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PETITIONER: SUN EXPORT CORPORATION & ANR.

       Vs.

RESPONDENT: BOARD OF TRUSTEES OF THE PORT OF BOMBAY

DATE OF JUDGMENT:       23/10/1997

BENCH: A.S. ANAND, K. VENKATASWAMI

ACT:

HEADNOTE:

JUDGMENT:                THE 23RD DAY OF OCTOBER, 1997 Present:                Hon’ble Dr.Justice A.S. Anand                Hon’ble Mr. Justice K. Venkataswami Parag P.  Tripathi, Ms.  Rakhi Ray  and Ms. Bina Gupta, Advs for the appellants. R.F. Nariman,  Sr. Adv.  And Mrs.  A.K. Verma, Avd. with him for the Respondent for M/S J.B. Dadachanji & Co. Advs.                       J U D G M E N T      The following Judgment of the Court was delivered: DR. ANAND. J.      Appellant No.1. a sole proprietory concern of appellant No.2, imported  10 cases  of stainless  steel tubes in July, 1974. The import of the consignment was effected against two Import Licences  dated 13th November, 1973 and 1st February, 1974 which  were held  by a  firm running under the name and style of  M/s. Laxmi  Engineering Company, district Sonipat, Haryana. The said firm obtained from the Joint Controller of Imports and  Exports two  letters of  authority  dated  20th February. 1974  whereunder the  first appellant was to clear the goods  in respect of those two licences. The consignment landed by  vessel s.s.  "JALA VEERA"  on July 26/27, 1974 at Indira Docks. The consignment was to be cleared by the first appellant from the warehouse at Indira Docks. That, however, was not  done. The Collector of Customs vide his order dated 28th February,  1976 found  that the  goods covered  by  the consignment were  liable to  confiscation under  section 111 (d) of the Customs Act, 1962 for various reasons detailed in the order.  Option to redeem the goods was, therefore, given to the appellant on payment of Rs. 200,000/- as penalty.      Since, the  goods were not recovered from the warehouse at  Indira   Docks,  the   respondent,  Bombay   Port  Trust authorities, served  a notice  on appellant  No.1, on April, 19, 1976,  informing  it  about  the  non-clearance  of  the consignment and  calling upon  it to  do the needful and pay the dues of the Port Trust. Appellant No.1 informed the Port Trust on  May 24,  1976 that  the Bill  of Entry  was  being completed and  that the  goods would  be cleared  and at the time of  clearance, charges  would also  be paid. Since, the goods had  not been  cleared, on  October 6,  1976, the Port

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Trust  informed   respondent  No.1  that  demurrage  charges amounting to  Rs. 1,58,545,10 ps. were due "upto the date of confiscation" and  called upon  appellant No.1  to remit the said amount.  Since, three  was no  response, the Port Trust sent a  reminder to appellant No.1 on November 10, 1976 also for remitting the due amount. On December 3, 1976, appellant No.1 informed  the Port  Trust that  it had  merely opened a Letter of  credit and  that the licence holder was liable to pay the  costs and  charges, who  had failed to do so and 45 days’ time  was, therefore,  sought by  appellant No.  1  to arrange necessary  finance for  payment of  the dues. Since, appellant No.1  failed to pay the charges and dues, the Port Trust instituted  Suit No.  394 of 1979 on the Original Side of the  High Court  of Judicature  at Bombay on November 26, 1979 for recovery of Rs. 1,58,545,10 with interest thereon @ 12%  per   annum  from  the  date  of  the  said  suit  till realisation. Appellants  resisted the suit and various pleas were raised.  It was  claimed that  the suit  was barred  by limitation. On  merits the  contention of the appellants was that since  they were  not the  importers or  owners of  the goods, they  were consequently  not liable  for the wharfage and demurrage  charges. It  was  asserted  that  M/s.  Laxmi Engineering Company  of Haryana,  being the  licence holders for the  import of  stainless steel  tubes, who had imported the said  goods were  the owners  of the  goods  within  the meaning of  the expression  "owner" under  the  Bombay  Port Trust Act  as well  as under the Major Port Trusts Act, 1963 and as  such that  firm alone  was liable to pay the dues of the Port  Trust and  since the  Port Trust  had  failed  and neglected to  recover their  dues from M/s Laxmi Engineering Company, they  were estopped  from  claiming  demurrage  and other charges from the appellants. From the pleadings of the parties, the following issues were claimed:-      "1. Whether  the suit  is barred by      the law of limitation?      2. Whether  the defendants were the      importers  and/or   owners  of  the      goods mentioned  in para  4 of  the      plaint, as alleged in para 6 of the      plaint?      3. Whether  the plaintiffs were not      entitled  to  take  charge  of  the      consignment mentioned in the plaint      except on the request of the owners      of the  goods as provided under the      Major Port Trusts Act?      4.  Whether   the  defendants  were      under an  obligation or  were bound      to apply  for and  take delivery of      the said good for and take delivery      of the  said goods and to clear the      same within  seven  clear  days  as      alleged in  para 6  and  9  of  the      plaint?      5.  Whether   the  defendants  were      bound and  liable to  pay Wharfage,      demurrage  and   other  charges  as      alleged in  para 6 of the plaint or      at all?      6.  Whether   the  plaintiffs   are      entitled  to  claim  demurrage  and      other charges  in  respect  of  the      said   goods    for   the    period      subsequent to  the  period  of  one      month from  the date  on which  the

