Bombay High Court
M/S. Bakshi Steels Ltd vs The City Of Nagpur on 3 November, 2009
Author: A.H. Joshi
Bench: A. H. Joshi, A. R. Joshi
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR
Writ Petition No. 1086 of 1994
M/s. Bakshi Steels Ltd.,
18, Commercial Complex,
Malcha Marg, Diplomatic
Enclave, New Delhi-110 021,
a registered Company under the
Companies Act, through
Mahendra Dindayal Sharma,
aged about 36 years,
Packet-B-10, House No. 110,
Sector 3,
Mohini, New Delhi,
Auithorized Agent -
Holding Power of Attorney. .... Petitioner.
Versus
1. The City of Nagpur
Corporation, through
Municipal Commissioner,
Civil Lines,
Nagpur.
2. Union of India, through
Secretary,
Ministry of Railways, Rail Bhavan,
New Delhi.
3. Chief Project Manager
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2
[Gauge Conversion],
D.R.M. s Office,
Building-IIIrd Floor,
South Eastern Railway,
Nagpur-1. .... Respondents.
*****
Mr. W.G. Charde, Adv., for the petitioner.
Mr. C.S. Kaptan, Adv., for respondent no.1.
*****
CORAM : A.H. JOSHI AND
ig Date :
A.R. JOSHI, JJ.
03rd November,2009.
ORAL JUDGMENT [Per A.H. Joshi, J]:
1. Heard learned Adv. Mr. W.G. Charde for the petitioner and learned Adv. Mr. C.S. Kaptan for respondent no.1. Perused annexures to the petition and judgments cited at bar.
2. Petitioner herein is a manufacturer of metallic castings, which are, inter alia, used as inputs by Railways in the manufacturing of cement concrete railway sleepers.
3. Respondent nos. 2 and 3 have placed with ::: Downloaded on - 09/06/2013 15:15:40 ::: 3 petitioner an order for one lakhs pieces of Malliable Iron Casting Insert , described briefly as MIC inserts . Copy of Work Order-cum-agreement is dated 6th December, 1993, which is at Annexure-A to the Writ Petition at Page Nos. 12 to 22.
4. It is seen that in the process of supply, the petitioner had to deliver the goods freight prep-paid to the convenient Railway Station, or when transported by road, the delivery has to be done, freight pre-paid and goods have to be delivered to the designated representative of Railway at the factory/work site.
5. Whenever MIC inserts are delivered, those would be received and upon inspection accepted by the specified representative of Railway.
This mode of delivery is provided in Clause 8 of the Work Order, the Annex.A foregoing.
6. In the situation at hand, petitioner has preferred to deliver the goods by road at the appointed destination, i.e., at the factory of M/s. ISCO Track Sleepers Pvt. Ltd., Railway Yard, Kalamna, Nagpur.
::: Downloaded on - 09/06/2013 15:15:40 ::: 47. Having elected to transport the goods by road, the petitioner was required to deliver the goods, secure acknowledgment after inspection of MIC inserts at the factory of the consignor, secure a certificate from Specified Railway Officer and receive the payment of bills from the respondent no.3 s designated officer.
8. The petitioner under MIC inserts were dispatched lorry receipt dated 25th February, by 1994 [one lorry], and lorry receipt dated 7th March, 1994 [one lorry] and 9th March, 1994 [two lorries].
These lorries and consignments were detained by respondent no.1 for recovery of octroi.
9. It is seen that on all consignments till four lorries transporting the MIC inserts and all subsequent consignments, the respondent no.1 did not charge octroi on the MIC inserts transported from the petitioner to the ISCO TS Pvt. Ltd. for the Railways.
10. Lorries/consignments were not released in spite of communications/certificates issued by the ::: Downloaded on - 09/06/2013 15:15:40 ::: 5 Railways through their certificates dated 9th March, 1994 [Annex.F], and letter dated 15th March, 1994 [J] to the Respondent No.1.
By these certificates/letters, the Respondent Nos.2 and 3 had certified and had reiterated that the goods transported through concerned lorries were railway material purchased by Executive Director Track [M], Railway Board, Ministry of Railways, New Delhi.
Only upon deposit of octroi amount by the petitioner, respondent no.1 released the four trucks/consignments.
11. Petitioner herein has challenged the said levy of octroi and claimed the refund of said amount of octroi which seems to be around Rs.7,212-00 per truck, and total sum of Rs. 30,558/- inclusive of demurrage charges.
