Public Notice vs Private Contracts: Kerala HC Berths Commerce Ministry's Overreach on Terminal Charges
1. Why this case matters for every importer, exporter and shipping line
For years, complaints have swirled around "terminal handling charges" (THC) and a bouquet of add-ons-SSR, reefer monitoring, demurrage, special handling, etc.-collected by shipping lines at Indian ports. Trade bodies have often alleged a mismatch between what ports actually charge and what lines recover from customers.
In Cochin, Customs tried to address exactly this pain point through Public Notice No. 05/2020, offering a voluntary option for eligible importers to pay THC and certain port charges directly to terminal operators. The idea was simple: transparency + "Ease of Doing Business" + reduced logistics costs.
But what began as a facilitative administrative step soon morphed-at the hands of another arm of the Government-into a de-facto price control on shipping lines. The Ministry of Commerce issued directions telling lines not to collect any amount over and above the THC prescribed by ports under the Major Port Trusts Act, 1963. Those directions were challenged by the Container Shipping Lines Association (India) and major liners like CMA CGM and MSC before the Kerala High Court.
The High Court's verdict is a textbook reminder that public notices and circulars are not mini-statutes, and cannot be used to rewrite private contracts or create regulatory powers out of thin air.
2. The legal backdrop – what can circulars and public notices really do?
(a) Section 151A – instructions to officers, not a new source of power
Section 151A of the Customs Act, 1962 allows the Central Board of Indirect Taxes and Customs (CBIC) to issue orders, instructions and directions to officers of customs to ensure uniformity in the implementation of the Act. These are:
Administrative and clarificatory in character
Binding on departmental officers
Not a substitute for statutory law or delegated legislation
The Supreme Court has repeatedly held that circulars cannot override the Act, Rules or valid notifications issued thereunder; at best, they can clarify doubtful areas or lay down internal administrative practice. Where a circular is beneficial, taxpayers may rely on it; where it is contrary to law, courts will ignore it.
(b) Public Notice – a communication tool, not a legislative instrument
A Public Notice issued by a Customs Commissioner is even one step lower in the legal food chain:
It is essentially a communication to trade about procedures, operational practices, or implementation of already existing law/policy.
It cannot, by itself, create new substantive rights or obligations for private parties unless some statute expressly delegates that power.
In other words: Act → Rules / Regulations / Notifications → Circulars → Public Notices. Public Notices are at the bottom of this pyramid. They are meant to facilitate trade, not to re-write commercial bargains.
3. What Public Notice No. 05/2020 actually said
In February 2020, the Commissioner of Customs, Cochin issued Public Notice No. 05/2020 titled "Terminal Handling Charges levied by Shipping Lines – reg.". The key elements were:
THC is levied by port terminals on shipping lines,
Shipping lines in turn recover THC and other heads (SSR, demurrage, reefer monitoring charges, special handling charges etc.) from importers or customs brokers,
Trade had complained that these recoveries were not aligned with what terminals actually charged, causing opacity and perceived over-recovery.
To address this, the Public Notice offered an option:
Importers having AEO status or enjoying DPD (Direct Port Delivery) facility for containerised cargo may be allowed to pay THC and other port charges directly to terminal operators, instead of routing these through shipping lines.
In practical terms, it:
Applied only to eligible and willing importers (AEO/DPD);
Was premised on the importer and terminal having appropriate arrangements (P.D. accounts, invoicing etc.);
Did not prohibit shipping lines from continuing to collect charges under existing contracts where importers did not opt for the direct-payment route.
So, the Public Notice was facilitative and optional, not regulatory or prohibitory in nature.
4. Commerce Ministry's step too far – from "option" to "price cap"
The Ministry of Commerce then issued directions to shipping lines, effectively reading the Public Notice as if it created a cap on charges that could be recovered from shippers/consignees. As reported, the Ministry instructed that:
Shipping lines should not charge any amount over and above the terminal handling charges prescribed by Indian ports in accordance with the Major Port Trusts Act, 1963;
In effect, if a port tariff fixed a particular THC, shipping lines could not add any additional component towards THC or related services when billing customers.
