Bombay High Court
Amendment Act vs M/S Indian Express Newspaper on 5 March, 2010
Author: V.M. Kanade
Bench: V. M. Kanade
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SUIT NO.894 OF 1990
The Board of Trustees of the )
Port of Bombay, )
a body corporate constituted )
under the provisions of the )
Major Port Trust Act, 1963 )
as amended by the provisions )
of the Major Port Trusts )
Amendment Act, 1974 and )
having their office at Vijay
ig )
Deep, Shoorji Vallabh- )
das Marg, Ballard Estate, )
Bombay - 400 038 ).... Plaintiffs.
V/s
1 M/s Indian Express Newspaper )
(Bombay) Pvt. Ltd., a Pvt. Ltd. )
Company incorporated under the )
Companies Act of 1956 and )
carrying on business at Express )
Towers, Nariman Point, Bombay - )
400 021. )
2 Shipping Corporation of India )
Ltd., a Ltd. Company incorporated )
under the Companies Act of 1956 )
and having its registered office )
at Shipping House, 245, Madam )
Cama Road, Nariman Point, )
Bombay- 400 021. ) .... Defendants.
----
Mr. U.J. Makhija with Ms. Preeti Shah, i/b Motiwala & Co. for
plaintiffs.
Mr. Vinayak Shete i/b Ms. Poorvi Kamani for Defendant No.1.
::: Downloaded on - 09/06/2013 15:40:43 :::
2
Ms. N. Sumnani i/b Bhatt & Saldhana for Defendant No.2.
----
CORAM: V. M. KANADE, J.
DATE : 5th March, 2010
ORAL JUDGMENT:
1. Plaintiffs are statutory Corporation constituted under the provisions of the Major Port Trust Act, 1963 as amended by the Major Port Trust Amendment Act, 1974 (hereinafter referred to as "the said Act"). The 1st Defendants are a Private Limited Company incorporated under the Companies Act, 1956 and carrying on business at the above address.
According to Plaintiffs, 1st Defendants are importers/owners/consignees of the 89 reels containing Glazed News Print. The 2nd Defendants are a Limited incorporated under the Companies Act, 1956 and they were agents of the Vessel "Vishva Apurva" and, according to Plaintiffs, , therefore, were also the owners within the meaning of the expression "owner" as contained in section 2(o) of the said Act.
2. According to Plaintiffs, they are entitled to charge and ::: Downloaded on - 09/06/2013 15:40:43 ::: 3 levy wharfage, demurrage and other charges in respect of the goods landed and stored by Plaintiffs in the Docks at Bombay according to the scale of rates duly prescribed by the provisions of the said Act and to realize the charges by sale of the consignment if the said amount is not paid and if any deficit remains after sale of the consignment, they are entitled to claim the said amount from Defendants.
3. Plaintiffs have filed this suit for recovery of an amount of Rs 3,21,369.45 being the deficit in the port trust charges which remained to be paid even after sale of the 1st, 2nd and 3rd lots of the said consignment alongwith interest.
4. Brief facts are as under:-
5. According to Plaintiffs, some time in or about September, 1984 the 1st Defendants imported the consignment of 89 reels containing Glazed News Print. The said consignment was shown at Item No.72 of the Import General Manifest No.1199 dated 17th September, 1984 of the vessel "s.s. Vishva Apurva" and it was discharged by the ::: Downloaded on - 09/06/2013 15:40:43 ::: 4 said vessel after it came into the Docks at Bombay. The General Landing date and the Last Free day of the cargo of the said vessel were 1st October 1984 and 8th October, 1984 respectively. Out of the total number of 89 reels which were imported, 81 reels of the said consignment were listed for sale and sold in three different lots. The first lot of 16 reels was sold under Lot No.AA/406 on 8th December, 1986. The second lot of 55 reels was sold under Lot No.AA/412 on 8th December, 1986 and the third lot of 10 reels was sold under Lot No.AA/413 on 8th December, 1986. (The said lots are hereinafter referred to as "first lot", "second lot" and "third lot").
6. According to Plaintiffs, balance 8 reels were lying in the Docks and were to be sold if the deficit charges were not recovered after sale of the said three lots. According to Plaintiffs, the 1st Defendants were importers/owners/consignees of the said three lots and the 2nd Defendants were agents of the said vessel and also bailers /owners of the said consignment and, therefore, both of them were liable to take delivery and clear the said three ::: Downloaded on - 09/06/2013 15:40:43 ::: 5 lots within 7 days from the date of landing and to pay charges which accrued and were payable to Plaintiffs for the period during which the said thee lots remained in the custody of Plaintiffs in accordance with the rules. It is the case of Plaintiffs that the Defendants failed and neglected to clear the consignment and, as such, the said consignment remained in the custody of Plaintiffs.
7. It is the Plaintiffs' case that since the first lot was not cleared for over two months from the date of landing, by letter dated 27th October, 1986 addressed to Defendant Nos.
1 and 2 Plaintiffs informed the Defendants that the said first lot was lying uncleared for over two months from the date of landing and, therefore, it was liable to be put up for sale under sections 61 and 62 of the Act and it would be sold in the sale which was proposed to be held on 10th November, 1986 or on any subsequent date without further notice if the said charges which had accrued are not paid within 10 days from the receipt of the said letter.
::: Downloaded on - 09/06/2013 15:40:43 ::: 68. Accordingly, the list of packages being sold including the first lot was published in the Government Gazette dated 30th October, 1986 and also in local news-paper "Times of India" in its issue dated 28th October, 1986 as required by the provisions of the Act and, thereafter, the first lot was sold on 8th December, 1986 for an amount of Rs 74,195/-.