12. The levy of octroi was done and it appears, was recovered by the Respondent no.1 thereafter successively. Petitioner has challenged the said levy of octroi by filing this petition.
13. Petitioner claims that after the goods, ::: Downloaded on - 09/06/2013 15:15:40 ::: 6 subject-matter, were manufactured, those were got inspected by authorities prior to delivery of consignment to transporter. Relevant averment is seen in para 7 of the Writ Petition, which reads as follows:-
7. After this release order was received, the four truck loads of the MIC parts each of the truck containing 6000 pieces were got inspected by the authorities of the Railways and the consignee s receipts in the name of the Railway Authority Executive Director in respect of the four trucks were issued by the petitioner. The lorry receipts are at Annexures C,D, E & F respectively. The Inspection Certificate in this respect of the purchasing authority viz. Railways, through its Executive Director, Track (M), Railway Board, New Delhi is at Annexure-
G. [Quoted from page nos. 3 and 4 of the Writ Petition paper book].
14. Relying on facts as pleaded and the effect of provisions of Sale of Goods Act, petitioner has urged that Railway is the owner of MIC inserts , the subject-matter of these consignments, stating that the MIC inserts are :-
[1] Specific goods. [Section 22].
[2] The goods were inspected before delivery to the transporter. [Section 20].::: Downloaded on - 09/06/2013 15:15:40 ::: 7
[3] Goods have been unconditionally appropriated to the contract by the seller with the assent of the buyer.
[Section 23 (1)].
[4] Goods are delivered by the seller to the carrier without a right of disposal under the instructions of the buyer. [Section 23 (2)].
[5] Delivery by road is authorized by the contract and hence when consigned to transporter, property in the goods [6] ig passes to the buyer. [Section 39 (1)]. The property in the goods has passed as intended. [Section 19].
[7] The property/title in the goods passes whether the payment is made or not, because future payment can be a good condition for transfer of ownership.
[8] Petitioner is a bailee of the
Respondent Nos. 2 and 3 on the date
when those were detained by Respondent No.1 for demanding octroi.
15. In brief, case of petitioner is that when goods were detained by the respondent no.1, those were owned by Railway, since same were specific goods and were appropriated towards sale by seller at the directions of buyers as those were inspected by purchaser the respondent nos. 2 and 3 and being ::: Downloaded on - 09/06/2013 15:15:40 ::: 8 railway property when detained, levy of octroi is not attracted, and hence the claim by respondent no.1 is unlawful and arbitrary.
16. The challenge, as presented in the petition in a condensed form as found in paragraph no.14 can be better read by quotation, which is as follows:-
14. The petitioner submits that this action on the part of the Respondents is arbitrary and jurisdiction.
unlawful and without It constitutes invasion on the right of the petitioner to carry on the business and occupation and infringes the right conferred under Article 19 (G) of the Constitution of India. It also invades the right under Articles 14 and 21 of the Constitution of India. In any case, it was not within the powers of the Respondent No. 1 to charge the octroi duty in question only because the petitioner happened to bring the property of the Railways i.e., Union Government according to their instructions for delivering the same at Kalamna Railway Yard. It was impermissible and directly in contravention of Articles 265 and 285 of the Constitution of India and also sections 184 and 187 of the Indian Railways Act. .....
[Quoted from page nos.6 and 7 of the Writ Petition paper-book].
17. Learned respective Advocates have placed reliance on following reported judgments :-
By petitioner :::: Downloaded on - 09/06/2013 15:15:40 ::: 9
[a] M/s. Marwar Tent Factory Vs. Union of India & ors. [AIR 1990 SC 1753], [b] Agricultural Market Committee Vs. Shalimar Chemical Works Ltd. [AIR 1997 SC 2502], [c] Birendra Nath Guha & Co., Vs. State of Bihar [AIR 1955 Patna 245SC 1753], [d] Commissioner of Sales Tax, Eastern Division, Nagpur Vs. Husenali Adamji & Co. [AIR 1959 SC 887], [e] The Union of India Vs. Bhusawal Municipal Council [AIR 1982 Bombay 512], and [f] Maharashtra Distilleries Ltd. Vs. Municipal Corporation of Aurangabad & another [AIR 2005 SC 760].
