Bombay High Court
Board Of Trustees Of The Bom. Port Trust vs Sun Export Corpn. on 1 January, 1800
Equivalent citations: 1990(48)ELT192(BOM)
JUDGMENT
1. The Bombay Port Trust has filed this suit to recover a sum of Rs. 1,58,545.10/- being the demurrage charges due on a certain consignment which remained on the docks from about july 1974 till about the beginning of 1976.
2. The first defendant is a proprietary concern of the second defendant. In or about July 1974 ten cases, said to contain stainless steel tubes, which were manifested at item No. 98 of the Import General Manifest No. 512 dated July 20, 1974 of s. s. "JALA VEERA", were imported. The general landing date and the last free day of the cargo of the said vessel were July 30, 1974 and August 3, 1974 respectively. The consignment was landed by the ship on July 26/27, 1974 at Indira Dock. An outturn of the said consignment was drawn on or about January 27, 1975.
3. The plaintiffs say that the defendants were the importers and/or owners of the said consignment within the meaning of the Major Port Trusts Act, 1963, as amended in 1974. The plaintiffs further say that the defendants were liable to take delivery and clear the same within seven clear days from the date of landing thereof and to pay wharfage, demurrage and other charges which accrued thereon for the period during which the goods remained on the docks. The defendants failed and neglected to clear the said consignment. It appears that by an order dated February 28, 1976, passed by the Collector of Customs, the said consignment was ordered to be confiscated under Section 111(d) of the Customs Act, 1962 read with Section 3(2) of the Imports and Exports (Control) Act, 1947. The plaintiffs received the order of confiscation for the first time on or about April 7, 1976. Since, the defendants failed and neglected to take delivery and/or to remove the said consignment, the plaintiffs became entitled to recover the charges in respect of the said consignment for the period from the date of landing of the said consignment till the date previous to the said order of confiscation (exclusive of the free days) amounting to Rs. 1,58,545.10/- under Section 48(d) read with Section 59 of the Major Port Trusts Act, 1963, as amended as aforesaid.
4. The plaintiffs, by their Assistant Manager's letter dated April 19, 1976, informed in the first defendants about the confiscation order. By their letter dated May 24, 1976 the first defendants requested the plaintiffs to advise the defendants if any amount was payable to the plaintiffs to enable the first defendants to remit the said amount. By a further letter dated Oct. 6, 1976 addressed to the first defendants, the plaintiffs called upon the first defendants to pay to the plaintiffs the said sum of Rs. 1,58,545.10/- as per the working sheet enclosed therewith. Since, there was no response, another letter dated November 10, 1976 was sent and the defendents were informed that if the defendants did not remit the said amount within fifteen days from the receipt of the said letter, legal action will be taken for it recovery. By their letter dated December 3, 1976, the first defendants requested the plaintiffs to grant sixty days time to enable the defendants to clear the said consignment. By his letter dated February 10, 1077, addressed to the first defendants, the Assistant Manager of the plaintiffs informed the first defendent that if the said charges were not paid before February 26, 1977, the plaintiffs will be constrained to take legal action for the recovery thereof. The defendants again asked for another forty five days time to make the payment. By their letter September 7, 1977, the first defendants stated that they were unable to finalise the matter till the disposal of an appeal purported to be filed by them. The plaintiffs informed the first defendants that the outcome of the appeal would not in any way vitiate their liability to pay the Port Trust charges. Finally, the plaintiffs had to file this suit in this Court. The plaint was lodged on February 26, 1979.
5. The defendants have filed their written statement. In the written statement, they have contended that the suit is barred by the law of limitation. They have further contended that the rights and privileges, duties and obligations of the plaintiffs were governed by the Major Port Trusts Act and not by the Bombay Port Trust Act. Accordingly the plaintiffs were and are not enjoined by Law or the Major Port Trusts Act to take charge of the goods landed from ships coming to Bombay, unless the owner of such goods requested the plaintiffs to take charge of such goods. In the present case there has been no such request from the defendants.