Accordingly, Plaintiffs adjusted sale price against the port trust charges. Thereafter, according to Plaintiffs, by letter dated 01/12/1989 addressed to Defendant Nos. 1 and 2, Plaintiffs informed the Defendants that the first lot had been sold on 08/12/1986 and the Defendants were called upon to pay the deficit which was arising after adjusting the sale price. Similarly, since the second and third lot was not cleared, letters were issued by Plaintiffs to Defendants informing them that under the provisions of sections 61 and 62 of the Act the said lots would be sold and they were also informed about the sale proposed to be held on the date mentioned in the notice or at any time thereafter without issuing further notice and the said second and third lots were sold and, in spite of sale, there remained deficit and, accordingly, Defendants were called upon to pay the deficit ::: Downloaded on - 09/06/2013 15:40:43 ::: 7 amount and since the said amount was not paid, the present suit has been filed.
9. Defendant No.1 filed their Written Statement and in the Written Statement it is alleged that the Plaintiffs have no cause of action against them since they had never directed Defendant No.2 to import any news print or any other material. Further, it is alleged that the suit is barred by limitation since the said consignment had arrived at Bombay in September, 1984 and the suit has been filed belatedly in December, 1989. It is further stated that though Defendant No.1 had asked Plaintiffs by their letter dated 10th October, 1991 to supply necessary details and particulars, no details were furnished by Plaintiffs. It is further denied that Defendant No.1 were importers or owners of the consignee of the consignment . It is further contended that Defendant No.1 were not aware of the list of packages sold by Plaintiffs.
Defendant No.1 denied their liability towards the alleged deficit in port trust charges.
10. Defendant No.2 also filed their Written Statement and ::: Downloaded on - 09/06/2013 15:40:43 ::: 8 contended that the Plaintiffs have no cause of action against the said Defendants. It is contended that the 2nd Defendant were only concerned with the carriage of the consignment into India and upon consignment being discharged, their connection ceased. It is contended that the services rendered by Plaintiffs were for the benefit of Defendant No.1 and, therefore, Defendant No.2 were not liable. Defendant No.2 also claimed that the suit is barred by limitation since the cargo had landed in or about September, 1984 and, therefore, the suit which has been filed in 1989 is barred by law of limitation. It is also contended that the demurrage accrued for more than four months after the date of landing falls outside the scope of section 63 of the said Act.
Defendant No.1 further denied that they were owners of the said consignment under the Major Port Trusts Act or any other Act. Further, it is contended that Defendant No.2 were carrying their contractual obligations for taking charge of the goods for carriage and there was no relationship of bailor and bailee as between Defendant No.2 and Plaintiffs.
Defendant No.2 also denied that Plaintiffs had sold the said goods in three lots and that there was a deficit as alleged by ::: Downloaded on - 09/06/2013 15:40:43 ::: 9 Plaintiffs. It is also contended that in view of section 63 of the said Act, claim against Defendant No.2 was not maintainable.
11. Thereafter, this Court framed the following issues by order dated 06/12/2007:-
ig ISSUES
1. Whether the suit is misconceived and
not maintainable as alleged in para
(1) of the written statement of
defendant No.1?
2. Whether the plaintiffs' claim in suit is barred by law of limitation as alleged in para (5) and para (2) of the written statements of both defendant No.1 and 2 respectively?
3. Whether the plaintiffs prove that defendant No.1 are the importer and/or owners and/or consignees of the suit consignment within the meaning of section 2(o) of the Major Port Trusts Act as stated in paras (2) and (5) of the plaint?
4. Whether the plaintiffs prove that defendant No.2 were the bailors/owners of the said consignment as stated in para (5) of the pliant?
5. Whether the plaintiffs prove that the defendants were bound and liable ::: Downloaded on - 09/06/2013 15:40:43 ::: 10 to take delivery of and clear the said consignment and that they failed to do so as stated in para (5) of the plaint?
6. Whether the plaintiffs prove that the defendants are liable to pay wharfage, demurrage and other charges which accrued thereon as stated in para (5) of the plaint?
7. Whether the sale of the consignment has resulted in a deficit of Rs.
3,20,447.62 as alleged in para (18) of the plaint?
8. Whether the plaintiffs prove that they are entitled to the sum of Rs.
3,21,369.45 with interest @ 15% per annum on the sum of Rs.3,20,447.62 from the date of the suit till payment and/or realization and cost of the suit as stated by the plaintiffs in prayer
(a) of the plaint?
9. To what relief, if any, the plaintiffs entitled to as against the defendants?
12. I have heard the learned Counsel for Plaintiffs and Defendants at length.
13. Plaintiffs have examined two witnesses viz P.W. 1 -
Santosh Dighe and P.W.2 - Chandrakant Patwade. Both these witnesses have been cross-examined by Defendants' Counsel. No further witnesses were examined on behalf of ::: Downloaded on - 09/06/2013 15:40:43 ::: 11 Plaintiffs and no witness was examined on behalf of any of the Defendants.
14. I now propose to deal with the aforesaid issues.
Findings on Issues Nos. 1, 3 and 4:
15. The goods came to be transported to Mumbai through the vessel "Vishva Apurva". The status of Defendant No.2 as agents is not disputed by them. According to Plaintiffs, 1st Defendant imported consignment of 89 reels containing Glazed News Print. The said consignment was mentioned at Item No.72 of the Import General Manifest No.1199 dated 17th September, 1984. According to Plaintiffs, 1st Defendants were importers/consignees/owners of the said goods and Defendant No.2 were agents of the vessel and also bailors/owners of the consignment since it was discharged by them in the custody of Plaintiffs.
