Full Judgment Text
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CASE NO.:
Appeal (civil) 1407 of 2002
PETITIONER:
OM SHANKAR BIYANI
Vs.
RESPONDENT:
BOARD OF TRUSTEES, PORT OF CALCUTTA & ORS.
DATE OF JUDGMENT: 22/02/2002
BENCH:
Syed Shah Mohammed Quadri & S.N. Variava
JUDGMENT:
S. N. VARIAVA, J.
Leave granted.
Heard the learned counsel for the parties.
This Appeal is against an Order dated 27th July, 2000.
Briefly stated the facts are as follows:
The Appellant had imported into India, from Singapore, a consignment
of bearings. The said consignment landed at the Port of Calcutta on
13th July, 1989. The Appellant submitted a Bill of Entry for home
consumption for clearance of the said goods. The said goods were
assessed by the Customs and valued at Rs. 1,24,691/-. However, on
1st August, 1989 before the goods could be cleared by the Appellant
the Customs Authorities passed a seizure order under Section 110 of
the Customs Act. The Appellant then filed a Writ Petition in the High
Court of Calcutta. To this Writ Petition the 1st Respondent was not a
party.
On 27th September, 1989 an interim order was passed,
whereunder the Appellant was permitted to clear the goods on
payment of duty as assessed on the basis of the CIF value as
appearing in the invoice. However, the Appellant had to furnish to the
Customs Authorities a bank guarantee to pay the difference between
the duty found payable on a proper assessment and the duty being
then paid by the Appellant. The Customs Authorities were also
allowed to take a sample of the goods for necessary testing. This
interim order did not provide that the Appellant could clear the goods
without payment of the charges due to the 1st Respondents. Thus the
Appellant could have cleared the goods only after payment of the
charges payable to 1st Respondent.
The Customs Authorities then applied to the Calcutta High Court
for modification of the earlier order. The Customs Authorities opposed
clearance of the goods. On 15th December, 1989 the earlier order was
modified. It was directed that the goods could be stored in a bonded
warehouse of the Customs Authorities. To be noted that at this sage
also the 1st Respondents are not a party to the Writ Petition.
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Therefore the goods could be cleared from custody of the 1st
Respondent only on payment of all charges payable to the 1st
Respondent.
Taking advantage of the order dated 15th December, 1989 the
Appellant sought to remove the goods and put them into the bonded
warehouse without payment of the charges due to the 1st Respondent.
This was not allowed by the 1st Respondent. The Appellant then
joined the 1st Respondent as a party to the Writ Petition. On 2nd
February, 1990 the High Court passed an Order, in the presence of the
1st Respondent, permitting the Appellant to remove the goods to the
bonded warehouse without payment of the port charges. The 1st
Respondent was directed not to raise any objection. The High Court
merely accepted an undertaking from the Appellants to pay all charges
as well as the custom duty upon an effective adjudication of the
matter.
At this stage it would be appropriate to note certain provisions of
the Major Port Trusts Act. Section 58 of the said Act reads as follows:
"58. Time for payment of rates on goods.- Rates in
respect of goods to be landed shall be payable immediately
on the landing of the goods and rates in respect of goods
to be removed from the premises of a Board, or to be
shipped for export, or to be transhipped, shall be payable
before the goods are so removed or shipped or
transhipped.
(emphasis supplied)"
Thus the charges of the 1st Respondent are to be paid before the
goods are removed. The High Court seriously erred in permitting
removal of the goods without payment of the port charges. To be
noted that it was never disputed that the charges were payable. The
1st Respondent was not concerned with the dispute as to who had to
pay the charges. It was the Appellant who was interested in clearance
of the goods. It was for him to have paid the charges and cleared the
goods. Even if it was the Appellants’ case that the Customs Authority
had to pay the charges, the Appellant should have first cleared the
goods by paying charges due to the 1st Respondent and then claimed
reimbursement from the Customs Authority.
Now Section 59 of the Major Port Trusts Act may be noted. It
reads as follows:
"59. Board’s lien for rates.- (1) For the amount of all
rates leviable by a Board under this Act in respect of any
goods, and for the rent due to the Board for any building,
plinths, stacking areas, or other premises on or in which
any goods may have been placed, the Board shall have a
lien on such goods, any may seize and detain the same
until such rates and rents are fully paid.
(2) Such lien shall have priority over all other liens
and claims, except for general average and for the ship-
owner’s lien upon the said goods for freight and other
charges where such lien exists and has been preserved in
the manner provided in sub-section (1) of section 60, and
for money payable to the Central Government under any
law for the time being in force relating to customs, other
than by way of penalty or fine."
