee, after which the cargo was released.
The appellant provided a bank guarantee for ₹68 lakhs, obtained delivery of the cargo, and the vessel left Kolkata. The defendant later filed its written statement and subsequently, in 2012, amended it to include a formal counterclaim.
The suit progressed over several years, during which the appellant did not adduce evidence. Meanwhile, the defendant produced two witnesses—representatives from Oceanic Shipping Agency Pvt. Ltd. and P & I Services Pvt. Ltd.—and submitted documentation to establish the detention period and its entitlement under the contract. The plaintiff’s counsel failed to appear on several hearing dates and ultimately abandoned its claim.
The Single Bench decreed the defendant’s counterclaim and allowed the encashment of the bank guarantee, awarding interest at 6% per annum. The Division Bench heard an appeal and cross-objection against this decree.
The Division Bench examined the legislative framework governing maritime claims. Referring to Section 11 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017, the Court recorded: “A counterclaim of a defendant in an admiralty action is embedded within Section 11 itself.”
The Court added that a formal counterclaim under Order VIII Rule 6B of the CPC is not mandatory where the defendant’s entitlement stems directly from a maritime claim raised in response to the plaintiff’s averments. It stated: “If after the trial the defendant succeeds the sum payable to him reserved in the form of security for release of the vessel must be decreed in its favour.”
On the question of limitation, the Court found that the counterclaim, as pleaded, was within time and that its origin lay in the unamended written statement filed soon after the suit was instituted. The Bench observed: “The genesis of such a counterclaim is already contained in its original written statement that was filed within the period of limitation.”
Referring to the liability under the Bill of Lading, the Court examined Clauses 11 and 12, observing: “Clause 11 of the terms and conditions of the Bill of Lading inter alia provided that if the vessel waits at some convenient port or place or at the designated discharge port any waiting time shall be paid for by the merchant as detention.”
Clause 12 set the formula for calculating such detention at DM 2,000 per vessel’s gross deadweight per day.
On the burden of proof, the Court cited the Evidence Act, stating: “The plaintiff therefore took upon itself the burden of proof under Section 101 of the Evidence Act that the defendant was not entitled to claim detention charges.”
It further recorded: “The plaintiff appellant having failed to lead any evidence in this regard must be deemed to have admitted its liability.”
Rejecting the appellant’s claim that the counterclaim was barred by limitation, the Court applied the ruling in Laxmidas Dayabhai Kabrawala v. Nanabhai Chunilal Kabrawala, holding: “It would be open to a court to convert or treat the counter-claim as a plaint in a cross-suit.”
On the broader principle of restitution, the Division Bench stated: “The defendant was and is entitled to be restored to the position as if the plaintiff paid the said detention charges on 28th February, 1996.”
In dealing with interest, the Court found the rate of 6% per annum inadequate in the commercial context. It recorded: “The defendant shall, therefore, be entitled to interest @ 11% per annum on and from the date of filing of the suit till the date of actual payment.”
The Court held that the plaintiff, while enjoying the benefit of cargo delivery for over two decades, had avoided discharge of its contractual obligations.
The judgment described the appellant’s conduct as follows: “The plaintiff therefore abandoned the suit after obtaining the delivery of the consignment. The finding of the single judge as regards the unjust enrichment by the plaintiff in obtaining the interim order of arrest, is wholly justified.”
The Division Bench upheld the Single Judge’s decree, granting relief in favour of the defendant/cross-objector. It stated: “The defendant is therefore entitled to a decree on its counterclaim for detention charges for a sum of Rs.68,42,844/-. The plaintiff’s suit is liable to be dismissed.”
On the issue of interest, the Court modified the rate ordered by the Single Bench: “The defendant shall, therefore, be entitled to interest @ 11% per annum on and from the date of filing of the suit till the date of actual payment.”
The Court further directed: “The Registrar Original Side is directed to invoke the Bank Guarantee for Rs.68 lakhs and make payment to the Defendant/Cross-Objector. The Defendant/Cross-objector shall be entitled to execute this decree towards the balance sums as ordered hereinabove.”
Finally, the Court dismissed the appeal and allowed the cross-objection: “Consequently, AD-COM-4 of 2024 is dismissed. OCO 2 of 2025 is allowed. With the aforesaid observations, the appeal is dismissed and cross-objection is allowed and disposed of.”
The judgment concluded with no order as to costs.
Advocates Representing the Parties:
For the Petitioners: Mr. Ratnanko Banerjee, Senior Advocate; Mr. D.K. Sarkar, Advocate; Mr. J. Ghorai, Advocate; Mr. D. Ghorai, Advocate; Mr. S. Sen, Advocate
For the Respondents: Mr. V.K. Ramavardhan, Senior Advocate; Mr. K. Thakkar, Senior Advocate; Mr. S. Prasad, Advocate; Mr. N. Banerjee, Advocate
Case Title: TATA Steel Limited v. The Owners and Parties Interested in the Ocean Vessel Esperanza III
Case Number: AD-COM 4 of 2024 with AS 3 of 1996 and OCO 2 of 2025
Bench: Justice Rajasekhar Mantha, Justice Ajay Kumar Gupta
[Read/Download order]
