Customs, Excise and Gold Tribunal - Delhi
Oswal Spinning And Weaving Mills Ltd. vs Collector Of Customs And Calcutta Port ... on 15 December, 1988
Equivalent citations: 1989(21)ECR125(TRI.-DELHI)
ORDER G.P. Agarwal, Member (J)
1. The case in hand is remanded by the Hon'ble Supreme Court vide its Majority Judgment dated April 19, 1988 passed in Civil Appeal No. 4102 of 1984 with the following observations and directions-
19 bales, as alleged, appear to be missing and 39 bales are said to be available. The appellants have contended that the goods has not been properly preserved and parts of some of the bales have been taken out to be made into independent bales. These allegations have not been accepted by the respondent No. 1. Respondent No 2 has totally denied any liability in the matter. In case it is ultimately found that the Customs authorities by themselves have the total liability to account for the goods or in case their liability in that behalf has to be shared by the Calcutta Port Trust and even though one or both are liable to I account for the goods and they fail to do so, in what manner the appellants would in such eventuality be compensated are matters which require factual consideration and would warrant reception of evidence. This proceeding before us is thus not appropriate for looking into this part of the grievance. A situation has now arisen where the order of the Tribunal as modified by this Court for the return of the goods cannot be fully given effect to. We think it appropriate to require the Tribunal to finally dispose of this question.
...The Tribunal would give reasonable opportunity to the appellants as also the two respondents in the matter of adjudication of this aspect of the dispute.
In case, the goods are not finally traceable and the liability to account for the goods is fixed in the hands of one or both of the respondents, the Tribunal would do well to examine and decide what amount of compensation in lieu of the goods should be payable to the appellants.
...Costs to be in the discretion of the Tribunal.
2. The facts and circumstances under which the Hon'ble Supreme Court remanded the case may be briefly stated in order to appreciate the case of the parties and also to complete the record. These are-
The appellants imported 58 bales of woollen rags valued at Rs. 1,04,321.00 through the State Trading Corporation from Canada. When the goods arrived at Calcutta, the Customs authorities called upon the appellants to show cause as to why the same may not be confiscated and the penalty be not imposed under the provisions of the Customs Act, 1962 on the allegation that the importation of the subject goods was without '"a proper licence. After hearing the appellants, as also the State Trading Corporation, the Collector of Customs by his order dated 12th March, 1981 ordered for the confiscation of the goods in question under Section 111(dt) and 111(m) of the Customs Act, 1962 giving an option under Section 125 of the Customs Act to clear the goods on payment of redemption fine of Rs. 50.000/-. On appeal by the appellants the Central Board of Excise and Customs vide its order dated 25.11.1981 while sustaining the order of confiscation but reducing the redemption fine to Rs. 20,000/-, directed that-
...after the goods are mutilated to the satisfaction of Collector of Customs, Calcutta, by the importers at their cost and under Customs supervision so as to render them unfit for use except rags and after payment of appropriate duty, the goods be released on payment of a fine of Rs. 20.000/- within three months hereof.
On further appeal this Tribunal by its Order dated 31.7.1984 while upholding the order of confiscation directed that-
...the goods be released on payment of customs and other related duties, under T.I. 63.02, with countervailing duty as leviable under corresponding entry in the Central Excise Tariff. This is subject to Board's order about payment of redemption fine of Rs, 20.000/- and mutilation of the goods to the satisfaction of the Collector, at the cost of the appellants and under the supervision of the Customs authorities.
3. Still dissatisfied, the appellants chased the matter before the Apex Court under Section 130-E of the Customs Act. It appears from the remand order dated April 19, 1988 of the Hon'ble Supreme Court that during the pendency of the appeal before it, the Court directed waiver of the redemption fine on 17th December, 1986 and Mr. Salve, counsel for the appellants therein agreed to pay the duty, as directed, when delivery was to be taken of the goods. It further appears that the appellants therein complained to the Court that the part of the goods were not traceable. Consequently, the Court issued a notice to the Calcutta Port Trust authorities (respondent No. 2 herein). It further appears from the record that both the respondents namely the Customs Authorities and the Calcutta Port Trust Authorities denied their liability to account for the goods and therefore the question that arose before the Hon'ble Supreme Court was as to the availability of the subject goods and its return whereof to the appellants and the liability to account for the same by the respondents. Hon'ble Mr. Justice B.C. Ray while disposing of the said question held that the respondent No. 1 namely the Customs authorities are liable for the loss or damages that has been caused to the appellants by the destruction of the imported goods and that it is not possible for this Court while hearing the appeal under Section 130-E of the Customs Act against the order of this Tribunal to ascertain and determine the money value of the imported goods which have been lost or destroyed from the possession and custody of the Customs authorities. Consequently the appellants may take appropriate proceedings for determination of the damages and for recovery of the same in accordance with law. However, the Majority of the Judges constituting the Bench remanded the case with the aforesaid directions to the Tribunal.