Thus, 1st Respondent has a statutory lien. It is entitled to retain the
goods until all amounts payable to it are paid. By directing removal of
goods from the custody of the 1st Respondent without payment of their
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charges, the High Court was also setting at naught the statutory lien.
Being aggrieved the 1st Respondents field an Appeal against the
Order dated 2nd February, 1990. The Appellate Court rightly stayed
the Order dated 2nd February, 1990.
The Customs Authority withdrew the seizure Order on 19th
December, 1989. Now the Appellant was free to clear the goods by
payment of all charges to the 1st Respondent. The Appellant made no
efforts to clear the goods by payment of the charges. Thus the
Appellant allowed the goods to remain with the 1st Respondent
knowing full well that further demurrage charges would be incurred.
On 16th September, 1991 a single Judge of the Calcutta High
Court disposed of the Writ Petition filed by the Appellant. By this
Order the Customs Authorities were directed to complete adjudication
proceedings within a particular time. It was directed that if the
adjudication proceedings were decided in favour of the Appellant, then
the Customs Authorities would pay the demurrage charges for the
period of detention. It was held that as the 1st Respondent had
opposed removal of the goods into the bonded warehouse, they had
exercised their right of lien. It was held that once they exercised their
right of lien they were not entitled to claim any demurrage charges.
It was held that the 1st Respondent could claim demurrage charges
only up to 2nd February, 1990. It was further held that if the Appellant
had, by that time, paid the demurrage charges upto 2nd February,
1990 the Customs Authorities would reimburse the Appellant for the
same. Mr. Nageshwar Rao, produces letters dated 25th September,
1991 and 11th October, 1991 and submits that the Appellants had
offered to pay charges till 2nd February, 1990.
The 1st Respondent filed an Appeal. By an interim Order dated
16th November, 1991 the Appellants were permitted to clear the goods
on payment of demurrage up to 2nd February, 1990 and on furnishing
a Bank Guarantee in the name of the Chairman of the 1st Respondent.
The Bank Guarantee was to be for the charges of the 1st Respondent
from 3rd February, 1990 till the date of Bank Guarantee. The
Appellants now did not pay the charges up to 2nd February, 1990 nor
furnished the Bank Guarantee. They allowed the goods to remain with
the 1st Respondent knowing full well that further demurrage charges
were being incurred.
The Appeal of the 1st Respondents was disposed of by the
impugned Order dated 27th July, 2000. The directions of the learned
single Judge directing the 1st Respondent to recover only till 2nd
February, 1990 has been set aside. It is held that the 1st Respondent
can recover charges for the entire period the goods remain with it.
Mr. Nageshwar Rao submits that the order of the learned single
Judge was absolutely correct. He submits that the right of lien under
Section 59 of the Major Port Trusts Act is similar to a lien exercised by
a bailee under Section 171 of the Indian Contract Act. He submits
that once a right of lien has been exercised the bailee cannot charge
rent for storage of goods.
Mr. Nageshwar Rao relies upon the case of Board of Trustees of
the Port of Bombay v. Sriyanesh Knitters reported in (1999) 7 SCC
359. In this case the Port Trust Authorities were claiming lien not
under Section 59 of the Major Port Trusts Act but under Section 171 of
the Indian Contract Act. The question before the Court was whether
the Port Trust Authorities could claim a lien both under Section 59 of
the Major Port Trusts Act and under Section 171 of the Indian Contract
Act. This Court held that when the Port Trust Authorities stored the
goods a relationship of bailer and bailee came into existence. It was
held that the Port Trust Authorities could claim a lien under Section
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171 of the Indian Contract Act also. In our view, this authority does
not support the proposition that principles which apply to a lien under
Section 171 would also apply to the statutory lien under Section 59.
Statutorily the 1st Respondent is entitled to claim payment of all
demurrage charges before the goods were cleared. The Appellants
never offered to pay the demurrage charges. They sought to misuse
the Order of the Court and take the goods out of the custody of the 1st
Respondent without payment of their charges. The 1st Respondent
was fully justified in refusing to allow such clearance. The Appellate
Court was right in concluding that the 1st Respondent was entitled to
recover all charges till the date the goods remained with it.
In our view the proposition that the bailee, who exercises a lien,
is not entitled to charge rent for storage of goods can never apply to a
case where the lien is exercised for non-payment of rent or storage
charges. If such a proposition were to be accepted it would lead to
catastrophic results. It is well known that in most cities, particularly
port cities like Calcutta and Mumbai, storage space is at a premium. If
such a proposition were accepted then all that a person need to do is
to make a demand for removal of the goods without offering to pay
the storage charges. If the bailee were to refuse to allow clearance
and exercise his right of lien, as he is bound to do, the bailor’s purpose
would be served. He would thereafter have rent free storage space.