6. The defendants say that they had not imported the goods. One M/s. Laxmi Engineering Company of Haryana held two licences authorising them to import stainless steel tubes and in pursuance thereof the said M/s. Laxmi Engineering Company imported the said goods. Because the said M/s. Laxmi Engineering Company were in Haryana and the goods were to be imported at Bombay they, for the purpose of such import, obtained from the Joint Chief Controller of Imports and Exports, two letters of authority dated February 26, 1974 in respect of the said licences in favour of the first defendants in accordance with the provisions of the relevant import policy. Under the said import policy the said two letters of authority constituted the first defendants an agent of the said M/s. Laxmi Engineering Company for the limited purpose of import policy and the goods imported were, and remained, the property of M/s. Laxmi Engineering Co. upto clearance and subsequent thereto. It was also one of the conditions of each of the said import licences that the goods imported remained the property of the licensee i.e. the said M/s. Laxmi Engineering. Co. both at the time of the import and thereafter upto the time of clearance through the customs. In the premises Laxmi Engineering Co. were the importers of the said goods and they were the owners of the said goods within the meaning of the expression "owner" under the Bombay Port Trust Act as well as the Major Port Trust Act, 1963. The defendants did not import the said goods. The defendants were not the owners of the said goods within the meaning of the said expression "owner". They deny the rest of the contentions. They say that it was the duty of the Port Trust under the Bombay Port Trust Act and/or the Major Port Trusts Act to enforce their lien on the said consignment by selling the same and thereby recover their dues viz. wharfage, demurrage and other charges in respect of the said consignment. They further submit that the plaintiffs failed and neglected to recover their dues in the manner aforesaid and retained the said consignment beyond the period of one month from the date on which the said consignment was placed in their custody and wrongfully arugmented the wharfage, demurer and other charges in respect thereof. They , therefore , submit that the plaintiffs cannot take advantage of their own failure, neglect and wrong and cannot claim and are not entitled to claim and are estopped from claiming demurrage and other charges for the period subsequent to the period of one month.
7. As regards the confiscation of the goods, they admit the same. But they say that the order was addressed by the Collector of Customs to the said M/s. Laxmi Engineering Co. and also to the first defendants and Arvind Exports Pvt. Ltd., the indenting agents. The said order was also addressed to the Docks Manager of the plaintiffs.. They, therefore, submit that the plaintiffs had knowledge and notice that the said M/s. Laxmi Engineering Co. were the importers and owners of the said consignment and that the first defendants were mere agents for the limited purpose of the import policy.
8. As regards the correspondence, they submit that the letters addressed by them to the plaintiffs were written as agents for and on behalf of the said M/s. Laxmi Engineering Co. In the alternative the defendants say that the said letters were written in consequence of the demand made by the plaintiffs and under a bonafide but mistaken belief that since the plaintiffs made a claim from the defendants it was the defendants' liability to pay the same and the said letters were written without the defendants being then aware of the correct legal position in the matter. They submit that under the law the plaintiffs could not have had any claim against them and they were not liable and were under no obligation to pay the sum of Rs. 1,58,545.10/- or any part thereof. In these circumstances, they submit that the suit is liable to be dismissed.
9. On the basis of these pleadings, the following issues were framed and settled.
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 Trust Act?
4. Whether the defendants were an obligation or were bound to apply for and take delivery of the said goods and to clear the same within seven clear days as alleged in paras 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 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 `B' 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?
10. The plaintiffs led no oral evidence. Mr. Patel appearing for the defendants also stated that the defendants have no dispute about the quantum of the plaintiffs' claim. Mr. Chinoy, for the plaintiffs, also admitted that the defendants had the necessary letter of authority from M/s. Laxmi Engineering Co. in the prescribed form. The defendants examined one Mr. Badriprasad Choudhary, who is the constituted attorney of the second defendant. In his evidence he stated that the defendants acted only as agents of M/s. Laxmi Engineering Co. under the letter of authority from M/s. Laxmi Engineering Co. He admitted the bill of lading and that there is an endorsement made by the Indian Overseas Bank in favour of the defendants. However, he stated that the financing of this transaction was done by M/s. Laxmi Engineering Co. However, in his cross examination he stated that the defendants had opened the letter of credit and that was opened about three months before the arrival of the goods. He further stated that as far as the Bank was concerned, by opening the letter of credit, the defendants incurred a liability. He also admitted that when the steel arrived in Bombay, the defendants paid about Rupees two to two-and-a-half lakhs to the Bank, but he asserted that subsequently he was paid these amounts. He further admitted that, in all, the defendants invested about Rupees six lakhs in respect of the suit goods. He also admitted that the goods had contained the mark containing the initials of the first defendants. He denied the suggestion that the defendants endorsed the bill of loading in favour of the clearing agents. According to him M/s. C. C. Shah & Sons were the clearing agents of M/S Laxmi Engineering Co. He finally admitted that the first defendants did endorse the bill of loading in favour of M/s. C. C. Shah & Sons. He also stated that he did not remember who paid the charges of the clearing agents. He also stated that the defendents might have paid the charges of the clearing agents. The defendants also served with a show cause notice by the Customs authorities. A reply to that was also given by the defendents. An order of confiscation was also addressed to the defendants.
Issue No. 1.