By Respondent No.1 :-
Municipal Commissioner of Dum Dum Municipality & ors. Vs. Indian Tourism Devpt. Corpn. & ors. [(1995) 5 SCC 25].
18. Plea of the respondent no.1-Corporation is of a simple denial of exemption claimed by the petitioner.
Respondent no.1 urges that goods have been consigned by the petitioner and Railway is the recipient. It further urges that so long the Railways do not themselves come forward and claim to be owner of the property, the exemption would not apply.
::: Downloaded on - 09/06/2013 15:15:40 ::: 1019. The plea of Indian Railways is not disclosed, as they have chosen to be mute. It is seen that various certificates and communications are issued by Railways to the respondent no.1, stating that the subject-matter is railway material . At no point of time, the respondent nos. 2 and 3 came forward to seek release of goods, claiming ownership thereof. Even before this Court, respondent nos.2 and 3 have not appeared to support the plea of the petitioner.
20. It is to be seen as to when the consignments were detained for demanding octroi, whether those specified goods manufactured for railway had vested in Railways rather whether property in the goods had passed on to Railway.
21. The points on which there is no controversy as has revealed from the rival submissions demonstrate the following:-
[a] It is not in dispute that the railway property is not taxable in view of Sections 148 and 187 of the Indian Railways Act.::: Downloaded on - 09/06/2013 15:15:40 ::: 11
[b] The taxation may come under the bar of Articles 265 and 285 of Constitution of India once it is a property belonging to Union of India or the Railways.
[c] If the levy is not authorized by law, it would otherwise come into clutches of being arbitrary, unreasonable, and would be hit by Articles 14 and 19 of Constitution of India.
22. The points on which dispute arises are:-
[a] Whether the MIC inserts on the date of entry into the limits of Corporation are imported for use or consumption by the Railways as Railway property?
[b] Whether the petitioner/consignor was acting sheerly as an agent of Railways, when it had entrusted the MIC inserts to the transporter and property in goods had already passed to the Railways?
[c] Whether the MIC inserts were inspected by Railways as averred in para 7 of Writ Petition and what is ::: Downloaded on - 09/06/2013 15:15:40 ::: 12 the effect of said inspection, if admittedly done or proved?
23. The fact of the matter is required to be ascertained and dealt with on the basis of facts as obtaining between the parties and stipulations of sale as spelt out from the work order, which is the contract document deciding the relations between the parties, i.e. Railway and the petitioner, and their mutual rights and obligations.
24. Clauses 7 and 8 of Work Order [Annex.A] are relied upon by both the parties, though with divergent objects.
Clause 7 pertains to mode of dispatch and Clause 8 acceptance, inspection and payment.
25. Clause 7.2 is quoted ad verbatim for a quick access and understanding, which reads as follows:-
7.2 The contractor shall load and arrange dispatch as per the mode of transport preferred by the consignee
(s) at contractor s own cost, booking the consignment freight pre-paid.
The contract rate is inclusive of the cost of finished inserts supplied at the consignees works and contractor shall have no additional claim ::: Downloaded on - 09/06/2013 15:15:40 ::: 13 towards any cost incurred in the loading, packing and transport of the finished inserts.
[Quoted from page no.16 of the Writ Petition paper- book].
26. From Clause No.7 quoted above, it is apparent that the consignment is to be done by the consignor at own costs, with freight pre-paid and any additional claim towards costs of loading, packaging, transportation ig etc., of finished inserts is not admissible.
27. Clause 8 is quoted ad verbatim as follows:-
8. Payments :
8.1. The time to time payment at the accepted rate towards supply of finished inserts will be made by the FA & CAO, Central Railway, Bombay.
8.1.1 Payment of 98% of contract rate shall be made towards the inspected and passed inserts when despatched by rail.
The claim for payment shall be supported by inspection certificate as also proof of despatch (clear RR) where booking is done by Rail. Balance 2% payment shall be made on certification of receipt in good condition by the respective consignee (s) duly verified by Railway representative (Concrete Sleeper Inspecting Engineer) at the consignee (s) factory of receipt of consignment in good condition.
::: Downloaded on - 09/06/2013 15:15:41 ::: 148.1.2 Where the passed inserts as allotted (under Release Order (s) are supplied direct to the consignee by road transport, payment shall be made at 100% of contract rate by the paying authority on production of relevant inspection certificate (s) and a certificate from the consignee s authorised representative for the receipt of consignment in good condition and the same duly verified by the concrete sleeper inspecting authority (not below the rank of AEN/AIE) nominated at the consignees works. The consignee (concrete sleeper manufacturer) shall certify the receipt of consignment (s) on behalf of the Purchaser.