16. Mr. Makhija, the learned Counsel appearing on behalf of Plaintiffs invited my attention to the definition of the ::: Downloaded on - 09/06/2013 15:40:43 ::: 12 explanation "owner" as contained in section 2(O). He submitted that since Defendant No.2 were the agents of the vessel, they would also fall within the definition of section 2(O) and were equally liable like Defendant No.1 as they had imported the cargo. He relied upon the judgment of the Supreme Court in Trustees of The Port of Madras through its Chairman v. K.P.V. Sheikh Mohd. Rowther & Co.1 On the other hand, learned ig Counsel appearing on behalf of Defendant No.2 submitted that role of Defendant No.2 was limited and the liability of Defendant No.2 was over after they had delivered the goods to Plaintiffs and they were not concerned with the fact whether Defendant No.1 had taken delivery or not. It is, therefore, submitted that Defendant No.2 could not be made liable for the charges which would be payable by Defendant No.1.
17. In my view, there is much substance in the submissions made by the learned Counsel appearing on behalf of Plaintiffs. Section 2(o) defines the term owner. The said section 2(o reads as under:-
1 AIR 1995 SC 1922 ::: Downloaded on - 09/06/2013 15:40:43 ::: 13 "(o) "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 mortgagee in possession thereof,"
The ratio of the judgment of the Supreme Court in Trustees of The Port of Madras through its Chairman (supra) would squarely applies to the facts of the present case. The Apex Court, in the said case, after referring to definition of the terms "owner" in section 2(o), has clearly held that the agent of the vessel shall be treated as an owner and as long as deliver order is not handed over to Defendant No.1, Defendant No.2 would be responsible towards the said cargo and, therefore, liability of Defendant No.2 would be on par with Defendant No.1 in respect of payment of the port trust charges to Plaintiffs. In my view, therefore, it cannot be said that the suit is misconceived and is not maintainable against Defendant Nos. 1 and 2.
18. Issue No.1 is, therefore answered in the negative.
However, for the reasons stated above Issue No.3 and 4 ::: Downloaded on - 09/06/2013 15:40:43 ::: 14 are answered in the affirmative.
Findings on Issue No.2:
19. In order to decide this issue, it would be relevant to see particulars dates on which the goods were imported.
According to Plaintiffs the following dates are, therefore, relevant:-
DATES PARTICULARS
01/10/1984 General Landing date of the
suit consignment alleged to
have been landed.
08/10/1984 Last Free day by which the suit
consignment should have
been removed free of any
charges.
07/12/1984 The date after which Plaintiffs
were free to sell the suit
consignment since the period
of two months would be over
after that date.
30/10/1986 Date on which notice for public
auction to be held on
10/11/1986 was given.
08/12/1986 Date on which actual sale took
place.
07/12/1989 Date on which the suit is filed.
20. According to Plaintiffs, the suit was filed within three ::: Downloaded on - 09/06/2013 15:40:43 ::: 15 years from the date on which Plaintiffs came to know the actual amount which was due and payable by Defendants towards the payment of various port trust charges payable to Plaintiffs. Counsel appearing on behalf of Plaintiffs submitted that Article 113 has laid down that period of limitation is three years. He submitted that though Plaintiffs were free to sell the suit consignment on 07/12/1984, as long as goods were not sold in public auction, Plaintiffs would not be in a position to know the actual deficit between the sale price of the goods and the port trust charges and, therefore, period of limitation would start from the date on which the auction sale took place which was 08/12/1986 in this case and, therefore, suit is filed within limitation. He relied upon the judgment of the Bombay High Court in The Trustees of the Port of Bombay v. M/s Jayantilal L. Gandhi 1
21. On the other hand, Counsel appearing on behalf of Defendant No.1 submitted that no explanation was given as to why Plaintiffs did not sell the goods immediately after the date on which they became entitled to sell the consignment which date was 07/12/1984. It is, therefore, submitted that 1 AIR 1979 Bombay 12 ::: Downloaded on - 09/06/2013 15:40:43 ::: 16 the period of limitation would start running from 07/12/1984 and not from the date of actual sale.
22. In my view, there is much substance in the submissions made by the learned Counsel appearing on behalf of Plaintiffs. Article 113 of the Limitation Act reads as under:-
-------------------------------------------------------------------------------------
Description of suit Period of Time from which
Limitation period begins to run
-----------------------------------------------------------------------------------
113. Any suit for Three years When the right to which no period of sue accrues limitation is provided elsewhere in this Schedule
23. In the present case, the Port Trust has an authority to sell the goods which are unclaimed for a period of two months after the agent of the vessel delivered the goods to the Port Trust. If these goods are not cleared by the purchaser/owner/consignee, the Port Trust can sell the goods and recover port trust charges. Section 61 and 62 of the Major Port Trusts Act lay down the procedure for sale of the cargo. It is also laid down that in the event of the amount ::: Downloaded on - 09/06/2013 15:40:43 ::: 17 recovered from the sale of cargo is not sufficient to recover the port trust charges, in that event the Port Trust has a right to recover the said amount by filing a suit. It is evident, therefore, that as long as the goods are not actually sold the Trust would not be in a position to calculate the exact deficit which has to be recovered from the owner. It is possible that after selling the cargo, the entire amount may be recovered towards the port trust charges in which event there would be no necessity for the Port Trust to file a suit for recovery of any amount from the owner. However, it it is found that even after the cargo, the sale proceeds of the cargo may not be sufficient for the purpose of making payment of the port trust charges. It is only at that time the Port Trust would be in a position to know the exact deficit which has to be recovered from the owner. The date on which, therefore, in this case, the Port Trust became aware of the deficit is the date of sale viz. 08/12/1986.