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    goods were  taken in  their custody      that is  for the  period subsequent      to the 30th August, 1974?      7. Whether the plaintiffs abandoned      or waived  or forfeited their claim      in respect  of their  dues and  are      estopped from  making  a  claim  in      respect   thereof    against    the      defendants and/or Laxmi Engineering      Co., as  alleged in  para 8  of the      written statement?      8. Whether the defendants are bound      and liable to pay to the plaintiffs      a sum  of Rs.  1,58,545,10  as  per      exhibit ’8’  to the  plaint or  any      part thereof  either with  interest      at the  rate of 12% per annum or at      any other rate?      9.  To   what   reliefs   are   the      plaintiffs entitled?"      While the  Port Trust  led no  evidence, the appellants examined Shri  Badri Prasad  Chaudhary, constituted attorney of  appellant   No.2.  The  parties  also  produced  various documents  in  support  of  their  respective  cases.  On  a consideration of  the evidence  on the  record, the  learned Single Judge concluded that the suit filed by the Port Trust was not  barred  by  limitation.  However,  on  merits,  the learned Single Judge held that since the appellants were not the importers  and/or owners  of the  goods covered  by  the consignment, the  Port Trust could not recover the dues from the appellants.  It was  admitted before  the learned  trial Judge that  there was  no dispute  about the  quantum of the claim raised  by  the  Port  Trust  on  account  of  various charges. Aggrieved  by the  decision of the trial Judge, the Port Trust  filed an appeal before the Division Bench of the High Court.  The Division Bench allowed the appeal on 9/10th February, 1993  and setting aside the judgment and decree of the trial  court, decreed  the suit filed by Port Trust with 12% interest  per annum  from the  date of the suit till the realisation  of  the  amount  of  Rs.  1,58,545,10  ps.  The appellants were  also directed to pay costs of the suit. The decision of  the Division  Bench dated 9/10th February, 1993 is assailed through this appeal by special leave.      We have  heard Mr.  Parag P.  Tripathi, learned counsel for the  appellants and  Mr. R.F.  Nariman,  learned  Senior counsel appearing for the Port Trust authorities.      For the purposes of this appeal arguments were confined by learned  counsel for  the appellants  to the  findings on Issue Nos. 2, 8 and 9 only.      Mr. Tripathi  submitted that  the letters  of authority issued in  favour of  the  appellants  did  not  create  any privity between  the appellants  and  the Port Trust because those were  issued under  Import and  Export Policy and were not intended  to govern  any relationship  of the appellants with the  Port Trust.  It was  argued that Laxmi Engineering Company or  the named  consignee i.e.  Indian Overseas Bank, could  alone   be  fastened   with  the   liability  to  pay ’demurrage’ charges  because the  appellants  were  not  the "owners" of  the goods and that it was also open to the Port Trust to  recover the demurrage charges by sale of the goods and not having done that the Port Trust could not fasten the liability on the appellants.      In response,  Mr. Nariman  submitted that  not only did the appellant  No.1 at  no point  of time  informed the Port Trust that  it  was  acting  for  and  on  behalf  of  Laxmi

