( 1 ) WHETHER the Regulation 52 of the Kandla Port Regulations, 1967 (Regulation) is ultra vires the provisions of the Major Port Trusts Act, 1963 and the Constitution of India is the sole, but substantial question, which has emerged for consideration and adjudication in this petition under Art. 226 of the Constitution of India. With a view to appreciating the merits of the plea of adjudication that regulation 52 of the Regulations empowering the respondents to demand only a conditional security, subject to the liability and quantum of damages being ascertained/determined by a Court of competent jurisdiction in encashing the bank guarantee of Rs. 6,50,000. 00, on the ground of damage caused to the property of the Board of Trustees of the Port of Kandla. Let us have first, a short conspectus spectrum and factual profile leading to the rise of this petition on hand.

( 2 ) ). The petitioners are a registered partnership firm and carrying the business as shipping agents. The petitioners were, at the relevant time agents of a foreign flag vessel M. V. Hoe Ann (the vessel ). The respondents are the statutory body constituted under the Major Port Trusts Act, 1963, and inter alia are the owners of the Docks, Wharfs, Cranes, Jetties etc. of the Port of Kandla. The respondent- authority by the letter dated 17-7-1988 addressed to the Master of Hoe Ann alleged that Hoe Ann dragged anchor and came along side their dragger Kutch vallab, and thereby, held the master of Hoe Ann liable under Kandla Port regulations for the damages amounting to Rs. 10 lakhs. Subsequently, by a letter dated 18-7-1988, reduced the demand from Rs. 10 lakhs to Rs. 6. 50 lakhs stating that it was towards the cost of the replacement of the life boat of Vessel kutch Vallab together with expenditure incurred. Therefore, the petitioners came to be directed to deposit the same amount on or before 21-7-1988.

( 3 ) ). The respondents had till then not given the clearance for sail M. V. Asean Express from the Port of Kandla. It appears that since the petitioners have to sail from the Port of Kandla, they furnished a bank guarantee for Rs. 6. 50 lakhs of the State Bank of India, Overseas Branch, World-Trade Centre, bombay in favour of the respondents along with the letter dated 25-7-1988, without accepting the liability for the alleged loss/damage. The said Bank guarantee was later on encashed by the respondent-authorities. The main contention, therefore, of the petitioners is that the action of the respondents- authorities in demanding unilaterally assessed damages and encashment of the bank guarantee purported under the exercise of powers of Regulation 52 of the Kandla Port Regulations, 1967, and contended that the said Regulation is ultra vires the provisions of the Major Port Trusts Act, 1963 and the Constitution of India.

( 4 ) ). The respondents-authorities inter alia contended that under Sec. 116 of the Major Port Trusts Act, 1963, the vessel Hoe Ann could have detained pending the outcome of the proceedings, but upon request of the petitioners, demanded the deposit or bank guarantee of amount of damages assessed by them, to which the petitioners agreed and tendered bank guarantee, and that they are entitled to encash the bank guarantee for the damages in terms of the provisions of the Regulation 52 and the provisions of the Major Port Trusts Act, 1963. In short, it is the case of the respondents-authorities that the Regulation 52 is not ultra vires or unconstitutional and that they are statutorily authorised to assess damages in the situation unilaterally and recover the damages for the effective and efficient management and safety of Port and its property.

( 5 ) ). It would be appropriate at this juncture to consider the legislative design and mechanism of the Major Port Trusts Act, 1963, insofar as the dispute in the present petition is concerned. Section 163 of the Act empowers the Board to make Regulation pursuant to general power of Board to make