4. On receipt of the papers, notices were issued to both the respondents to adjudicate the disputes as directed by the Hon'ble Supreme Court.
5. When the case was taken up on 16.6.1988 it appeared that none of the three parties were ready for the hearing. It was also noticed that the parties have not filed any documents which may be necessary for proper determination of the issue arising out of the remand order of the Hon'ble Supreme Court. Accordingly time was given to both the parties to file the documents, if any.
6. On 13.7.1988 when the case was taken up for hearing Shri Chakraborthy, learned Departmental Representative raised a preliminary objection regarding the competency of the Tribunal to proceed further in the matter and submitted that the directions of the Hon'ble Supreme Court, contained in the majority judgment dated 19.4.1988, are per incuriam and that in view of what the Supreme Court itself had held in the case of A.R. Aniulay v. R.S. Nayak it will be open to, and in fact the duty of this Tribunal to ignore the direction of the Supreme Court and not to proceed further in the matter. In reply Shri J.S. Agarwal, learned Counsel for the appellants submitted that Shri Chakraborty, learned departmental representative is raising the said preliminary objection without prior notice and it relates to the jurisdiction of the Tribunal he may be given sufficient time to study and reply the same. Consequently with great reluctance we adjourned the matter and also directed the respondent Collector to set down his preliminary objections in writing with such detailed reference to other provisions as may be necessary to support the preliminary objection. On 3.10.1988 when the case was called. Shri M. Chandrasekharan, Advocate duly assisted by Shri L.C. Chakraborthy, JDR appeared on behalf of the Collector of Customs, respondent No. 1 and submitted that the respondent No. 1 had not filed the preliminary objection in writing as directed by the Tribunal earlier and he would reiterate what had been said orally by the learned JPR on 13.7.1988. Accordingly we heard the parties on the preliminary objection and over-ruled the same in the open Court with the direction that the detailed reasons would follow in the main order and proceeded to hear the parties on merits.
7. As regards the preliminary objection-It was contended on behalf of the respondent No. I orally on 13.7.1988 and reiterated by Shri M. Chandrasekharan, learned Counsel for the respondent No. 1 on 3.10.1988 that the directions of the Hon'ble Supreme Court contained in its majority judgment dated 19,4.1988 are per incuriam and that in view of what the Supreme Court itself had held in the case of A.R. Antulay v. R.S Nayak it will be open to, and in fact the duty of this Tribunal to ignore the direction of the Supreme Court and not to proceed further in the matter. In reply Shri J.S. Agarwal, learned Counsel for the appellants submitted that the said majority judgment of the Supreme Court was not per incuriam. That apart, submitted the counsel this Tribunal is not competent to overlook the said direction.
8. We have considered the submissions made by the parties. In order to appreciate the controversy in hand it would be advantageous to state the meaning and concept of "per incuriam" judgments. "Per incuriam" are those decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court concerned, so that in such cases some part of the decision or some step in the reasoning on which it is based, is found, on that account to be demonstrably wrong. See Morelle v. Wakeling (1955) 1 All ER 708, 718-F and State of Orissa v. Titaghur Paper Millx Co. Ltd. . It is not shown either by Shri L.C. Chakraborthy, learned JDR or by Shri M. Chandrasekharan, learned Counsel for the respondent Mo. 1 as to how the said majority judgment dated 194.1988 is "per incuriam". In other words they have not pointed out how the majority judgment dated 19.4.1988 was given in ignorance or forget fullness of some inconsistent statutory provision or of some authority binding on the court concerned. That apart, we are of the considered opinion that the question of validity of the majority judgment dated 19.4.1988 under reference can be established solely by the Apex Court itself and that, in practice no decision can be impeached collaterally by any inferior court. In other words the superior court can always correct its own error brought to its notice either by way of petition or ex debito justitiae. See Rubinstein's Jurisdiction and Illegality. In the case of Isaacs v. Robertson (1984) 3 All ER 140 it was reiterated by the Privy Council that if an order is regular it can only be set aside by an appellate court; if it is irregular it can be set aside by the Court that made it on application being made to that court either under rules of court dealing expressly with setting aside orders for irregularity or ex debito justitiae if the circumstances warranted, namely where there was a violation of the rules of natural justice or fundamental rights. The contention of the learned Counsel for the respondent No. 1 that if a decision has been given per incuriam the court can ignore it in view of the majority decision of the Hon'ble Supreme Court rendered in the case of A.R. Antulay v. R.S. Nayak (supra) also cannot be accepted. Firstly because, its stated above it was not shown how the said judgment was per incuriam. On the other hand we find from the judgment proposed by My Lord Justice B.C. Ray that on hearing the learned Counsels for the appellants and the Collector of Customs, the Supreme Court made an order on 17th December, 1986 to the following effect -
Two questions arise, one relating to the demand of duty and the other levy of penalty. On the facts, we are satisfied and the learned Addl. Solicitor General having agreed that there is no scope for levying of penalty. The demand of penalty, is therefore, waived and so far as duty is concerned, Mr. Salve agrees that the duty as demanded is payable and will be paid. The only difficulty is about delivery of the goods imported. Notice has been issued to the Port Trust Authorities and it is said to have been served, but there is no appearance on behalf of the Port Trust. Mr. Salve suggest that steps should be taken first to trace the goods. The Petitioner would pay the duty as demanded and take delivery of the materials. The matter be listed on 23rd January, 1987, and the Port Trust may be again notified of this date, so that further orders may be passed. The Port Trust will disclose the Court the location of the goods.