He could then continue to store the goods free of rent. On the other
hand, if the bailee were to permit clearance, in almost all cases, his
charges would not be subsequently paid and he would have to then
pursue the bailor for recovery of his charges. This could never be the
law.
Faced with this situation, Mr. Nageshwar Rao submits that the 1st
Respondent should have exercised their power of sale under Section
62 of the Major Port Trusts Act. He submits that it was the duty of the
1st Respondent to sell off the goods. He submits that the 1st
Respondent cannot be permitted to continue to levy demurrage
charges when they themselves do not sell off the goods. He submits
that after they obtained a stay on 11th May, 1990 the 1st Respondent
should have sold off the goods. He submits that the 1st Respondent
should not be allowed to claim demurrage charges after 111th May,
1990. We are unable to accept this submission. Till 19th December,
1989 the goods were under a seizure Order. Thus they could not
have been sold. Before 19th December, 1989 the Appellant had
already obtained Orders dated 27th September, 1989 and 15th
December, 1989. These Orders permitted clearance of the goods.
Thus the 1st Respondent could not sell the goods. The 1st
Respondents were further directed by Order dated 2nd February, 1990
not to raise any objection to the goods being cleared. Even though
they obtained an Order of stay of clearance they could not have sold
off the goods when the subject matter of clearance of goods was
before the Court. Thereafter by Order dated 16th September, 1991
the High Court again permitted clearance of goods. The interim Order
dated 16th November, 1991, in the Appeal filed by the 1st
Respondents, also permitted clearance on furnishing a Bank
Guarantee. At no stage did the Appellant inform the 1st Respondent
that they were not going to furnish a Bank Guarantee. Thus the 1st
Respondent could not have sold the goods.
Mr. Nageshwar Rao then submits that the 1st Respondent had
applied to the Appellate Court for permission to sell the goods. He
points out that by Order dated 10th January, 1992 it was held as
follows :-
".After hearing the Counsel for the parties, it is not
possible for this Court to specify as to what consequential
action the Board of Trustees for the Port of Calcutta is
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entitled to take in view of non-furnishing of the Bank
Guarantee by the writ petitioner/respondents. That course
of action has to be decided by the appellant itself.
However, we direct that the appeal shall appear in the list
for hearing on 31.1.1992 at the top of the list subject to
part-heard"
Mr. Nageshwar Rao submits that now the 1st Respondents could
have sold the goods. He submits that it was the duty of the 1st
Respondent to have sold the goods so that further demurrage charges
are not incurred. Mr. Jaideep Gupta does not deny that such an
application was made by the 1st Respondent. He admits that in the
Order dated 10th January, 1992 it was held that the 1st Respondent
could decide what course of action they should adopt. He submits that
as, on 10th January 1992, the Court directed the matter to be listed on
31st January 1992, the 1st Respondent could not have sold the goods.
In our view, the 1st Respondent should have sold off the goods
at that stage. They are a statutory body. Merely because there is no
obligation to sell does not mean that they can allow the goods to lie
around. By this time the 1st Respondent well knew that the Appellant
was not paying the charges. Now the Court had permitted them to
take recourse to such action as was available in law. Sale is
contemplated in the Major Port Trusts Act itself. In our view the 1st
Respondent should have now sold the goods. Apart from the fact that
demurrage charges would have stopped running, valuable godown
space would also have become available to them. On facts of this
case, we feel that it would be just and proper that the 1st Respondent
not be allowed to charge demurrage charges after 10th January, 1992.
Mr. Nageshwar Rao next submits that the adjudication
proceedings have ended in favour of the Appellant. He submits that
under the Order of the learned single Judge the Customs Authorities
have to pay the demurrage charges. As against this Ms. Bagchi
submits that under the Order of the learned single Judge the Customs
Authorities have to pay demurrage only for the period of detention.
These are not matters with which we are concerned in this Appeal.
This does not form part of the subject matter of the impugned
Judgment. We, therefore, express no opinion on this aspect.
We clarify that if the Appellant wants clearance of the goods he
has to pay all charges of the 1st Respondent till 10th January, 1992.
In the event of the Appellant not clearing the goods after paying all
charges within 30 days from today the 1st Respondent will be at liberty
to take action under Section 62 of the Major Port Trusts Act and also,
if permissible in law to do so, to make a claim against the Appellant for
recovery of the balance amount due after sale of the goods.
The Appeal stands disposed of accordingly. There will be no
order as to costs.
..J.
(SYED SHAH MOHAMMED QUADRI)
J.
(S. N. VARIAVA)
February 22, 2002