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Engineering Company  only but  even otherwise the appellants were acting  as agents  for the consignee and were therefore responsible for the custody of the goods and their clearance from the  warehouse and  since they  failed to  ‘clear’  the goods and  ‘remove’ the  same from the warehouse, they could not escape  from their  liability to pay the claimed dues to the Port Trust.      With a  view to appreciate the rival contentions raised at the Bar, it is first necessary to notice certain admitted positions.      A perusal  of the Bill of Lading, Ext. ‘B’ reveals that Atlantic Metal  Company Limited  were the  shippers. Against the column  of "consignee" it is stated "order of the Indian Overseas Bank"  and the  party to  be notified  is shown  as appellant No.1. It is also admitted that the Indian Overseas Bank had  made an  endorsement in  favour of  appellant No.1 which directed  that the  consignment in  question should be delivered to  appellant No.1. After the endorsement was made by Indian  Overseas Bank  in favour  of appellant No.1, M/s. C.C.  Shah  &  Sons,  clearing  agents,  were  appointed  by appellant No.1  to obtain  customs’ clearance  in respect of the consignment.  It is  also admitted that notice regarding confiscation and  option of redemption on payment of penalty was issued  by the Customs Authority to appellant No.1. That the appellant were acting as agents for the consignee is not denied. It is also admitted that at no point of time did the appellants inform  the Port  Trust about or liability of the licencee, Laxmi Engineering or that they were acting only on behalf of  the said  firm till the suit was filed. So far as the quantum  of charges  is concerned,  there is  no dispute about its correctness either.      Thus from  the admitted facts it would be seen that for all intent  and purposes  the rights  which  vested  in  the original  consignee  stood  transferred  in  favour  of  the endorsee  and   the  original   consignee  could  thereafter exercise no  rights in  respect of  the consignment  without cancelling the  endorsement. A reference to the statement of Shri Badri  Prasad Chaudhary,  the constitutes  attorney and husband of  appellant No.2,  also goes  to show  that it was appellant No.1  who had  opened the  Letter of Credit and it had also  incurred expenses and accepted its liability in so far as  the Bank  is concerned.  The witness  admitted  that after the  steamer had  arrived in  Bombay  in  July,  1974, payments were  made by  the first  appellant  and  the  Bank debited about  Rs. 2  to 2/-1/2  lakhs  to  the  account  of appellant No.1.  He went  on to add that apart from the said sum of  Rs. 2  to 2-1/2  lakhs, the  appellant No.1 had also invested a  sum of  about Rs.6  lakhs in respect of the suit consignment between  the years  1974 and  1976. The  witness further  admitted   that  the   consignment  bore  the  mark containing the  initials of appellant No.1. He also admitted that  appellant  No.1  had  filed  the  Bill  of  Entry  for clearance of  the goods  and that  it was appellant No.1 who had been  served with  the show  cause notice by the customs authorities. The  witness went on to admit that the order of confiscation was  also addressed  to appellant  No.1 by  the Customs authorities.  Mr.  Nariman,  on  the  basis  of  the evidence of  this witness  and the  documents on the record, submitted that  appellant No.1  was the  "consignee" or  the "owner" or  the "agent"  for  the  goods  in  question  and, therefore, the  Port Trust  was justified  in fastening  the liability of recovering demurrage charges from it.      Section 3  (5) of  the Bombay Port Trust Act defines an "owner" as:      "Owner" when  used in  relation  to