[Quoted from page no.16 of the writ petition paper- book].
28. Said Clause 8 can be analyzed as follows:-
As to Clause 8.1.1:-
The contractor/supplier is entitled for the 98% payment no sooner delivery of goods is certified by the Representative of Railways and balance payment is to be made after verification of Railway s representative Concrete Sleeper Inspecting Engineer at the factory on receipt of the consignment of goods at Railway yard.
As to Clause 8.1.2 :-
100 per cent payment will be made by the paying authority on production of relevant Inspection Certificates and Certificate from Consignee s authorized representative for the receipt of the consignment in a good condition and the same is duly ::: Downloaded on - 09/06/2013 15:15:41 ::: 15 verified by the specified Concrete Sleeper Inspecting Authority at the consignee s work.
29. It is seen from Clause 8.1.1 that the specified representative of Railway receives the delivery at the Railway yard whenever transportation is by railway freight pre-paid, and there the delivery of goods is complete and there and then upon said inspection and acceptance of goods, the property in goods gets transferred to Railways.
30. It is seen that in the situation governed by Clause 8.1.2, the delivery is complete only when the goods physically reach the consignee s work and the specified Concrete Sleeper Inspecting Authority of Railway inspects the MIC inserts and accepts the delivery.
31. What is common in Clauses 8.1.1 and 8.1.2 is Delivery upon inspection to specified representative of Railway .
32. This Court finds that delivery of physical possession to the Railway or for and on behalf of ::: Downloaded on - 09/06/2013 15:15:41 ::: 16 Railway after inspection in the manner prescribed is made a pivotal and common point in Condition No.8.
33. Now, this Court has to see how was the consignment done. For this purpose, Transport Invoice has to be seen.
34. The Transport Invoices/Lorry Receipts are four in number, and are concurrent as to form and details of consignor and consignee and relevant part thereof reads as follows:-
Consignor s Name & Address : M/s.
Bakshi Steels Ltd., Bhiwadi.
Consignee Bank s name and address :
M/s. Executive Director Track (M), Railway Board, Ministry of Railway, New Delhi at M/s. ISCO Track Sleeper (P) Ltd., Railway Yard, Kalamana, Nagpur.
[Quoted from page no.26 of the Writ Petition paper- book].
Reference to Bank appearing in the portion quoted above, is in-redundant, as the transaction is direct and not through Bank, and word only consignee will have to be read.
35. In present case, consignor, as seen from ::: Downloaded on - 09/06/2013 15:15:41 ::: 17 documents admitted/relied upon by the petitioner, is the seller the petitioner.
36. Now it is to be seen whether petitioner has acted as bailee, and for this purpose, it is also to be seen whether title/property in goods has transferred to seller before consignment.
37. It follows by essential inference from Clauses 8.1.1 and 8.1.2 that in either case of transportation either by rail or by road, the property in goods does not pass to the railway until the inspection is done by the specified Inspecting Authority, when goods actually reach the consignee s yard (when transported by Railway) or place of work and in the facts of present case, at the Kalamana-based factory of ISCO TS [P] Ltd.
38. Therefore, the property in goods would pass unto the Railways, soon the inspection is done at the time of taking delivery by the specified officer of Railway under Clause 8.1.1 or 8.1.2.
Thus, in both the situations, a common factor is inspection by specified authority at the time of ::: Downloaded on - 09/06/2013 15:15:41 ::: 18 taking physical delivery. This inspection before delivery by specified representative of Railway was not completed when the goods were consigned to transporter.
39. The goods were detained demanding octroi by the respondent no.1 before the stage of delivery to Railway Officer at ISCO TS [P] Ltd., has matured.
40. It is seen that the choice of transport by road was made by the petitioner. Had the goods been delivered at Railway Yard, wherever outside territorial limits of Nagpur Municipal Corporation whenever the goods would arrive within limits of Corporation while those would stand already vested in Railway, and were to be in physical possession of Railway as the Railway s owned property at the time of entry in limits of Corporation.
41. From what is shown by the petitioner as the transport free of freight to destination , was selected by seller, the entrustment of goods/consignment to the transporter was not as per the choice or direction of the buyer Railway.