This had three immediate consequences:
1. It intruded into the commercial freedom of shipping lines to structure their pricing and recover their service element.
2. It created a de facto tariff regulation-even though shipping line charges are typically governed by contract, commercial practice, competition law, and sometimes sectoral regulators, not by a customs Public Notice.
3. It re-interpreted Public Notice 05/2020 in a manner that went far beyond what the issuing authority (Customs, Cochin) had intended.
The Container Shipping Lines Association (India) and leading liners approached the Kerala High Court, challenging the Commerce Ministry's communications as ultra vires, contrary to the Public Notice and violative of their fundamental right to carry on business.
5. Before the Kerala High Court – what was really in issue?
The core question before the Court in The Container Shipping Lines Association (India) & Ors v. Union of India & Ors. [2025(03)LCX0537] was:
Can the Ministry of Commerce, relying on Public Notice No. 05/2020, direct shipping lines not to collect any charges beyond the port-prescribed THC, thereby interfering with their contractual arrangements?
This broke down into several sub-issues:
Scope of Public Notice 05/2020 – Did it create regulatory power to control or cap shipping line charges?
Source of authority – Was there any statute (Customs Act, Major Port Trusts Act, etc.) that gave the Commerce Ministry power to dictate what shipping lines may or may not collect from their customers?
Impact on fundamental rights – Did these directions unjustifiably restrict the freedom to carry on business and to contract?
6. The Kerala High Court's reasoning – administrative tools cannot mutate into law
The High Court unequivocally quashed the Commerce Ministry's directions, holding them to be legally unsustainable and inconsistent with the very Public Notice they purported to implement. The Court's analysis can be distilled into four key strands:
(a) No regulatory power without statutory anchor
The Court underscored that any power to regulate private charges must be traceable to a statute or a valid contract. In the absence of such a source:
You cannot conjure up a power merely from the wording of a Public Notice;
Especially where that power has the effect of reshaping private contractual relationships and interfering with pricing freedom.
In stark terms, the Court held that a power "which has the potential to interfere with the freedom of contract between parties" cannot be inferred merely from a Public Notice issued by a Customs Commissioner.
(b) Misreading the Public Notice – from "may be allowed" to "shall not charge"
The Court read Public Notice 05/2020 on its own terms and concluded that:
It only gave importers an additional option to pay THC and related port charges directly to terminals;
It did not mandate that all THCs must henceforth be collected only by terminals, nor did it prevent shipping lines from recovering such charges where the direct-payment option was not exercised;
It certainly did not authorise any ministry to prohibit lines from charging beyond the port tariff, or to regulate their commercial mark-ups.
Thus, the Commerce Ministry's directions were contrary to the intent and scope of the Public Notice itself.
(c) Public Notices and circulars cannot alter contracts
The Court reiterated the established principle that circulars, instructions and public notices are administrative instruments:
They cannot override legislation;
They cannot rewrite or nullify private contracts;
At best, they guide the internal working of the administration and inform trade about procedures.
Using a Public Notice as a stepping stone to curb contractual freedom, fix prices, or erase negotiated terms is legally impermissible.
(d) Impact on fundamental rights
By telling shipping lines what they could or could not charge their customers (in the absence of statutory backing or regulatory framework), the Commerce Ministry's communications were found to:
Trench upon the freedom to carry on trade and business guaranteed under Article 19(1)(g);
Interfere with freedom of contract without any "reasonable restriction" backed by law.
This constitutional infirmity further justified striking down the directions.
7. Broader doctrinal lessons – a reminder to all regulators
This judgment is not just about THC in Cochin. It reiterates some critical administrative-law guardrails relevant to all economic regulators and ministries:
1. Hierarchy of norms matters
○ Acts and Rules constitute law.
○ Notifications under delegated powers can create or modify rights/obligations.