24. In the present case, suit is filed on 07/12/1989 i.e within three years from the date of sale of the cargo which took place on 8/12/1986. Article 113 lays down that period of ::: Downloaded on - 09/06/2013 15:40:43 ::: 18 limitation would be three years in cases where no period of limitation is prescribed elsewhere in the schedule. In my view, therefore, Article 113 would be clearly attracted in the present case. The ratio of the judgment on which reliance is placed by the learned Counsel appearing on behalf of Plaintiffs in The Trustees of the Port of Bombay v. M/s Jayantilal L. Gandhi 1 would also clearly apply to the facts of the present case. In the said case, the cargo was sold in auction on 06/02/1964 and as the Defendants did not pay the amount of deficit, Plaintiffs filed a suit for recovery of the sum of Rs 33,082.86 on 20/03/1968. The Division Bench of this Court in para 13 of its judgment has observed as under:-
"13. This is not a suit to claim wharfage and demurrage simpliciter. This is a suit to claim the balance of the amount which can be claimed by the appellants in respect of wharfage and demurrage charges after credit is given for the sale proceeds realized upon the auction of the goods and for such a suit clear provision is made in Section 67-A of the Act. It should not be overlooked that Section 67-A of the Act starts with a non obtante clause and its provisions are applicable 'notwithstanding anything contained in the seven Sections last preceding and in Section 85'. As we have earlier stated, the deficit or the balance of 1 AIR 1979 Bombay 12 ::: Downloaded on - 09/06/2013 15:40:43 ::: 19 the amount claimable can only be ascertained after the auction sale is held therefore, it is not possible for us to accept the contention that the amount claimed in the present suit in respect of wharfage and demurrage charges should be regarded as one for which the cause of action accrues from day to day. Since the cause of action, in our opinion, for the first time, arose when the auction sale took place and that event took place after the Limitation Act, 1963, came into force, there is no question of the provisions of Section 30 of that Act being attracted at all. In that view of the matter, since the present suit has been filed after the expiry of the period of three years from the date of accrual of the cause of action, it is clearly barred by limitation under Article 113 of the Limitation Act, 1963. As a finding on the point of limitation is sufficient to dispose of the appeal, it is unnecessary for us to go into other questions which were agitated before the learned Judge in respect of which findings have been given against the appellants.
It is, therefore, clearly held that period of limitation would begin from the date of sale of the cargo and the period of limitation would be three years as laid down under Article 113 of the Limitation Act.
25. In the result, there is no substance in the submission made by the learned Counsel appearing on behalf of ::: Downloaded on - 09/06/2013 15:40:43 ::: 20 Defendant Nos. 1 and 2 that the suit is barred by limitation.
Issue No.2 is, therefore, answered in the negative.
Findings on Issue No.5 and 6:
26. Plaintiffs have examined two witnesses viz. P.W.1 -
Santosh V. Dighe and P.W. 2 - Chandrakant N. Patwade.
27. P.W.1 in his evidence has stated that Defendant No.1 imported consignment of 89 reels containing Glazed Newsprint in or about September, 1984 which was shown at Item No.72 of the Import General Manifest bearing No.1199 dated 17th September, 1984 of the vessel s.s. "Vishva Apurva" which was discharged at the Docks at Bombay. The General Landing date and the Last Free day of the cargo of the vessel was were 1st October, 1984 and 8th October, 1984 respectively. He has stated that 1st Defendant were importers/consignees/owners of the said consignment within the meaning of the said Act and the 2nd Defendant were agents of the said vessel and also bailors/owners of the said consignment. He has stated that as ::: Downloaded on - 09/06/2013 15:40:43 ::: 21 importers/consignees/owners and bailors/agents for loading and unloading of the said consignment, Defendants were bound and liable to take delivery and clear the said consignment within 7 days from the date of landing thereof and to pay wharfage and demurrage and other charges which had accrued thereon at the rates prescribed under the provisions of the Act.
28. P.W. 1 has been cross-examined by the advocate appearing on behalf of Defendant No.1. He has denied the suggestion that the Port Trust had carried out alterations in the Import General Manifest prepared by Defendant No.2.
He has stated that the date of sale on the said letter was 27/11/1986 and it was corrected to show as 27/10/1986. The witness also denied the suggestion that the Port Trust had not dispatched the letters which were allegedly sent by Plaintiffs to Defendant No.1. He, however, stated that he was not in a position to produce the acknowledgment of the letters which were dispatched.
29. P.W. 1 was also cross-examined by the Counsel ::: Downloaded on - 09/06/2013 15:40:43 ::: 22 appearing on behalf of Defendant No.2. Counsel appearing on behalf of Defendant No.2 adopted the cross-examination conducted by the advocate on behalf of Defendant No.1
30. The learned Counsel appearing on behalf of Defendant No.1 submitted that apart from the Import General Manifest, there was no other material on record to show that Defendant No.1 were consignees of the said goods which were imported. He also submitted that P.W.1 had not given evidence on the basis of his personal knowledge and, therefore, his evidence should not be relied upon. It is submitted that there was no provision either under section 30 of the Customs Act or under any provision of the Major Port Trusts Act whereby a presumption would be raised that the Defendant No.1 were the consignees of the goods only on the basis of entry made in the Import General Manifest.
P.W.2 also has practically reiterated what the P.W.1 has stated in his evidence. P.W.2 was also examined almost on the same lines as that of P.W.1.
31. In order to consider the rival submissions, it would be ::: Downloaded on - 09/06/2013 15:40:43 ::: 23 relevant to take into consideration the provisions of the Customs Act and the provisions of the Major Port Trusts Act.
Section 30 of the Customs Act lays down that a person importing any goods shall deliver to the proper officer an import manifest prior to the arrival of the vessel in the prescribed form and if the said import manifest is not delivered, the person-in-charge is liable to pay penalty. A declaration also has to be made regarding truth of its contents. Section 30 of the Customs Act reads as under:-
"30. Delivery of import manifest or import report- [(1) The person in charge of -
(i) a vessel; or
(ii) an aircraft; or
(iii) a vehicle, carrying imported goods or any other person as may be specified by the Central Government, by notification in the Official Gazette, in this behalf shall, in the case of a vessel or an aircraft, deliver to the proper officer an import manifest prior to the arrival of the vessel of the aircraft, as the case may be, and in the case of a vehicle, an import report within twelve hours after its arrival in the customs station, in the prescribed form and if the import manifest or the import report or any part thereof, is not delivered to the proper officer within the time specified in this sub-section and if the proper officer is satisfied that there was ::: Downloaded on - 09/06/2013 15:40:43 ::: 24 no sufficient cause for such delay, the person-in-charge or any other person referred to in this sub-section, who caused such delay, shall be liable to a penalty not exceeding fifty thousand rupees]"
From the aforesaid provision, it can be seen that the person-
in-charge of the vessel carrying imported goods has to deliver to the proper officer an import manifest in the prescribed form and if there is a delay, the person-in-charge is liable under the provisions of the said Act. A declaration also has to be made that the contents of the documents are true.