11. Mr. Chinoy submitted that suit is within the period of limitation inasmuch as the order of confiscation was dated February 28, 1976 and the period of limitation would start only from the date of confiscation and not earlier. In that connection he relied on a judgment given by Variava, J. on July 21/21, 1988 in Suit No 194 of 1976 The Board of Trustees of the Port of Bombay v. Caravan Hosiery Factory and Anr. In this case the learned judge had followed an earlier Division Bench Judgment in the case of Trustee of the Port of Bombay v. M/s Jayantilal & Gandhi, wherein it has been laid down that the cause of action in favour of the plaintiffs under Section 67/A of the Bombay Port Trust Act, 1879, arises when the balance of the amount to be recovered is ascertained. In cases where goods are under a detention order, the actual amount can only be ascertained after the adjudication proceedings by the Customs Authorities is completed.
12. As against this Mr. Patel submitted that there was no detention order upto December 27, 1975 and that, therefore, the plaintiffs could have certainly claimed the demurrage charges within three years from the date the charge is leviable. Mr. Patel submitted that the charges are fixed on per-day basis and, therefore, cause of action arises on each day when the charges are due and payable and, therefore, if the claim is beyond the period of three years from the date the charge becomes payable, all the claims subsequent to the period of three years of three years from each day would be barred by the law of limitation.
13. In this connection Mr. Chinoy has relied on the correspondence. In the correspondence it has been categorically stated by the defendants that they would sent the amount towards the charges and they wanted some facilities in that behalf. For example, in a letter dated April 19,1976 addressed by the Asstt. Docks Manger to the defendants the Port Trust has stated that the actual charges due and recoverable from the defendants are being worked out and in the meanwhile they called upon the defendants to note their liability and acknowledge. I reply to this letter, the defendants, by their letter date May 24, 1976 stated that as soon as the bill of entry is completed and the goods are ready for clearance they would be able to clear the consignment. In the meanwhile, if the plaintiffs wanted that the defendants should sent some amount towards their charges, the the plaintiffs could advise them accordingly. There is a further letter from the Assistant Docks Manger (sales), dated October 6, 1976, wherein the plaintiffs have claimed the amount claimed in suit and called upon the defendants to remit the above amount at an early date. This correspondence is followed by a letter dated November 10, 1976 to the same effect. It is stated in the said letter that if the amount was not remitted within fifteen days from the date of the receipt of the letter legal action will be taken to enforce recovery of the same at their entire risk and costs. To this letter the defendants replied by a letter dated December 3, 1976. In this letter the defendant stated that in order to assist the small scale industry, at their specific request they opened a letter of credit and the licensees were under obligation to pay them in advance all costs and charges. But they failed to do so and that, therefore the defendants were put to unforeseen liabilities to make the payment of about Rs. 6,00,000/-. Therefore, they requested the plaintiffs to allow them about forty five days time to arrange necessary finance for payment of duty and fine. They further requested that the plaintiffs should post-pone any legal action for at least another sixty days during which they would endeavor to obtain clearance of the consignment. There is further correspondence and finally the plaintiffs had to file the present suit.
14. Mr. Chinoy submitted that the acknowledgment as contained in the defendants' letter dated May 24, 1976 as also the letter dated December 3, 1976 would clearly save the question of limitation, if any.
15. I am inclined to think that there is no question of limitation in the present suit. The suit is within time. I am in respectful agreement with the observations made by Variava, J. in the case of The Board of Trustees of the Port of Bombay v. Caravan Hosiery Factory, and Anr. (supra) which itself is based on an earlier Division Bench judgment. If that is so, this issue will have to be answered against the defendants.
Issue No. 3.
16. This issue was raised on a plea that the provisions of the Major Port Trust Act, 1963, particularly Section 42, sub-section 2 would apply to the facts of the present case. But it has been pointed out by Mr. Chinoy that that provision will have no application inasmuch as that came into force with effect from February 1, 1975. Mr. Patel has also, therefore, not pressed this issue as such.
Issue No. 4.
17. In my view this issue also does not survive inasmuch as even if the defendants were not to clear the goods, it does not mean that the plaintiffs cannot claim demurrage or other charges as against the owner of the goods. It is true that in the plaint it has been pleaded that if the goods were not cleared within seven clear days, the plaintiffs would not be liable for negligence etc. That question does not arise in this suit. The only question that is relevant in the present case is that the goods have remained on the docks and the plaintiffs are entitled to claim their charges as per the prescribed rate. The question is whether the defendants are liable to pay the same or not.
Issue Nos. 2 and 5.
18. Mr. Chinoy submitted that under the Bombay Port Trust Act, 1879, the word "owner" has been defined as follows :
"owner", when used in relation to 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, chartered, consignee or mortgagee in possession thereof."