9. Consequently, the Port Trust Authorities appeared and filed their counter-affidavit sworn by one Girindra Bhuson Chakraborty, the Commercial Supervisor, Calcutta Port Trust on 18.3.1987 and at the time of hearing the Customs Authorities while denying their liability to account for the goods in question submitted that "the value of the imported goods cannot be determined in this appeal by this Court as it requires consideration of facts and the only remedy for the appellant is to bring a suit for determination of such issue" (page 8 of the judgment). After hearing the parties, Hon'ble Mr. Justice B.C. Ray held that "it is not possible for this Court while hearing the appeal under Section 130 E of the Customs Act against the order of the Appellate Tribunal to ascertain and determine the money value of the imported goods which have been lost or destroyed from the possession and custody of the Customs authorities. The appellant may take appropriate proceedings for determination of the damages and for recovery of the same in accordance with law." However, the majority of the Judges thought it proper to remand the case to the Tribunal for deciding the liability of the respondents to account for the goods and to examine and decide what amount of compensation in lieu of the goods should be payable to the appellants. Thus, it is not a case where the Hon'ble Supreme Court suo moto remanded the case and directed the Tribunal to determine the liability of the respondents and to examine and decide what amount of compensation in lieu of goods should be payable to the appellants. Present case is a case where the parties were heard on the question as to whether the appellants should be asked to bring a suit for determination of such issue or the Court itself should compensate the appellants unlike the case of A.R. Antulay v. R.S. Nayak (supra) where the directions were given by the Supreme Court suo moto on February 16, 1984 withdrawing the Special Cases (arising out of the complaint filed by one Shri P.B. Samant) pending in the Court of Special Judge, Greater Bombay, Shri R.B. Sule, and transferred the same to the High Court of Bombay with a request to the Chief Justice to assign these two cases to a sitting Judge of the High Court for holding the trial without hearing the parties and without awareness of or advertence to the exclusive nature of the jurisdiction of the Special Court and without reference to the possibility of the violation of the fundamental rights in a case of that nature as observed by a Seven Judges Bench decision in State of W.B. v. Anwar Alt Sarkar . And Secondly, because, the only court which can ignore it is the Court which passes it. In the case of A.R. Antulay v. R.S. Nayak (supra) itself My Lord Justice Sabyasachi Mukharji, speaking for himself and two other Hon'ble Judges of the Court in paragraph 79 (page 670 of the report) observed as follows-
79. We do not labour ourselves on the question of discretion to disobey a judicial order on the ground of invalid judicial order See Discretion to Disobey by Mortimer R. Kadish and Sanford H. Kadish pages 111 and 112. These directions were void because the power was not there for this Court to transfer a proceeding under the Act of 1952 from one Special Judge to the High Court. This is not a case of collateral attack on judicial proceeding ; it is a case where the court having no court superior to it rectifies its own order....