32. In the present case, Defendant No.2 who are agents as mentioned in the Import General Manifest and Defendant No. 1 are consignees of the said goods which were imported and unloaded in the Docks. Plaintiffs, therefore, have established on the basis of the Import General Manifest which is a document which has to be submitted to the proper authority by the person-in-charge of the vessel and which contained the name of Defendant No.1 - consignee.
Defendant No.1 could have called upon Defendant No.2 to produce the Bill of Lading. Defendant No.1, however, did not ::: Downloaded on - 09/06/2013 15:40:43 ::: 25 seek any information from Defendant No.2 and, as such, on the basis of Import General Manifest, in my view, Plaintiffs have established that Defendant No.1 were the consignees of the imported goods. Defendant No.2, on the other hand, being the agents falls under the definition of the term "owner" as defined under section 2(o) of the Major Port Trusts Act, 1963 and, therefore, Defendant No.2 are also equally liable as owners of the goods for the payment of charges of the Port Trust. Under section 47 of the Major Port Trusts Act, the Port Trust is entitled to levy charges and rates for the use of the docks as per the scale of rates which are fixed by the Board. The scale of rates are fixed as per the provisions of section 49 whereby the authority can frame scale of rates which have to be notified in the Official Gazette. Under section 59 of the said Act, the Board has a lien on such goods if the rates and rent which are payable by owners are not paid. These goods can be sold by the Board after expiry of two months if the rates payable to the Board have not been paid as per the provisions of section 61 of the said Act. Similarly, under section 62 of the said Act, if the goods are not removed from the premises of the Board ::: Downloaded on - 09/06/2013 15:40:43 ::: 26 within a particular time limit, the sale proceeds of the said goods which are sold in auction can be appropriated in the manner laid down under section 63. In view of the aforesaid provisions, in my view, since Defendant Nos. 1 and 2 are owners of the goods by virtue of provisions of section 2(o), Defendants were liable to take delivery and clear the consignment. Plaintiffs have, after Defendants failed to clear the goods, issued various notices before sale of the goods which were imported by Defendants and in spite of the said notices being served, Defendants failed and neglected to clear the said goods. By letter dated 27th October, 1986 addressed by Plaintiffs to Defendant Nos. 1 and 2, they were called upon to clear the goods within two months from the date the said goods came into the custody of the Trustees and, therefore, notice was given to both of them that if within 10 days from receipt, if the consignment is not cleared, the goods would be sold under the provisions of section 61 and 62 of the said Act.
33. The learned Counsel appearing on behalf of Defendant No.1 strenuously urged that there is no provision of service ::: Downloaded on - 09/06/2013 15:40:43 ::: 27 of the said notice since acknowledgment has not been produced. The learned Counsel had invited my attention to the cross-examination of P.W.2 who had stated that they were unable to produce the acknowledgment receipt in respect of the letters sent by Plaintiffs to Defendants. There is no substance in the said submission since Plaintiffs have produced the acknowledgment of the receipt of the letter dated 27th October, 1986. The acknowledgment is produced by Plaintiffs at Exhibit-R collectively. The contention urged by Counsel for Defendant No.1 that the notice issued by Plaintiff was not served is falsified by the said acknowledgment which is produced. All the letters have been sent by Plaintiffs to Defendant No.1 at the same address. Further, in the Written Statement, in para 6, Defendant No.1 have stated that they had addressed a letter dated 10th October, 1991 to Defendant No.2 to supply them necessary details and particulars including information regarding various documents. From the said averment, it is apparent that Defendant No.1 were aware about the said consignment which was lying with the Port Trust Authority.
In this view of the matter, in my view, Plaintiffs have ::: Downloaded on - 09/06/2013 15:40:43 ::: 28 established and proved that Defendants were bound and liable to take delivery and clear the said consignment.
However, they failed to do so. In my view, therefore, Plaintiffs have proved that Defendants are liable to pay wharfage, demurrage and other charges to Plaintiffs. Issue No.5 and 6 are therefore answered in the affirmative.
Finding on Issue No.7:
34. Mr. Makhija, the learned Counsel appearing on behalf of Plaintiffs has submitted that in view of provisions of section 62 of the said Act, Plaintiffs were entitled to sell the consignment since the Defendants had failed to remove the goods from the premises of the Board within the time prescribed under the Act. He submitted that since the delivery of the goods was not taken, Plaintiffs became entitled to sell the goods after two months if the rent was not paid. Both the witnesses have stated that since Defendant Nos. 1 and 2 did not take delivery of the goods, regular notice was issued to both Defendants calling upon them to take delivery of the said goods, failing which goods would be sold in public auction. The date of the auction was ::: Downloaded on - 09/06/2013 15:40:43 ::: 29 also mentioned in the notice and Defendants were informed that if charges are not paid, goods would be sold in the sale which was proposed to be held on 28th October, 1986 or on any date thereafter without issuing fresh notice. Both the witnesses examined on behalf of Plaintiffs have stated that since the first lot remained uncleared for a period of two months from the date of landing, the list of packages to be sold including the first lot was published in the Maharashtra Government Gazette on 30th October, 1986 and also in local news-paper "Times of India" in its Issue dated 28th October, 1986 and the first lot was sold on 8th December, 1986 for Rs 74,195/- and this resulted in deficit of Rs 1,21,509.45 and after adjusting the sale price against the port trust charges, customs duty and expenses of sale, there remained deficit of Rs 86,229.45 towards port trust charges and Rs 35,280.00 towards I.T.C. Fine. After the sale of the said first lot, Defendants were informed by letter dated 1st December, 1989 about the sale proceeds of the said first lot and they were called upon to pay the said deficit. Thereafter, again, by another letter dated 2nd December, 1989, they were asked to pay the said deficit and they were informed that ::: Downloaded on - 09/06/2013 15:40:43 ::: 30 the said amount would be recovered from them. Thereafter, the second lot was not cleared within two months and, therefore, by letter dated 27th October, 1986 addressed to Defendant Nos. 1 and 2, Plaintiffs informed them that the said lot was liable to be put up for sale which was to be held on 10th November, 1986 or at any subsequent date without further notice unless it was cleared on payment of accrued charges within 10 days of the receipt of the said notice.