He, therefore, submitted that the plaintiffs claimed the amount as against the defendants on the basis that the defendants were the "owners" within the meaning of the Act. He also submitted that whether it could be said that the defendants were the consignees or not or whether the defendants were agents of M/s. Laxmi Engineering Company or not, it would make no difference inasmuch as it could be said that the defendants were connected with the consignment and that the evidence shows that the defendants had financial interest in the goods. Mr. Chinoy, in particular, pointed out that the defendents' witness has categorically admitted that initially he invested about Rupees two to two and-a-half lakhs and thereafter, he admitted that in all he invested about Rupees six lakhs in respect of this transaction. Mr. Chinoy submitted that excepting the bare words of the witness there is nothing to show that the defendants were reimbursed by the said M/s. Laxmi Engineering Co. In this connection he relied on certain judgments given by this Court in two or three matters wherein it has been stated that if a person is somehow connected with the goods or has financial interest in the goods, such a person could be considered as "owner" within the meaning of the Act.
19. As against this Mr. Patel submitted that it is an admitted position that his clients had a letter authority in terms of the Rules and Procedure of the relevant Import Trade Control hand-book of 1972- 73. He submitted that as per the terms of the letter of authority and the functions of such a person holding a letter of authority, it cannot be said that he is the owner of the goods within the meaning of the Act. He further submitted that as per the terms of the letter of authority, the defendants could be the agents of the licence-holder and if that is so, the defendants cannot be considered even as consignee in respect of these goods. He also pointed out that under the Act, it is only the agents, either for custody or for sale of the goods, can be considered as "owners" and not any other agents.
20. The definition of "owner" under both the Acts in an inclusive definition. It means that the definition includes the categories of persons mentioned in the said definition, in addition to the real owner or one who owns the goods. It is in that sense an artificial definition. If the law wanted to include any other category of persons, the same would have been mentioned and included. Therefore, if a certain category of persons is not included in the definition, I cannot understand how such a person can be considered as an owner, just because he is somehow connected with the goods. If that was the intention of the law, the definition itself would have said that "owner" would mean and include not only the category of persons mentioned by all such other persons who are connected with the goods or who have any financial interest in the import or in the goods. Mr. Chinoy says that I would be restricting the scope of the definition. On the other hand the definition is wide enough to include persons who are mentioned therein, but specific enough not to include others.
21. In the Act there is no particular provision which says that the Port Trust can sue a particular person for demurrage. It is by virtue of the fact that under the law, if the goods remain on the docks beyond certain days, the Port Trust can charge demurrage at a particular rate. It has a lien on the goods and can refuse to deliver the goods till the charge are paid. Whoever deals with the Port Trust for collecting the goods will have to pay the charges. It could be the agent for the custody of the goods. It could be the agent for loading or unloading. It could be the agent for sale of the goods, since sale would naturally include delivery. But if no one comes forward for clearance of the goods, the Port Trust can naturally sue the owner of the goods, inasmuch as it is his goods that are lying on the docks. Very often the owner could be an unknown person as far as the Port Trust is concerned. That is why the law in its wisdom has included two others, viz., the consignor or the consignee. Since the liability has to be fixed on the basis of the definition of "owner" itself, that will have to be construed strictly. The Port Trust is not concerned with any outside arrangement between the owner of the goods and any other person for purchase or for any other purpose.
22. In the present case it is an admitted position that the defendants were acting pursuant to the letter of authority issued to them in terms of the Rules and Procedure of the Import Trade Control hand-book of 1972-73. Under para 268 a licensee who desires another party to indent the goods from abroad or open a letter or credit or make remittances or to import the goods on his behalf against any particular licence issued to him, should apply for a letter of authority in favour of such party in respect of that licence. Such application should be made to the licensing authority who issued the licence. A specimen form of letter of authority is given in Appendix 25. The form categorically says that the letter of authority is issued subject to the following conditions.
"(a) The person or concern in whose favour it has been issued will act purely as an agent of the licensee and the goods imported will be the property of the licence holder both at the time of clearance through the Customs and subsequent thereto. The licence holder will have to ensure that the goods on importation will be delivered to him and shall not be disposed of otherwise.
The licensee shall not cause or permit the holder of letter of authority to dispose of the goods. If the licensee fails to take delivery of the imported goods within three months from the date of clearance to through the Customs authorities, he shall inform the licensing authority concerned, explaining the reasons for the same.
(b) The holder of the letter of authority shall clearly indicate on all the relevant Custom documents including the triplicate copy of the Customs Bill of Entry that the goods have been imported by him on behalf of the licensee. This endorsement will be duly attested will be duly attested by the Customs Authority.