On the said question in a separate order My Lord Justice Ranganath Misra expressed as follows-
97 ...I do not propose to delve into that aspect in my separate judgment.-
10. It is interesting to note that such type of attack, as made in the present case by the respondent No. 1. was apprehended by My Lord Justice Ranganath Misra in the case of A.R. Antulay v. R.S. Nayak itself. Consequently a note of caution was recorded by His Lordships which runs thus-
107. There is still another aspect which should be taken note of. Finality of the orders is the rule. By our directing recall of an order the well settled propositions of law would not be set at naught. Such a situation may not recur in the ordinary course of judicial functioning and if there be one certainly the Bench before which it comes would appropriately deal with it. No strait-jacket formula can be laid down for judicial functioning particularly for the apex Court. The apprehension that the present decision may be used as a precedent to challenge judicial orders of this Court is perhaps misplaced because those who are familiar with the judicial functioning are aware of the limits and they would not seek support from this case as a precedent. We are sure that if precedent value is sought to be derived out of this decision, the court which is asked to use this as an instrument would be alive to the peculiar facts and circumstances of the case in which this order is being made.-(page 689 of the report).
11. Thus we overrule the preliminary objection raised by the respondent No. 1.
As regards compensation-
12. Shri J.S Agarwal, learned Counsel for the appellants submitted that 58 bales of the goods in question were imported and since according to be the respondents the same are not available compensation be awarded to the tune of Rs. 8,66,728.22 as detailed out in the Chart submitted by the appellants In reply both the respondents submitted that out of 58 bales of the goods in question only 45 bales were landed at Docks on different dates, in other words 13 bales were short landed. They also disputed the amount of compensation claimed by the appellants on various counts. Besides Calcutta Port Trust respondent No. 2 also denied their liability.
In order to appreciate the contentions raised by the parties it would be convenient to deal with the respective contentions in the order in which these were advanced.
(i) A s regards quantity of goods imported and received.
13. Shri J.S. Agarwal, learned Counsel for the appellants submitted that 58 bales of goods in question were imported and received and this entire quantity was confiscated by the Customs Authorities as admitted by the respondents before the Hon'ble Supreme Court as would appear from the Majority judgment under reference wherein it was stated that "it is not disputed that 58 bales of the goods in question had been received, nor is there any dispute that the entire goods had been confiscated under the Act."
Elaborating on his arguments Shri Agarwal submitted that since out of these said 58 bales 19 bales were alleged to be missing by the respondents and only 39 bales were said to be available the Supreme Court remanded the case to determine and award the compensation to the appellants and also to appropriate the inter se liability between the two respondents, if necessary. That apart, he also submitted that the suppliers sent the goods comprising of 58 bales of Woollen rags through the State Trading Corporation on 1.5.1979 to be delivered at Calcutta Port and the Invoice was drawn in favour of State Trading Corporation (allocation to the appellants herein). Alongwith it there was a certificate from the suppliers to the effect that "goods shipped are in conformity with Contract No. STC/CI/247/WR/ 239/78-79 dated 4.4.1979" as would be seen from the Invoice itself. Shri Agarwal also drew our attention to the Bill of Entry wherein the quantity of goods in question imported was shown as 58 bales of Woollen rags. He emphasised that there is no remark on the said Bill of Entry that the 13 bales were landed short. He stressed that the supplier raised the bill for Rs. 1,05,364.00 for the supply of 58 bales of goods in question and accordingly Bankers of the appellants namely New Bank of India debited the said amount on 14.7.1979 plus their charges from the cash credit account of the appellants and at no stage the appellants were told either by the Customs Authorities or by the Calcutta Port Trust about the short landing of 13 bales as alleged now. On the other hand submitted the learned Counsel for the appellants a show cause notice for confiscating the entire goods namely 58 bales was issued by the Customs Authorities on 2.1.1980 and after the usual adjudication proceedings the entire goods imported namely 58 bales were confiscated with an option to redeem the same on payment of a certain amount of tine in lieu of confiscation. The said order of confiscation on appeal was confirmed by the Central Board of Excise & Customs, New Delhi with certain modification in the amount of fine. On further appeal the said order of confiscation was also confirmed by the Tribunal. However, on further appeal the Supreme Court set aside the said order of confiscation. He also cited a decision of this Tribunal rendered in the case of South Mia Corporation, Ltd. v. Collector of Customs 1986 (8) ECR 620 to canvass his contention that burden lies on the Customs Authorities to establish short landing by an acceptable evidence, which is totally lacking in the instant case.