Since the said second lot was not cleared, it was published in the Maharashtra Government Gazette dated 30th October, 1986 and also in the local news-paper "Times of India" in its Issue dated 28th October, 1986 and, thereafter, it was sold on 8th December, 1986 for Rs 1,69,785.00 and, as a result of the said sale, there was deficit to the tune of Rs 2,08,309.41 towards port trust charges and Rs 84,893/- towards I.T.C. Fine. Again, information was given to Defendant Nos. 1 and 2 by letters dated 1st December, 1989 and 2nd December, 1989 and the Plaintiffs have produced the registered acknowledgment due of the letter dated 27th October, 1986 which is at Exhibit-R collectively. Similarly, the third lot was also sold after publication of the same in the Maharashtra ::: Downloaded on - 09/06/2013 15:40:43 ::: 31 Government Gazette dated 30th October, 1986 and in the local news-paper "Times of India" of its Issue dated 28th October, 1986. As a result of the sale of the said goods, there was deficit to the tune of Rs 25,908.76 towards port trust charges and Rs 10,290.00 towards the I.T.C. Fine.
Again Defendants were informed by letter dated 4th December, 1989 that they were liable to pay the said deficit and if the said deficit is not paid the said amount would be recovered from the Defendants. Plaintiff have produced the said letters which have been exhibited and have stated that port trust charges were calculated in accordance with the Docks' scale of rate applicable at that time and the said amount was calculated as per working sheet and allocation sheet produced by Plaintiffs. Allocation sheet and the cost memo has been taken on record. The working sheet and allocation sheet in respect of three auction sales in respect of lots 1 to 3 have been produced by P.W.2. P.W.2 has himself verified and calculated the charges.
35. In view of the detailed evidence given by P.W.2, in my view, Plaintiffs have established that the sale of consignment has resulted in deficit of Rs 3,20,447.62 as alleged in para 8 ::: Downloaded on - 09/06/2013 15:40:43 ::: 32 of the Plaint Issue No.7 is, therefore, answered in the affirmative.
Findings on Issue Nos. 8 and 9:
36. Plaintiffs have examined two witnesses viz P.W. 1 and P.W.2. Both the witnesses have stated he procedure which was followed by the Port Trust for selling the said consignment by public auction in respect of each of the lots.
Initially, list of packages to be sold were published in Maharashtra Government Gazette dated 30th October, 1986 and also in the news-paper "Times of India" in its Issue dated 28th October, 1986. The cash memo has been produced as well as proforma "B" which is the report of goods sold and cleared to purchasers in respect of each lot.
Witnesses have stated what was the weight of each lot, what was the declared rate, what was the actual rate and the excess rate and the amount received by the Port Trust for excess weight, the net sale price realized for each lot.
Thereafter P.W.2 has stated the calculation of charges ::: Downloaded on - 09/06/2013 15:40:43 ::: 33 payable to the port trust. P.W.2 has stated the manner in which these rate were calculated in para 6 and 7 of his affidavit in lieu of evidence. P.W.2 in para 6 and 7 of his affidavit in lieu of evidence has stated as under:-
"6. I say that wharfage is a one time charge. As the consignment imported by the Defendant is a Paper and Paper product, the same falls under Section-I, Rate No.67 of the Docks Scale of Rates which mentions the rate to be charged for Wharfage at the rate of Rs 11.60 per M.T. The 1st lot weighed 10.450 M.T. Hence, the Wharfage charges worked out to Rs 121.22. I say that the Plaintiffs are entitled to charge Demurrage after the expiry of the Last Free Day of the vessel. The last free day of the aforesaid vessel was 08/10/1984. The Demurrage charges are per day charges and are based on the weight of the consignment. The demurrage charges are calculated as per Section-III (iii) of Docks Scale of Rates. For the first 30 days the demurrage charges are Rs 15 per M.T. per day. The first 30 days expires on 07/11/1984 and the amount of demurrage works out to Rs 4,702.50 (10.450 X 15 X 30). From 31st day to 60th day the demurrage charges are Rs 22.50 per M.T. per day. The 60th day expires on 07/12/1984 ::: Downloaded on - 09/06/2013 15:40:43 ::: 34 and the amount of demurrage works out to Rs 7,053.90 (10.450 X 22.50 X 30). From 61st day to 120th day the demurrage charges are Rs 30 per M.T. per day. The 120th day expires on 06/02/1985 and the amount of demurrage works out to Rs 18,810/- (10.450 X 30 X 120).