(c) The holder of the letter of authority shall not under any circumstances be entitled to any quota licence or quota certificate on the basis of these imports."
Para 272 of the said hand-book gives us the functions of the holder of letter of authority, which are as follows :
272. (1) Functions of the holder of letter of authority - A person or concern in whose favour a letter of authority is issued by a licensing authority in respect of an import licence, will act as the licensee's agent so far as the particular import licence is concerned.
(2) The function of the holder of a letter of authority will be limited, namely, to operate upon the licence in question, i.e., to place an order, to open a letter of credit, to make remittances, to import the goods and clear the same through the Customs, on behalf of the licensee. The letter of authority holder can also apply, on behalf of the licensee, for revalidation of licence. But he cannot make an application for any amendment in the licence or for the grant of duplicate copy of the licence."
Therefore, since the defendants have acted as holder of letter of authority, it must necessarily be held that hey had acted as licensee's agents as far as the particular import licence was concerned. If that is so, as per the conditions of the letter of authority that the goods imported shall be the property of licensee "both at the time of clearance through the Customs and subsequent thereto". The terms and conditions further require that the licensee will have to ensure that the goods on importation will be delivered to hem and shall not be disposed of otherwise. He shall not cause or permit the holder of letter of authority to dispose of the goods. The letter of authority holder is also not entitled to any benefits or quota licence or quota certificate on the basis or such import. Therefore, it is clear that as far as the defendants are concerned, they were agents within the meaning of para 272 of the said hand-book. They were not the agents for custody and they were not the agents for sale of the gods.
23. Mr. Chinoy submitted that if one looks at the bill of lading it could be said that the defendants were consignees of the said goods and, therefore, in any event, they would be the owners within the meaning of the said Act. The bill of lading has been exhibited as Ex. B in the suit. The same shows that the shippers were M/s Atlantic metal company limited On London. I the column showing the consignee it is stated as follows:
"Order of the Indian Overseas Bank, Bombay - 3, India.
Notify: Sun Export Corporation, Bombay - 3, India."
On the reverse of the bill lading there is an endorsement in favour of the defendants. There is also an endorsement in favour of the Clearing Agents, C. C. Shah and Sons. The evidence shows that that has been done by the defendants in favour of C. C. Shah and Sons. But on the face of the bill of lading it has been stated that the Port Trust should deliver to M/s C. C. Shah and Sons or the bearer of the bill of lading. Mr. Patel submitted that the consignees as shown on the bill of lading are the Indian Overseas Bank. If the they are directed to notify a third person such a person cannot be considered as consignee and in that behalf he relied on the meaning of the word "consignee" as given in Words and Phrases, Permanent Edition, 1958 to date Volume 84. It reads as follows:
"Where bill of lading names shipper as consignor and consignee, with directions to notify third person, such person was not a "consignee" as regards carrier's alleged duty to notify shipper of such person's failure to respond to notice. Trinidad Bean & Elevator co. Pennsylvania R. Co., C. C. A. Pa 72F. 2d371, 372.."
Mr. Patel drew my attention to a passage from Halbury's Law of England, Vol. 43, Para 490, as under:
"This person may be named in the bill of lading as the person to whom delivery of the goods is to be made on arrival at their destination, in which case he is known as the consignee; if he is not named in the bill of lading, he is usually known as the holder or endorsee or the bill of lading."
Therefore, the consignee as shown in the bill of lading are the Indian Overseas Bank. They were required to notify the defendants. But the notification did not make the defendants, the consignees. the endorsement did not pass on the property to the defendants. in this connection Mr. Patel relied on para 518 and contended that transfer of a bill of lading, although purporting to pass the property in the goods, in fact passes on property in them to the transferee in certain circumstances. The present case is one such instance. That is why the Port Trust Act included certain category of agents in the definition of "owners." By virtue of the endorsements if the defendants were to come forward for taking delivery they could have been agents for custody or for loading or unloading (under the Major Port Trusts Act) and could have been liable. But that is not so. They did not go to Port Trust. It was C. C. Shah & Sons, the dearing agents who were to take delivery of the goods. The Port Trust chose not to claim from the Bank, the consignees M/s Laxmi Engineering Co., the licensee at whose instance the goods were imported, or from C. C. Shah and Sons, the agents for clearing, all on their own.