14. In reply while denying their respective liability to account for the goods in question it was contended by the respondents that only 45 bales actually landed at the Dock as would appear from the two documents on record namely (i) Short landing certificate dated 30.4.1980 issued by the Port Shed Foreman of Jetty No. 11, Kidderpore Dock, Calcutta to the Clearing Agents of the appellants, M/s. Mackinnon Mackenzie & Co. Ltd., Calcutta and (ii) Out-turn Report dated 30.4.1980 prepared by the Shed Foreman, 11, Kidderpore Dock to the Steamer Agent M/s. Scindia Steam Navigation Co. Ltd., Calcutta, was sent to the Assistant Collector of Customs, Manifest Clearance Department, under the Collector of Customs, Calcutta. It was emphasised that this fact of short landing was brought to the notice of Supreme Court by filing a counter affidavit sworn by one Shri Girindra Bhushon Chakravorty, the Commercial Supervisor, Calcutta Port Trust on 18.3.1987 wherein he (Shri Girindra Bhushon Chakravorty) specifically averred that out of 58 bales only 45 bales were landed and 13 bales were landed short. Both the counsels for the respondents also drew our attention to the following observations made by Hon'ble Mr. Justice B.C. Ray in his judgment (page 9)-
...Moreover after confiscation of the entire consignment of imported goods, i.e. 45 bales out of 58 bales of woollen rags, the same vested in the Central Government in accordance with the provisions of Section 126 of the said Act.
15. We have considered the submissions made by the parties. In the majority judgment of the Supreme Court we find the following observations-
...the only question that survives for examination is as to the availability of the goods returned whereof has to be made to the appellants and in case the whole or part of the goods is not traceable, in what way the direction of the Tribunal for return of the goods has to be worked out. It is not disputed that 58 bales of the goods in question has been received, nor is there any dispute that the entire goods has been confiscated under the Act. (Page 3) and further that-
19 bales, as alleged, appear to be missing and 39 bales arc said to be available.
16. From the said observations made in the Majority judgment it is clear that it was admitted by the parties therein that 58 bales in question were received and the entire goods were confiscated under the Customs Act and since 19 bales were alleged to be missing and 39 bales were only said to be available the Supreme Court remanded the case with the aforesaid directions to the Tribunal. Under these circumstances in our considered opinion it is no longer open to the respondents to contend before us that only 45 bales actually landed at the Dock and 13 bales were landed short. Particularly when at the time of passing of the said judgment by the Supreme Court on April 19, 1988 the said counter affidavit sworn by the Commercial Supervisor of Calcutta Port Trust on 18.3.1987 specifically making averment that out of 58 bales only 45 bales were landed and 13 bales were landed short was before the Court. Even assuming with the learned Counsel for the respondents that this issue is still open to them, we find no force in the contention raised by the respondents about the short landing of 13 bales. It is not in dispute that right from the stage of issuing of the show cause notice till the disposal of the appeal by this Tribunal on 31 7.1984 it was an admitted position by the parties that 58 bales were landed at the Dock and the same were confiscated and it is only when during the pendency of the appeal before the Hon'ble Supreme Court when the Court on 17th December, 1986 directed waiver of the redemption fine and Mr. Salve, counsel for the appellants agreed to pay the duty as demanded at the time of taking of the delivery of the goods the Calcutta Port Trust in answer to the notice issued to them on the complaint of the appellants made therein that the imported goods were not traceable that the Calcutta Port Trust for the first time came out with the defence that there was a short landing of 13 bales by filing the Counter Affidavit of their Commercial Supervisor Shri Girindra Bhushon Chakravorty sworn on 18,3.1987. In the said Counter Affidavit (a copy of which has been placed on record before us) Shri Girindra Bhushon Chakravorty has stated that 45 bales were landed on different dates in the months of September and October 1977 and also filed the copy of out-turn report dated 30,4.1980 and letter dated 30.4.1980 addressed to M/s, Mackinnou Mackenzie & Co. Ltd. The Customs Authorities have not produced any documents to show that there was a short landing of 13 bales. According to Section 30 of the Customs Act the person-in-charge of a conveyance i.e. master of the vessel, carrying imported goods shall within twenty-four hours after arrival thereof at a customs station, deliver to the proper officer, an import manifest, in the prescribed form and the person delivering the import manifest shall at the foot thereof make and subscribe to a declaration as to the truth of its contents and if the proper officer is satisfied that the import manifest is in any way incorrect or incomplete and that there was no fradulent intention, he may permit it to |be amended or supplemented. In practice in accordance with this section (Section 30) the master of the vessel prepares a manifest, which is a list of the cargo in the vessel taken charge of from different consignors and the same is intended for the Customs Officials and a copy is given to the Port Authorities. Neither the Customs Authorities nor the Calcutta Port Trust has produced the said import manifest. Not only this neither the Customs Authorities nor the Calcutta Port Trust have produced any receipt which is issued in terms of Sub-section (2) of Section 42 of the Major Port Trusts Act, 1963, Sub-section (1)(b) of the said Section provides that a Board i.e. to say Trustees of Calcutta Port Trust shall have power to undertake the work of receiving, removing, shifting, transporting, storing, delivering the goods within the Board's premises. Sub-section (2) provides that the Board may, if so requested by the owner, take charge of the goods for the purpose of performing the service or services enumerated in Sub-section (1) and shall give a receipt in such form as the Board may specify. Against this it was the contention of the appellants that according to the bill of lading 58 bales of woollen rags were loaded and imported-a fact which was not disputed by either of the respondents. Section 3 of (The Indian) Bills of Lading Act, 1856 provides as follows-