○ Circulars and Public Notices are essentially explanatory-they cannot create new substantive obligations on private parties.
2. "Ease of Doing Business" is not an independent source of power
Governments often invoke this slogan to justify procedural changes. But "EoDB":○ Can motivate facilitative measures (like optional direct payment mechanisms);
○ Cannot be used as a stand-alone justification for restricting contractual freedom where the statute does not authorise such restriction.
3. Separation of economic roles
If the legislature wants shipping line charges to be regulated, it must say so expressly, typically through:○ Sectoral regulation (e.g., a maritime regulator or tariff authority);
○ Specific statutory provisions enabling price controls, with clear criteria and safeguards.
4. Until then, such charges remain primarily a matter of private commercial arrangement, subject of course to general laws like competition law and consumer protection.
8. Practical implications for trade and logistics stakeholders
(a) For shipping lines
The judgment reaffirms their freedom to design pricing structures (THC, surcharges, bundled services, etc.) through contract and commercial practice, so long as no specific statutory cap applies.
It prevents a precedent where ministries could, by informal letters or misunderstood public notices, micro-regulate tariffs without going through Parliament or formal rule-making.
However, transparency concerns raised by importers are very real; lines would be wise to adopt clear break-ups and disclosures to avoid renewed regulatory pressure in a more formal avatar.
(b) For importers and exporters
The optional direct-payment facility for eligible AEO/DPD importers at Cochin survives; those who prefer to deal directly with terminals on THC can continue to do so under Public Notice 05/2020.
At the same time, importers cannot insist that shipping lines everywhere must cap their THC recovery strictly at port tariff, merely by citing this Public Notice or Commerce Ministry letters.
Contract negotiation regains importance: traders must scrutinise shipping contracts and liner terms if they wish to limit add-on charges.
(c) For customs and other regulators
Commissioners issuing Public Notices must be clear that they are:
○ Clarifying or facilitating the implementation of existing law;
○ Not attempting to alter private commercial arrangements beyond the four corners of their statutory remit.
Inter-ministerial coordination is crucial. One ministry cannot "weaponise" another's Public Notice to achieve regulatory outcomes not contemplated by the original issuing authority.
9. Compliance and drafting takeaways
For legal and compliance teams in shipping, logistics, and trade:
1. Map the source of power
Whenever confronted with a circular/public notice letter that affects commercial freedom, ask: Which section of which Act authorises this? If the answer is vague, the instruction may be vulnerable.2. Record your contractual frameworks
Maintain clear, written contracts and standard terms that define what each component-THC, handling, equipment, documentation-covers. Courts are more inclined to protect transparent, documented arrangements.3. Use facilitative schemes prudently
Facilities like direct terminal payment for AEO/DPD clients can be advantageous, but:
○ They are optional;
○ Their use should be aligned with internal systems (billing, accounts, IT).
4. Watch for sectoral shifts
This judgment does not bar Parliament or a specialised maritime regulator from stepping in later with a statutory pricing framework for ports and shipping lines. Stakeholders should keep an eye on evolving maritime and port-sector reforms.
10. Conclusion – public notices as GPS, not the steering wheel
The Kerala High Court's ruling on terminal handling charges and Commerce Ministry directions is a sharp reminder that:
Public Notices and circulars are meant to guide, not govern.
They cannot be stretched into tools of price control or contract rewriting unless a statute clearly permits it.
Administrative enthusiasm for transparency and lower logistics costs, however laudable, must operate within the boundaries of law.
By quashing the Commerce Ministry's directions, the Court has restored the original, modest intent of Public Notice No. 05/2020-to give importers one more payment option, not to confiscate the pricing freedom of shipping lines. For India's trade ecosystem, the message is clear: if the Government wishes to regulate commercial charges, it must sail through the proper legislative and regulatory channels, not attempt a shortcut via administrative correspondence.
That makes this decision an important precedent not just for port charges, but for all sectors where "clarificatory" notices threaten to become stealth legislation.
Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.