24. Mr. Chinoy in that connection sought to rely on Section 1 of the Indian Bill of Lading Act, 1856, to contend that every consignee of goods named in a bill of lading and every endorsee of a bill of lading to whom the property in the goods therein mentioned shall pass, can be considered as a consignee. This argument has in fact been negatived by the Division Bench of our High Court in the case of Board of Trustees, Bombay Port v. Sriyansh Knitters, and the relevant passage is as follows :
"It was urged by the learned counsel that the title to the goods passed in favour of the consignee on presentation of Bill of lading and thereby the consignee was vested with all the rights and liabilities in respect of such goods. It was urged that the liability to pay the charges in respect of the goods mentioned in the Bill of lading has passed to the consignee and it is not correct to suggest that the agreement for payment of charges of wharfage and demurrage rests only with the ship- owners or the carriers and has not passed over to the consignee. It is not possible to accept this submission. Mere passing of the title in the goods in accordance with the provisions of Sale of Goods Act, 1930 would not automatically create a contract or an agreement between the Board and the consignee."
If one has regard for the fact that the defendants are holders of letter of authority, it cannot be said that they can have any interest whatsoever in the goods for any reason and, therefore, in my view, this entire argument will have to be negatived.
25. Mr. Chinoy drew my attention to a series of cases which appear to have taken a slightly different view. It all started with the case of The Board of Trustees of the Port of Bombay v. M.A. Noormahomed & Co. & Anr., (High Court Suit No. 798 of 1969) decided by Mrs. Sujata V. Manohar, J. on September 8, 1980. In that case what happened was that the Customs authorities came to a finding that the import licence stood in the name of the first defendants but the real importers of the goods in question were the second defendants. The order of confiscation also held that the second defendants were responsible for the offence of gross mis-declaration of value and for contravention of Imports Control Order, and the first defendants were held responsible for aiding and abetting the said offences. It was entirely on the basis of the said order the Port Trust sued both the defendants for payment of their charges. It had also come on record in the said case that the goods were imported in the name of the first defendants who had import licence, but the second defendants had financed the import of the said goods. They were also concerned with getting the goods released and were interested in quicker release of these goods because "according to them they had agreed to purchase these goods". The learned Judge, therefore observed that this is how both the defendants were concerned with the goods and had an interest in the goods. It is in this context the interpretation of the definition of the word "owner" was sought to be given so as to include all persons who have a connection or interest in the goods. The learned Judge categorically held that in view of the order of confiscation and the findings given therein as also in view of the submissions made by defendant No. 2 before the Customs authorities it is not possible to say that the second defendants had no title to or interest in the suit goods,at all. The learned Judge further observed that if they had financed the purchase of these goods and admittedly had "an intention" to purchase them from the importers, they had sufficient interest in the goods to make them liable for the payment of demurrage charges to the Bombay Port Trust authorities. Therefore, in my view, the learned Judge came to the said conclusion on the basis of the facts where it was clear that the first defendants as persons who had the import licence and the second defendants as persons who had the import licence ad the second defendants as persons who had agreed to purchase the goods were clearly liable and, therefore, they could be sued.
26. Mr. Chinoy then drew my attention to a judgment given by S. K. Desai, J. on February 22, 1983, in the case of The Trustees of the Port of Bombay v. M/s Aurangabad Metal and Engineering Works and others, (Suit No. 287 of 1973) which followed the judgment given by Sujata V. Manohar, J. The learned Judge also said that the import licence as also an application for irrevocable letter of credit and a copy of a certain letter sent by the second defendants to M/s Tulsidas Khimji Pvt. Ltd who are appointed by the Bank as clearing agents established " conclusively their interest in the goods which would appear to be much higher that that of the defendants in the said suit No. 798 of 1969, decided by Sujata V. Manohar, J."
27. There is further judgment of Sujata V. Manohar, J in the case of The Board of Trustees of the Port of Bombay v. M/s Nazir Ahmed & co. and Anr.(Suit No. 1017 of 1973), decided on September 4, 1987, wherein again she had followed the earlier judgment. But here also it was clear that before the goods were landed the goods had been purchased by the second defendants from the first defendants and they had been fully paid. The learned Judge further observed that the property in the goods had therefore passed to the second defendants and it is in that context it was observed that the second defendants had substantial interest in the goods and thus converted by the definition of "owner". They were all owners and the real owners. Such persons would not come within the scope of an included category of persons mentioned in the definition just because they have some financial interest in the transaction as such.