Every bill of lading in the hands of a consignee or endorsee for valuable consideration, representing goods to have been shipped on board a vessel, shall be conclusive evidence of such shipment as against the master or other person signing the same, notwithstanding that such goods or some part thereof may not have been so shipped, unless such holder of the bill of lading shall have had actual notice at the time of receiving the same that the goods had not in fact been laden on board:
(Emphasis supplied)
17. Thus, from a plain reading of the said section it is clear that the bill of lading generally is prima facie evidence of the shipment on board of the goods acknowledged under the bill of lading to have been shipped. As noted in the foot-note at page 70, Article XX in Sir Thomas Edward Scrutton, Charter-parties and Bills of Lading, 16th Edn.:
The evidence to displace the bill of lading must show not merely that the goods may not have been shipped, but that they were not; Smith v. Bedouin Steam Navigation Co. 1896 AC 70, 79, but this may be shown by conclusive evidence that after receipt by the ship-owner none of the goods were lost or stolen and that he has delivered all that he received.
The statement in the bill of lading is not to be displaced merely by a consideration of the balance of probabilities.
18. Hence on the above principles in the absence of any evidence to the contrary, it must be held, to start with, that the consignment of 58 bales of woollen rags as shown in the bill of lading, had been loaded at the Port of origin. This conclusion of ours also gets strength from the fact that the Bill of Entry also speaks of importation of 58 bales and there is no remark on it about short landing. From the Invoice and Packing List also we find that 58 bales were shipped. Shri Dbaram Paul Oswal, Chairman and Managing Director of the appellants company in his affidavit sworn on 20th June, 1988 had also stated that 58 bales were imported and received at the Dock. Here Section 116 of the Customs Act may also be noted. Section 116 provides that if any goods loaded in a conveyance for importation into India are not unloaded at their place of destination in India or if the quan they unloaded is short of the quantity to be unloaded at that destination, and if the failure to unload or the deficiency is not accounted for to the satisfaction of the Assistant Collector of Customs, the person-incharge of the conveyance shall be liable to the specified penalty. It was nobody s case before us that any action for the alleged short landing of 13 bales was ever taken against the person incharge of the conveyance as provided under Section 116 or that the import manifest as required under Section 30 of the Customs Act was not delivered by the person incharge of the conveyance to, the proper officer or such import manifest (not produced before us though must have been prepared and delivered after arrival of the conveyance containing the subject goods) was in any way incorrect or incomplete requiring any amendment or supplementation in terms of Sub-section (3) of Section 30 Thus absence of any action as required under Section 116 of the Customs Act on the part of the Customs Authorities knocks down the bottom of the defence that there was a short landing of 13 bales of woollen rags,, Hence under these circumstances the subsequent out-turn report prepared by the Calcutta Port Trust on 30.4.1980 is of no consequence. From the out-turn report filed by the Calcutta Port Trust we find that the same was prepered after about six months of the unloading of the subject goods. From the out-turn report we further find that it was prepared by the Shed Foreman on 25 4.1980 and signed by the Dock Manager on 30 4.1980. It is significant to note that it does not bear the signature of the Steamer Agent namely the Scindia Steam and Navigation Co. Ltd., Calcutta. It further appears from the out turn report that it was never sent to the Assistant Collector of Customs, Manifest Clearance Department under the Collector of customs, Calcutta as alleged by the Calcutta Port Trust. In the said out turn report the column "Forwarded to.-..." is left blank. No other evidence was produced by the Calcutta Port Trust regarding the despach of the said out turn report to the Customs Authorities. Neither the Customs Authorities had produced any communication from the Calcutta Port Trust regarding the short landing of 13 bales as alleged. Under these circumstances the said out turn report which is an internal arrangement amongst the Calcutta Port Trust, Ship-owner and the Customs Authorities cannot be pitted against the consignee i.e. appellants. For the like reasons the letter dated 30 4 1980 which is alleged to have been sent after preparation of the out turn report to M/s. Mackinnon Mackenzie & Co. Ltd is also of no consequence. The Port authorities have not produced any tally sheet and therefore the Said out turn report prepared long after the arrival of the goods is of no consequence. See Shaw Wallace & Co. v. Assistant Collector . Customs Authorities haw also not discharged their burden to show that there was a short landing also not discharged their . 