::: Downloaded on - 09/06/2013 15:15:41 ::: 1942. The inspection note on record Annexure-G at page 30 is dated 3rd March, 1991. Goods inspected are described therein, but those are not shown or proved to be the very goods which are consigned. It is also not shown that due to any subsequent agreement, inspection as prescribed in Clause 8 has been altered and dispensed with so as to render inspection represented in Inspection Note [Annex. G ] dated 3rd March, 1991 to be the inspection as contemplated by Clause 8.1.2.
43. Moreover, while Railways supported the petitioner before the Respondent No.1 in the form of letters/Certificates at Annexures H and I , they have not filed in this Court any consenting reply.
Railways has refrained from appearing and supporting the petitioner.
44. It is not a case where like in an interpleader, the petitioner may have said that not the petitioner, but respondent nos. 1 and 2 are liable for octroi, and, if any, levy is due, it be recovered from the respondent nos. 1 and 2. Railway Establishment ::: Downloaded on - 09/06/2013 15:15:41 ::: 20 was, therefore, not called upon to traverse the contents of the petition, and they have chosen to remain mute.
45. It has to be noted that they have not come forward to own the responsibility of title of goods and claim exemption from duty, by virtue of title, probably because they wish to say that ownership in the goods was not so far passed unto them, which would occur only after the goods are physically delivered.
46. The term railway material or any other loose description as to Railway s interest in goods or alleged admission by Railway that MIC parts are purchased by Railway in itself does not prove that the ownership of goods on the day of detention was that of Railway.
47. It is pertinent to note that at no point of time, Respondent Nos. 2 and 3 themselves did come forward to urge before the respondent no.3 that consignments belonged to them and those be released in their favour, and that the consignor was justa ::: Downloaded on - 09/06/2013 15:15:41 ::: 21 bailee as their agent, no sooner first inspection at manufacturer s [petitioner s] site represented through Annexure G [at page 30] was conducted.
48. It is thus clear that Respondent Nos. 2 and 3do not claim the ownership in goods so long those are put in physical possession of Railway s representative, as is clear without any ambiguity from Clauses 8.1.1 and 8.1.2 and mute stance of these respondents.
49. It is, thus, seen that inspection by Railway Officer prior to delivery to truck for transport by itself and in isolation would not pass the title in the goods to Railway, and by fiction of law, make it a railway property , since the inspection prior to actual delivery of consignment to railway was contemplated by Clauses 8.1.1 and 8.1.2.
50. In the given situation as obtaining on record, Railway is not shown to be the consignor, but is the consignee, as owner of goods on facts or by fiction of law.
::: Downloaded on - 09/06/2013 15:15:41 ::: 2251. On facts, the petitioner has failed to bring on record any material or jurisdictional facts, to prove or demonstrate that indisputably Railway is the owner.
52. Petitioner has failed to prove fact crucial to attract the fiction of passing property in goods , which is inspection followed by delivery. By application of various provisions of law relied upon while urging points referred to in para 14 of this judgment are, property in goods does not pass unto Railway. Facts crucial to passing the property in goods are not proved from the material relied upon by the petitioner.
53. This Court holds that the goods were not appropriated to the sale either by seller or purchaser to the contract, and the property in goods did not pass to the buyer.
54. The petitioner, therefore, continued to hold the goods for himself when detained by the Respondent No.1, and, therefore, was not a bailee of Respondent ::: Downloaded on - 09/06/2013 15:15:41 ::: 23 Nos. 2 and 3.
55. It is, thus, clear on facts, and this Court holds that:-
[a] The said MIC inserts are owned, imported and possessed by petitioner, and not by respondent nos. 2 and 3, on the date of entry in municipal limits of the respondent no.1.
[b] Petitioner is not bailee of Railway, but a consignor itself for own purpose of delivery to Railway.
[c] The inspection done by some
organization represented through
Annexure G is not the inspection
as contemplated by Clause 8.1.2.
56. In the result, goods imported by the petitioner do attract octroi as has happened in the present case.
57. Analysis of facts done herein before does not warrant any further detailed discussion about the precedents relied upon by the petitioner.
::: Downloaded on - 09/06/2013 15:15:41 ::: 2458. In the circumstances, Rule is discharged.
Parties are directed to bear own costs.
JUDGE JUDGE
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