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    goods,  includes   any   consignor,      consignee, shipper or agent for the      sale or  custody of such goods; and      when used in relation to any vessel      or any  aircraft making  use of the      Port   includes   any   part-owner,      charterer, consignee  or  mortgagee      in possession thereof."      Section 2(o)  of the  Major Port  Trusts Act defines an "owner" in the following terms:-      "Owner", (i)  in relation to goods,      includes any  consignor, consignee,      shipper  or  agent  for  the  sale,      custody, loading  or  unloading  of      such goods; and (ii) in relation to      any vessel  or any  aircraft making      use of any port, includes any part-      owner,  charterer,   consignee,  or      mortgage in possession thereof."      Bare  reading  of  the  definition  of  the  expression "owner",  under  both  the  Acts,  goes  to  show  that  the expression includes a "consignee" as also an "agent for sale or custody"  of such goods. Thus, both under the Bombay Port Trust Act  as well  as under  the Major Port Trusts Act, the expression "owner"  includes an  "agent for  the custody  of such goods". Therefore, irrespective of the question whether the expression  "owner" could only imply the title holder in the goods as canvassed by Mr. Tripathi, from the definitions noticed above  it follows  that the  expression "owner would include within its ambit a "consignee" as well as the "agent for the  custody of  the  goods"  in  question.  We  are  in agreement with  the view  of the  Division Bench of the High Court that on the endorsement made by the "consignee" on the Bill of  Lading, the  appellant No.1  became the "consignee" and in  view of  the Letters  of the authority issued to it, appellant No.1 was obliged to clear the goods as an "agent". Appellant No.1  would therefore  squarely  fall  within  the definition of  an "owner"  both under  the Bombay Port Trust Act  as   also  under   the  major  Port  Trusts  Act,  more particularly since  it is  not disputed that appellant No. 1 had secured an endorsement on the bill of Lading with a view to obtain  custody of the consignment. It is, therefore, not available to  Mr. Tripathi  to contend  that the  appellants could not  be considered  even to  be the  "agents  for  the custody" of  the consignment. This being the fact situation, the liability to pay demurrage and other charges to the Port Trust would  squarely lie  on the  party who  was obliged to remove the goods from the warehouse but failed to do so.      The expression  "demurrage" has  not been defined under the Port  Trusts Act.  In the context of the goods remaining in the wharfage, it implies the charges which the Port Trust can levy  at a  particular rate  if the  goods remain on the docks beyond a specified time. The Port Trust with a view to recover those dues would ordinarily have a lien on the goods and can  refuse to  deliver the  goods  till  the  demurrage charges are  paid. This,  however, presupposes that the Port Trust continues  to hold the goods, but where the goods have been confiscated by the Customs Authority, it cannot be said that the  Port Trust  had any  hold over  those goods  after their ‘confiscation’.  The obligation  to pay the charges of the Port  Trust, till  the  confiscation  of  the  goods  as already observed,  that of  the party  which had the duty to remove/receive the  goods and  had failed  to do  so. In the instant case it was the appellants, who admittedly had acted as  holders  of  the  Letters  of  authority  and  were  the

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licensee’s agents  for clearance of the consignment from the customs and  entitled to receive the goods which they failed to receive  and clear. They could therefore be fastened with the liability to pay charges by way of demurrage etc. to the Port Trust.      We do  not find  any merit  in the  submission  of  Mr. Tripathi that  the Port  Trust could  have put  the goods in question to  sale to  off-set the demurrage since they had a lien over  those  goods  before  making  any  claim  on  the appellants. The goods, as already noticed, stood confiscated by the  Customs Authority  vide order  dated 28th  February, 1976 under Section 111(d) of the Customs Act, 1962 read with Section 3(2)  of the  Import and Export (Control) Act, 1947. The option to redeem the goods on payment of fine/penalty of Rs.2 lakhs in lieu of such confiscation under the provisions of Section  125 of the Customs Act, 1962 was to be exercised by the  appellants, to whom notice was issued by the Customs Authority within  a fortnight  to  redeem  the  goods.  That option was  never exercised.  Since, the goods stood already confiscated, the submission that those goods could have been sold to  off-set the  demurrage charges  is fallacious.  The goods  confiscated   by  the   Customs  Authority  were  not available to  the Port Trust for appropriation towards their dues. Section  63 of the Major Port Trusts Act, 1963, in the facts and  circumstances of  this case,  does not  come into play at all. In so far as Board of Trustees, Bombay Port Vs. Sriyansh Knitters. (A.I.R. 1983 Bombay 88) on which reliance is  placed   by  learned   counsel  for  the  appellants  is concerned, that  judgment has  been considered  and  rightly distinguished by the Division Bench of the High Court.      Since, the  obligation to  clear the  goods was that of the appellants  and they  had failed  to clear  those goods, they cannot escape their liability to pay the charges to the Port  Trust   including  demurrage.  The  liability  of  the appellants in  the facts  and circumstances of the case, has been correctly  fastened by  the Division  Bench of the High Court.      In view  of what  we have  said above, we find that the impugned judgment  of the  Division Bench  of the High Court does not  call for  any interference. The appeal, therefore, fails and is dismissed. No costs.