1986 (8) ECR 620. It is significant to note that at no stage the appellants were informed either by the Calcutta Port Trust or by the Customs Authorities about the short landing of 13 bales of woollen rags as alleged. If such an information about the short landing had been given to the appellants, they could have proceeded against the ship-owners or the consignors, as they may be advised On the other hand it is amusing to note that show cause notice proposing the confiscation of the imported 58 bales of woollen rags was issue by the Customs Authorities to the appellants on 2,1.1980 itself whereas the said out turn report was prepared much afterwards i.e. to say on 25.4.1980 (sinned on 30.4.1980). Thus, we have no hesitation in holding that 58 bales of woollen rags landed as described in the bill of lading and hill of entry and the authorities concerned failed to tender the same when the appellants went to take delivery in terms of the orders passed by the Hon'ble Supreme Court as stated above. It is needless to speculate as to what has happened to the particular goods (i.e. 13 bales). It may be that negligently they had been delivered to other consignees. The possibility is thereof goods being landed elsewhere or overcarried. But in no case it is open to the respondents to put forward any such plea. The point is not what the Calcutta Port Trust had chosen to record in their out turn report or what the Customs Authorities had done, but what is their legal duty and what are their legal obligations to the consignee when the subject goods landed at the Port and if there was any negligence on the part of either of the respondents or both they should blame themselves.
19. In the premises we reject the contentions put forth by the respondents regarding the short landing of 13 bales of woollen rags as alleged.
20. (ii) As regards quantum of compensation--On the point of compensation both the parties agreed that the goods in question are not available for delivery. Hence the compensation be determined according to law.
21. The appellants have claimed the compensation of Rs. 8,66,728.22 calculated as below-
Rs.
1. Cost of goods of 58 bales at the market value at the present Exchange Rate... 2,84,283.16
2. Interest calculated at Bank rates from 14.7.1979 to March, 1987 @ 18,5% and from April 1987 to Sept. 1988 @ 16.5% (The invoice value has been taken for working out the interest)... 4.67,938.15
3. Expenses Travelling from Ludhiana to Calcutta and Delhi in connection with the above goods... 15,717.91
4. Legal Expenses 19,120.00
5. Loss in production due to non-receipt of Goods-This amount has been worked out on the basis of average profit @ 4% per kg. 79,669.00
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Total 8,66,728.22
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22. Supporting the aforesaid claim Shri J.S. Agarwal, learned Counsel for the appellants submitted that the word "compensation" has not been defined in the Customs Act and therefore, the compensation should be understood and determined in accordance with ordinary parlance. For this proposition he relied upon a Full Bench decision of the Allahabad High Court rendered in the case of Suryapal Singh v. U.P. Government wherein it was held that the word "compensation" in Article 31(2) of the Constitution means the equivalent in value of the property taken or acquired. He also relied upon the decision rendered in the case of State of Gujarat v. Shantilal wherein while interpreting the meaning of the word "compensation" appearing in Article 31(2) of the Constitution it was held that in ordinary parlance the expression "compensation" means anything given to make things equivalent; a thing given to or to make amends for loss, recompense, remuneration or pay. He also relied upon the judgment rendered by a Division Bench of Orissa High Court in the case of Narayana Deo v. State of Orissa wherein while deciding the question as to what is the meaning of the term compensation for compulsory acquisition of property in terms of Article 31(2) of the Constitution, it was observed that compensation as understood under the law of Eminent Domain, necessarily involves the idea of "just compensation", carrying with it the following attributes :-(1) Market-value payable on the footing of compulsory sale; (2) determination of compensation by a Judicial Tribunal; (3) payment of compensation (a) in cash and (b) on the date when possession is taken unless any other method and manner of payment is consented to by the dispossessed proprietor. For the claim of interest Shri Agarwal cited the case of Satinder Singh v. Umrao Singh wherein it was held that where the lands are acquired under the Land Acquisition Act, and the claimants are awarded compensation, the claimants are entitled to interest on the amount of the compensation for the period between the taking of the possession of the land by the State and the payment of compensation by it to the claimants. He also cited the case of Province of W.B. v. Basant Properties Ltd. wherein it was held that the enigmatic expression "there can be no damages on damages" which is an epigram of the law of torts, has no application to the cases of statutory compensation for compulsory requisition of property by the State in the exercise of its sovereign power. These are not cases of tort. Compensation, or call it by whatever name, payable for such requisition does not strictly arise from any breach of law or legal duty. It is fundamentally different from damages recoverable for torts committed. It was further held that it is true that there is no expressed provision of law, authorising award of interest in such cases, as in the two Sections 28 and 34 of the Land Acquisition Act. That, however, would not affect the general equitable principle which is well recognised in the law which is almost a part of law of the land that, for wrongful detention or withholding of his money a party may be relieved in damages particularly when the other party is enjoying the equivalent or corresponding benefit. He also cited the case of Revenue Divisional Officer, Guntur v. Vasireddy wherein mode of calculation of interest under Section 28 of the Land Acquisition Act was stated. On the same analogy Shri Agarwal contended that the appellants are also entitled for the expenses incurred in contesting the confiscation proceedings and also for the loss of average profit due to loss in production on account of non-delivery of goods imported by the authorities concerned.