From 121st day to 357th day (for 237 days) the demurrage charges are Rs 30 per M.T. per day. The 357th day expires on 30/09/1985 and the amount of demurrage works out to Rs 74,299.50 (10.450 X 30 X 237). I say that the Port Trust Charges are calculated for 1 year from the General Landing Date. I say that this is reflected in the working sheet which is already filed in this Hon'ble Court and which is duly audited. I say that the total Port Trust charges (wharfage + demurrage + Sales W/House Carting Charges) for the 1st lot amounts to Rs 1,05,279.72. I say that the working sheet is maintained in the ordinary course of the Plaintiffs business."
"7. I say that the Port Trust Charges were calculated in accordance with the Docks of Rates applicable at that time and amounted to Rs 1,05,279.72 as per the Working Sheet and Allocation Sheet produced by the Plaintiffs. The said Working Sheet and Allocation Sheet were ::: Downloaded on - 09/06/2013 15:40:43 ::: 35 prepared by the Plaintiffs in the regular course and shows the calculation of wharfage and demurrage charges which are calculated in accordance with the Docks Scale of Rates applicable at that time. I say that the charges shown in the said Working Sheet and Allocation Sheet are correctly worked out and I have personally verified the correctness of the same."
37 In the same manner, P.W.2 has also stated how the calculation of deficit charges was made in respect of the 2nd and 3rd lot. So far as customs duty is concerned, he has stated that he had checked the same with the customs show cause memo issued to Plaintiffs by Assistant Commissioner of Customs and the expenses of sale and sale price which was recorded from the lot-wise statement prepared by Plaintiffs in its ordinary course of business. P.W.2 has produced the certified copy of the show cause memo issued by Customs and a lot-wise statement of expenses of sale in respect of the three lots of the suit consignment.
::: Downloaded on - 09/06/2013 15:40:43 ::: 3638 So far as the customs cost memo is concerned, perusal of the same clearly reveals that there are number of alterations made in the said cost memo. The witness has not satisfactorily explained the reason why the said cancellation and alterations were made. Some calculations were also made on each customs show cause notice. The person who has made those endorsements on the said memo has not been examined.
ig There is no material on record to show that the said amount was paid by port trust authorities to customs authorities. No correspondence has been produced between the customs authorities and the port trust authorities for demanding the said amount. The witness also has stated that the entire ITC Fine is not recovered. In this view of the matter, therefore, in my view, Plaintiffs have not established that the amount mentioned in the statement of the witness examined by the Plaintiffs towards customs dues was due and payable by Defendants to the customs authorities. The witness examined by Plaintiffs also has not stated as to how he had checked the customs duty from the show cause memo issued by the Assistant Commissioner of Customs. That is also one more ::: Downloaded on - 09/06/2013 15:40:43 ::: 37 reason why the said show cause memo does not inspire any confidence and does not prove that the said amount was due and payable.
39 P.W. 2 then has stated the procedure which was followed at the relevant time before uncleared consignment was put up for sale. He has stated that after the consignments were unloaded, they were taken into sheds, warehouse or kept in yards depending on the nature of the consignments and after expiry of two months, the person-in-
charge of the said storage used to prepare uncleared cargo lists in respect of the consignments which had remained uncleared over a period of two months. Thereafter, the said lists were sent from different places to Central Documentation Office (CDO) where the IGM were maintained. He has stated that the uncleared cargo list was used to prepare after checking the name of the vessel, IGM No., marks shown on the cargo, quantity and description of cargo and date of ::: Downloaded on - 09/06/2013 15:40:43 ::: 38 preparation of the said list. He has also stated that the Assistant Shed Superintendent and the clerk used to sign the said uncleared lists. Thereafter, these lists were sent by the Central Documentation Office to Sales' Branch. The Sales' Branch, thereafter, would appoint valuers to find out the fair market value of such lots who then would take physical inventory of the lots assigned to them. Thereafter, the details of lots were obtained from uncleared list maintained at each location and the same details were taken note of by valuers themselves and after physical inspection was taken, the valuers would then prepare a valuation sheet recording approximate market value of such lots which were intended to be put up for sale. He further stated that this duty was calculated according to the Brussels Tariff Nomenclature (BTN) and the valuation sheets used to be approved by a Custom Official who used to be on deputation with the Plaintiffs and he was known as BPT Appraiser and, after his approval, he would put his initial/signature on such valuation sheet and after this procedure was completed, the Sales' Branch starts the procedure of issuing notices to the importers/consignees and the others concerned informing ::: Downloaded on - 09/06/2013 15:40:43 ::: 39 them for effecting clearance, failing which lot would be put up for sale. He has further stated the procedure adopted for sale of the said lots and he has stated that, normally, sale of some lots would take place in a particular day and prior to the sale the intending bidders/purchasers would inspect the lot or see a sample thereof. Sometimes till the minimum bid was not received, the sale would be postponed to some other day and after the procedure was completed, the lot would be put up for sale and sold. Sometimes, no objection certificate had to be obtained from the Customs Department.
So far as the rate of interest is concerned, he has stated that since the liability of wharfage and demurrage charges accrued is in connection with the Defendants' trade, industry and/or business and since it is a commercial transaction, Plaintiffs are entitled to interest at the rate at which Nationalized Banks led monies. According to him, the rate was about 14% to 17% and the Prime Lending Rates (PLR) is 12%. This witness when cross-examined has denied that there was any order prohibiting Plaintiffs from selling the consignment after a period of two months. He also denied the suggestion that because of delay and latches on the part ::: Downloaded on - 09/06/2013 15:40:43 ::: 40 of Plaintiffs, the consignment did not fetch its true value.
He, however, admitted that since News Print was imported in September 1984 and was sold on 8th December, 1986 i.e after a period of two years and three months the consignment had worn out to such an extent because of the wear and tear that it had to be sold as scrap/waste (raddi).
