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CASE NO.: Appeal (civil)  2472 of 2005

PETITIONER: M/s. Gujarat Cypromet Ltd.                                   

RESPONDENT: Union of India & Others                                             

DATE OF JUDGMENT: 07/04/2005

BENCH: CJI R.C. Lahoti,G. P. Mathur & P. P. Naolekar

JUDGMENT: J U D G M E N T (Arising out of S.L.P.(Civil) No. 24541 of 2002)

G. P. MATHUR, J.

1.      Leave granted.

2.      This appeal, by special leave, is directed against the judgment and  order dated 16.9.2002 of the Bombay High Court, by which the writ  petition filed by the appellant was disposed of with certain directions.  

3.      The appellant imported certain consignments of copper cathodes  from Germany in August, 1998.   The consignments were not cleared by  the appellant from the Port Trust and accordingly they were sold in a  public auction on 13.1.2000 for Rs.52,50,000/-.   The Jawaharlal Nehru  Port Trust, Mumbai deducted 50 per cent of the sale proceeds i.e.  Rs.26,25,000/- towards sale expenses.   The appellant filed a writ petition  in the Bombay High Court challenging the deduction of 50 per cent of  the sale proceeds as expenses and prayed that the sale proceeds towards  expenses of sale on actual basis only should be deducted and the balance  amount should be paid to the appellant.   The High Court took the view  that the controversy raised by the appellant involved adjudication of facts  which was not possible in a writ petition filed under Article 226 of the  Constitution.   The writ petition was accordingly disposed of permitting  the appellant to pursue ordinary civil remedy for redressal of its  grievance.   

4.      In response to the notice issued, the respondents have filed a   counter affidavit.   It is averred therein that Jawaharlal Nehru Port Trust  was incorporated under the Major Port Trusts Act, 1963 and it renders  services in accordance with the aforesaid Act.   The core function of the  Port is to provide storage space for bulk and containarised cargo, which  is stored in the Board premises.   Such storage facilities are to facilitate  international trade and to attract international shipping lines to the Port  for promoting trade in the national interest.   Any delay in clearing or  removing the cargo attracts demurrage charges.  The  importers/consignees are given 15 free days to take delivery of the cargo.    If the cargo is unclaimed for two months, it is put for sale under Sections  61 and 62 of the Major Port Trust Act, as the case may be.  Congestion in  Ports affects the free movement of ships and all essential goods.   The  Port does not do any business of warehousing and it performs statutory  functions.   The scheme of the Major Port Trusts Act is to frame the scale  of  rates of penalties, rent, charges, expenses in such a manner which will  act as an incentive and compulsion for the expeditious removal of the  goods/cargo from the transit area.   Ships, wagons, containers, cargo have  to be kept moving and that can happen only if there is some kind of  pressure on the importer to remove the goods from the Board’s premises  with the utmost expedition.  The rates and charges which the Board is

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entitled to recover have been framed under the Major Port Trusts Act so  as to ensure that the Ports are congestion free, both for purposes of  movement of ships and movement of cargo.   

5.      It is further averred that the Board of Trustees vide Item Nos.17  and 18 of the Agenda of the 92nd Board Meeting held on 31.1.1992  approved the formula for fixing of reserve price.   The Board thereafter  started disposal of the unclaimed cargo as per the said procedure, but the  rate of disposal was not commensurate with the generation of  longstanding containers, resulting in occupation of valuable space in the  container yard by such longstanding containers.  In order to find a  solution to the problem, the matter was placed before the Board in its  meeting held on 25.7.1997 for reconsideration of the method for fixing  the reserve price.   A revised formula was then adopted which also was  not found to be working satisfactorily.   Certain suggestions were  received from the Commissioner of Customs and finally a resolution was  passed in the meeting of the Board held on 23.7.1999, which reads as  under :  "Treating 50% of sale proceeds as sale expenses  which shall be first charge on the sale proceeds and customs  duty and other claims as per order laid down in MPT Act of  1963 and applying the formula as approved by the Board  vide TR No.492/97 dated 25.7.1997 in all the previous cases  where auction has already been held.