28. Mr. Chinoy then relied on a similar case decided by Variava, J in the case of The Board Trustees of the Port of Bombay v. Caravan Hosiery Factory and Anr., (Supra). Here the facts are slightly different. Under the Import Trade Control Policy for the relevant year, the State Trading Corporation. In respect of the suit consignment an import licence was issued in favour of the second defendants. The second defendants gave a Letter of Authority to the first defendants. The first defendants submitted a tender for approval of the second defendant in the prescribed form. The second defendants approved the tender. The first defendants thereafter opened a Letter of Credit in favour of the foreign supplier. The relevant import documents were received by the second defendant. After comparing the same with the indent, second defendants handed them over to the first defendants along with the custom copy of the licence. From the evidence of the plaintiffs' witness it has also come to light that the Bill of lading was in the name of the first defendants and that one M/s. Jeenah & Co. acted as the clearing and forwarding agents of the first defendants. It is true that the learned Judge was not given a copy of the letter of authority issued by the second defendant to the first defendant. The learned Judge presumed that the general form of letter of authority was as per the form contained in Appendix 25 of the hand-book referred to above. With respect, the learned Judge's attention was not drawn to the fact that this being a case of canalisation of imports the letter of authority was subject to such terms and conditions as would be settled between the licensee and the party concerned. Infact pare 274 of the hand-book relates to such letter of authority and it reads as follows :
"274. Licences issued to agencies owned or controlled by the Central Government and which are entrusted with canalisation of imports -
The Imports (Control) Order, 1955 has been amended to the effect, that the conditions under Items (i) and (ii) of sub-clause (3) of Clause 5 of the said Order shall not apply to the licences issued to the State Trading Corporation of India, the Minerals and Metals Trading Corporation of India and other similar institutions or agencies owned or controlled by the Central Government and which entrusted with canalisation of imports. It may, however, be clarified that even in respect of licences issued to such agencies, a letter of authority from the licensing authority will be necessary if the licence is to be operated upon by a person other than the licensee. But such letter of authority will be subject to such terms and conditions as may be settled between the licensee and the party concerned or which may be imposed by the licensing authority having regard to the purpose for which such party has been allowed to import the goods against the licence."
29. Therefore, it was clear that by virtue of the policy of the Government, the first defendants could not have imported the goods. They had to necessarily import the goods through the second defendants. Even otherwise it may further be pointed out that the first defendants never contested the suit. It was only the second defendants who contested. Their contention that they imported the goods for and on behalf of the first defendants, and that they were not liable, was negatived by the learned Judge. I cannot understand as to how this case can be of any help to the plaintiffs as such.
30. Thus, it becomes clear to my mind that this is a case where the defendants were holders of letter of authority within the meaning of para 272 read with para 268 and read with the form in Appendix 25, as contained in the hand-book of the Import Trade Control for the year 1972-73. Such letter of authority holders can never be the agents within the meaning of the definition of "owner". They also cannot be considered as consignors or consignees within the meaning of the said provisions. They are certainly not the owners of the goods in any sense. Mr. Chinoy submitted that the evidence shows that they has invested six lakhs. In my view, it makes no difference. Just because an agent has invested certain amount for the purpose of carrying out the terms of letter of authority, it dose not make him an "owner" of the goods within the meaning of the said Act. In fact, the function of the holder of letter of authority itself that he can place an order, open a letter of credit, and also make remittances to import goods and clear the same through the Customs, but all on behalf of the licensee. Just because he has invested some amount for clearance of the goods or for obtaining the necessary documents from the Bank, it does not mean that in law such a person can have any financial interest in the goods as such. If that is so, in my view, this suit as against the defendants is not maintainable at all.
31. Mr. Chinoy pointed out from the order of confiscation that the order has been passed against the defendants as also the others. The Collector of Customs has categorically stated that the goods have been imported without cover of a valid import licence and that all the three have been held to be liable. But I must say that the defendants had expressly contended before the Collector of Customs that they are only holders of the letter of authority and they have only imported the goods for the licence-holder. The order nowhere indicated that the defendants had any other interest in the consignment, as such.
32. Mr. Patel has also argued that under the law it is only the shipper or the shipping agent who can be considered as the owner of the goods and in that connection he relied on the case of The Trustees of he Port of Madras by its Chairman v. K. P. V. Sheik Mohamed Rowther & Co. and others, [(1963) Supp. 2 S. C. R. 915]. The question was, in what capacity the Port Trust takes charge of the goods and on whose behalf? The authority appears to have laid down the legal position that the Port Trust takes charge of the goods on behalf of the ship owners and not on behalf of the consignee and whatever services it performs at the time of the landing of the goods or removal thereafter are all services rendered to ship. Mr. Chinoy submitted that this case has been considered by the two judgments of the Madras High Court. Firstly, in the case of M/S K. P. V. Shaik Mohamed Rowther & Co. v. The Trustees of Port of Madras, and Anr., (Appeal No. 813 of 1967) and secondly in the case of M/S K. P. V. Sheik Mohamed Rowther & Co. Pvt. Ltd. v. The Trustees of the Port of Madras and Anr., (O. S. Appeal No. 55 of 1974). In both these cases it was held that the said case of The Trustees of the Port of Madras by its Chairman v. K. P. V. Sheik Mohamed Rowther & Co. and Others, (supra) relates to service charges rendered to the ship as such and it does not deal with the demurrage charges and the case should be construed as applicable only to the services rendered by the Port Trust at the time of the landing of the goods and their removal thereafter to its custody, and these charges were taken to be for the benefit of the steamer. It was for this reason, they explained that the Court took the view that the Port Trust was entitled to collect the service from the steamer or its agent. But once the bill of lading is delivered to the named consignee or an endorsee with the intention of passing the property in the goods specified therein the rights and liabilities under the bill of lading are transferred to such consignee or endorsee as if the contract had been made with himself and in that event the relation between the steamer and the Port Trust snaps.