Counsel appearing on behalf of both the Defendants, however, did not cross-examine the witness regarding the procedure adopted by Plaintiffs for the sale of the said consignment in three lots or method of calculation adopted by Plaintiffs for calculation of wharfage and demurrage charges. Therefore, in my view, calculation of the wharfage, demurrage charges have not been challenged by Defendants in the cross-examination. In my view, the manner in which the said charges were calculated has been given in detail by P.W.2 and he has also produced cash memo which has been taken on record. Plaintiffs, in my view, have established the amount which, according to them, was due and payable by Defendants to Plaintiffs.
Therefore, merely because working sheets which have been marked for identification and which are not proved by ::: Downloaded on - 09/06/2013 15:40:43 ::: 41 Plaintiffs and are not brought on record, it cannot be said that on that ground Plaintiffs have failed to prove that the said amount is not properly calculated.
40. The next question which is to be decided is what is the amount which is actually due and payable by Defendants to Plaintiffs. In the present case, it has been established by Plaintiffs that Defendant No.1 are consignees/importers of the said goods and Defendant No.2 are agents of the consignees and, therefore, both are owners within the meaning of section 2(o) of the said Act. It is also established that the goods were unloaded in September, 1984 and were not cleared by Defendants in spite of notice being served by Plaintiffs. It is, therefore, established that Plaintiffs were entitled to sell the said goods after non-payment of the wharfage, demurrage and other charges after two months i.e after November, 1984. It has also been established that the goods actually were sold after two years and three months in October, 1986, November, 1986 and December, 1986. The learned Counsel appearing on behalf of Defendant Nos. 1 and 2 has submitted that Plaintiffs were negligent and did ::: Downloaded on - 09/06/2013 15:40:43 ::: 42 not dispose of the goods immediately after two months and, therefore, value of the goods had decreased and it did not fetch good price and, secondly, because of the delay cause in selling the goods, Plaintiffs were not entitled to claim demurrage charges till the date of auction of the goods.
41. In my view, plaintiffs have established that the goods have been sold as per the procedure laid down in sections 61 and 62. In view of section 131 of the Major Port Trust Act, Plaintiffs are entitled to recover the amount of deficit after adjusting the dues towards the sale price of the goods which are auctioned by the Plaintiffs. Section 131 reads as under:-
"131. Without prejudice to any other action that may be taken under this Act, a Board may recover by suit any rates, damages, expenses, costs, or in the case of sale the balance thereof, when the proceeds of sale are insufficient, or any penalties payable to, or recoverable by, the Board under this Act or under any regulation made in pursuance thereof."::: Downloaded on - 09/06/2013 15:40:43 ::: 43
It is has to be noted here that though section 63(1)(c) lays down that the said charges are to be payable in respect of such goods for a period of four months from the date of landing, it does not, in any way, restrict the right of the Board to recover demurrage. This section, however, provides that after the sale proceeds are applied for demurrage for a period of four months, the proceeds shall then be applied for any penalty or fine due to the Central Government as provided in clauses (c) and (d) thereof and, thereafter, in payment of any other sum due to the Board. It is obvious that this limitation is imposed so that the entire amount is not applied by the Board for recovery of the entire demurrage due to it, but certain amount which is due to the Central Government ought to be appropriated and only thereafter a sum which is due to the Board has to be deducted. Section 63(1)(c), therefore, has to be read with section 131.
42. In the present case, Plaintiffs witnesses have stated that they have calculated the charges which are due and ::: Downloaded on - 09/06/2013 15:40:43 ::: 44 payable and have personally verified the said charges according to the scale of rates and the working sheets which were prepared. Plaintiffs, therefore, in my view have proved that they are entitled to the port trust charges which includes wharfage, demurrage and other charges alongwith the expenses of sale. P.W.2 has stated that wharfage is a one time charge and the consignment imported by Defendants is a Paper and Paper Product and it falls under section-I and the Rate No.67 of the Docks Scales of Rates would be applicable which mentions that the rate to be charged for wharfage shall be at the rate of Rs 11.60 per M.T. He has stated that the 1st lot weighed 10.450 M.T and, therefore, wharfage charge worked out to Rs 121.22. He has also stated that Plaintiffs are entitled to charge demurrage after the expiry of Last Free Day of the vessel and the Last Free Day of the vessel was 08/10/1984 and that the demurrage charges are per day charges and are based on the weight of the consignment. P.W.2 in paras 6 and 7 of his affidavit in evidence has given the calculation of the demurrage charges. Plaintiffs, therefore, have established that they are entitled to claim demurrage charges as per ::: Downloaded on - 09/06/2013 15:40:43 ::: 45 the scale of rates + expenses of sale + port trust charges which are to be adjusted towards the sale price. If the said port trust charges for the 1st, 2nd and 3rd lots are adjusted with the sale price, the net deficit comes to Rs 1,71,459.62.
In my view, Plaintiffs would be entitled to recover this amount from Defendants alongwith interest thereon @ 12% per annum from the date of filing of the suit till payment or realization. Issue No.8 is answered accordingly.
43. The issues framed above are, therefore, answered as under:-
Issue No.1 In the negative
Issue No.2 In the negative
Issue No.3 In the affirmative
Issue No.4 In the affirmative
Issue No.5 In the affirmative
Issue No.6 In the affirmative
Issue No.7 In the affirmative.
Issue No.8 Plaintiffs have
established that they
are entitled to recover
an amount of Rs
1,71,459.62 with
interest thereon @
12% per annum from
the date of filing of
the suit till payment
or realization.
Issue NO.9 As per final order.
::: Downloaded on - 09/06/2013 15:40:43 :::
46
44. In the result, the following order is passed:-
ORDER Suit is accordingly decreed. Defendants are directed to pay to Plaintiffs a sum of Rs 1,71,459.62 with interest thereon @ 12% per annum from the date of filing of the suit till payment or realization.
(V.M. KANADE, J.) ::: Downloaded on - 09/06/2013 15:40:43 ::: 47 ::: Downloaded on - 09/06/2013 15:40:43 :::