Fixing of reserve price as the sum of Custom duty  plus 4 months’ ground rent."

6.      It is further averred in the counter affidavit that as it is virtually  impossible to ascertain the exact sale expenses in respect of each lot and,  therefore, a decision has been taken to treat 50 per cent of the sale  proceeds as sale expenses.   The sale expenses normally vary from lot to  lot and are dependent upon the amounts realized in each sale.  For the  purposes of auction, an auction hall, godown of 7000 sq. meters meant  for storage of uncleared goods to container yards for keeping  longstanding cargo of uncleared goods has to be arranged.  A notification  is published in the Government Gazette and advertisement is issued in all  leading newspapers in English, Hindi, Marathi and Gujarati.   The Port  Trust has also to make available services of its officers and staff, such as  Deputy Manager, Assistant Manager, Superintendent, Junior Engineers,  Checkers, Clerks and Peons, etc.    

7.      In the counter affidavit details have also been given regarding the  actual expenses incurred by the Port Trust and the amount realized on the  basis of the current formula of charging 50 per cent of the sale proceeds  towards sale expenses, which show that the actual expenses exceeded the  amount so recovered and the Port Trust suffered a loss. It is further  averred that in most cases, the Port Trust is unable to recover its entire  dues from the sale of cargo from longstanding containers.   

8.      Though the principal prayer made in the writ petition was to quash  the Resolution No.624 dated 23.7.1999 of the Port Trust whereunder it  was resolved that 50 per cent of the sale proceeds in a consignment be  appropriated towards expenses of the sale, learned counsel for the  appellant has not been able to point out any ground as to how the said  resolution is invalid.   Section 63 of the Major Port Trusts Act, 1963  reads as under :

"63.    Application of sale proceeds \026 (1)    The proceeds of every  sale under Section 61 or Section 62 shall be applied in the  following order \026

(a)     in payment of the expenses of the sale;

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(b)     in payment, according to their respective priorities, of the  lines and claims excepted in Sub-section (2) of Section 59  from the priority of the lien of the Board;

(c)     in payment of the rates and expenses of landing, removing,  storing or warehousing the same, and of all other charges  due to the Board in respect thereof, including demurrage  (other than penal demurrage) payable in respect of such  goods for a period of four months from the date of landing;

(d)     in payment of any penalty or fine due to the Central  Government under any law for the time being in force  relating to customs;

(e)     in payment of any other sum due to the Board.

(2)     The surplus, if any, shall be paid to the importer, owner or  consignee of the goods or to his agent, on an application made by  him in this behalf within six months from the date of the sale of the  goods.   

(3)     Where no application has been made under Sub-section (2),  the surplus shall be applied by the Board for the purposes of this  Act."

9.      Section 61 of the Act empowers the Board, after the expiry of two  months from the time when any goods have passed into its custody (other  than animals, perishable or hazardous goods) to sell by public auction,  the goods so removed.   Section 62 of the Act also empowers the Board  to sell the goods by public auction which after landing thereof are not  removed by the owner or other person entitled thereto from the premises  of the Board within one month from the date on which such goods were   placed in their custody.   In view of these statutory provisions, the Board  was perfectly justified in selling the unclaimed cargo by public auction.    As explained in the counter affidavit filed by the respondents, it is not  possible to precisely determine the expenses of sale in each case on  account of various factors involved.   Therefore, the Board has passed a  resolution to deduct 50 per cent of the sale proceeds as expenses of sale.   It has to be borne in mind that sometimes the expenses of sale, which is  conducted through public auction after a Gazette notification and wide  publicity in newspapers, far exceed the actual amount recovered.   In fact,  the figures supplied in the counter affidavit show that in the year 2000- 2001 and 2001-2002 the total cost incurred in holding the public auction  exceeded the amount recovered on the basis of the impugned resolution  i.e. 50 per cent of the sale proceeds and thus the Board has suffered a  loss.  

10.     On overall consideration of the matter, we are of the opinion that  the appellant has failed to make out any case for interference by this  Court in a Special Leave Petition filed under Article 136 of the  Constitution.   The appeal is accordingly dismissed with costs.