33. Mr. Patel on the other hand pointed out that in the case of The Board of Trustees, Bombay Port v. Sriyansh Knitters, (supra), our High Court has not accepted this interpretation put forward by the Madras High Court. In my view, it is not necessary for me to go into this question as the case before me is decided mainly on the question as to whether a letter of authority holder, within the meaning of the Rules of the hand-book, can be considered as consignee or owner of the goods within the meaning of the Act.
34. Mr. Patel has also drawn my attention to the following passage in the case of Trustees, Port of Madras v. Aminchand Pyarelal, "Facts must come before the law for legal principles cannot be applied in a vacuum. No oral evidence was led by the parties and we find it difficult on a mere perusal of documents to say that respondent No.1 ought to be held liable to meet the appellants' claim. Documents do not prove themselves nor indeed is the admissibility of a document proof by itself of the truth of its contents Import Licence No. CL/53/3/02105 - 1 dated June 16, 1962, under which the goods were imported stood in the name of the State Trading Corporation of India. It issued an authorisation in favour of the 1st respondent which, as the documents go, was liable to deliver the consignment to the nominees of the Corporation. The 1st respondent, it would appear was only entitled to charge a commission for the work done by it in pursuance of the authorisation issued by the Corporation. The 1st respondent had no title to or interest in the goods except to deliver them in accordance with the instructions of the Corporation. If the appellants were to enforce their statutory lien, the incidence of the demurrage would have fallen on the Corporation in whom the title to the goods was vested. The appellants permitted the goods to be cleared without then demanding the demurrage which they claimed later, thereby depriving the 1st respondent of an opportunity to reject the goods as against the supplier unless, of course, the Corporation was willing to accept them and along with them the liability for the payment of demurrage. In the absence of any more facts we find it impossible, on the record as it stand, to accept the appellants' claim against the 1st respondent. Out of 15 is sues framed in the suit, issues 1 and 10 only pertain to the liability of the 1st respondent and on those issues, the facts appearing on the record are too scanty to support the appellant's claim against the 1st respondent. We, therefore, hold that the claim against the 1st respondent must also fail."
I think the same line of reasoning can be had in this case also. It is not enough to say that the defendants had invested amount either for the purpose of opening the letter of credit for the purpose of getting the documents from the Bank. That by itself is not sufficient.
Issue Nos. 6 & 7.
35. Mr. Patel submitted that the Act, the plaintiffs have a lien in respect of the goods. The goods were in their custody and there was no impediment in their exercising right of lien and disposing of the goods till December 12, 1975. He further submitted that the Port Trust ought to have exercised their power to sell the goods inasmuch as they have a duty to minimise their claim of damages or their charges. Since they failed to do so and waited unreasonably for a long period the defendants cannot be made liable for their to dispose of the goods as provided under Section 64 of the Bombay Port Trust Act. But I think, I need not go into this question inasmuch as this question has been well answered in the judgment of Bharucha, J. in the case of The Trustees of The Trustees of the Port of Bombay v. M/s. Eastern Associates Company, (S. C. Suit No. 344 of 1971) decided on February 21, 1980 and as rightly held by the learned Judge that this argument is "non sequiter". It is not enough to say that the Port Trust ought to have exercised their right to sell the goods. The defendants must further plead as to what are the consequences of not doing so. The defendants have not pleaded nor have they led any evidence as to how and in what manner they have suffered. I am, therefore to accept the contention of Mr. Patel.
36. In the result I answer the issues as follows:
Issue No.1 : In the negative.
Issue No.2 : The defendants are not the owners of goods.
Issue No.3 : In the negative as the Major Port Trusts Act, 1963 did not apply.
Issue No.4 : Does not survive.
Issue No.5 : In the negative.
Issue No.6 : In the affirmative inasmuch as they are entitled to claim demurrage charges till the order of confiscation.
Issue No.7 : In the negative.
Issue No.8 : In the negative.
Issue No.9 : See below:
37. The suit is dismissed. However, in the circumstances of the case, there will be no order as to costs.