23. In reply it was contended by the respondents that compensation is awarded only for the loss actually suffered and such compensation is not to be given for any remote or indirect loss or damages sustained by reason of the breach of the contract. Shri M. Chandrasekharan, learned Counsel for respondent No. 1 pointed out that in their affidavit dated 31.3.1987 filed by the appellants before the Supreme Court the appellants in para 8 of the affidavit had stated the value of 39 bales (13,500 Kgs of woollen rags) as Rs. 80.000/- C I.F. basis (Market value Rs. 1,35,000.00" approximately)". He also submitted that the Collector of Customs who adjudicated the case confiscating the goods imported gave an option to the appellants to clear the goods on payment of a fine of Rs. 50,000/- in lieu of confiscation. On appeal the said amount of fine was reduced by the Central Board of Excise and Customs to Rs. 20,000.00. On further appeal the Tribunal also confirmed the said amount of fine of Rs. 20,000,00 with the condition that the goods would be mutilated at the cost of the appellants under Customs supervision after payment of appropriate duty. But the appellants never redeemed the imported goods by paying Rs. 20,000.00. Thus, in estimating the loss or damages arising from the non-delivery of the goods imported, this conduct of the appellants of not redeeming the goods must also be taken into account
24. We have considered the submissions. Under the Common law damages or compensation are awarded either under the tortor under the Contract Act. Section 73 of the Contract Act makes provision for compensation or loss or damage caused by breach of contract and Section 74 of the same Act makes provision for compensation for breach of contract where a sum is named in the Contract as the amount to be paid in case of such breach or where it contains any other stipulation by way of penalty. Yet in the Contract Act there is another chapter IX under the Heading "Of Bailment" running from Sections 148 to 181. Section 148 defines "bailment", "bailor" and "bailee''. Section 151 enjoins upon the bailee to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value as the goods bailed. Section 161 speaks of bailee's responsibility when goods are not duly returned and provides that if, by the default of the bailee, the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time. There can be bailment without an enforceable contract. It is a settled proposition. In "possession in the Common Law" by Pollock and Wright, p. 163 it is stated that-
Upon the whole, it is conceived that in general any person is to be considered as a bailee who otherwise than as a servant either receives possession of a thing from another or consents to receive or hold possession of a thing for another upon an undertaking with the other person either to keep and return or deliver to him the specific thing or to (convey and) apply the specific thing according to the directions antecedent or future of the other person. "Bailment" is a relationship suigeneris and unless it is sought to increase or diminish the burdens imposed upon the bailee by the very fact of the bailment, it is not necessary to incorporate it into the law of contract and to prove a consideration.
25. Quoting the said observations made by Pollock and Wright in their book, "Possession in the Common Law" with approval the Supreme Court in the case of State of Gujarat v. Memon Md. AIR 1967 SC 1885 held that there can, therefore, be bailment and the relationship of a bailor and a bailee in respect of specific property without there being an enforceable contract. Nor is consent indispensible for such a relationship to arise. A finder of goods of another has been held to be a bailee in certain circumstances. In that case also certain movable properties were seized by the Customs Authorities on the ground that the same were smuggled goods and the action was taken under the Junagadh State Sea Customs Act (2 of S.Y. 1998) and ultimately the seized goods were confiscated. But on appeal the Tribunal set aside the order of confiscation and directed the return of the seized goods. It appeared that pending the appeal the seized property was disposed of under the order of the Magistrate passed under Section 523 of the Code of Criminal Procedure. On these established facts it was held by the Supreme Court that the Government was in a position of a bailee in respect of the goods seized and there was legal obligation on its part to preserve the property intact and also to take reasonable care of it so as to enable the Government to return it in the same condition in which it was seized. In other words the Government became liable to return the goods or its value to the owner, who had a right to demand the same, ft was further held that even if the Government cannot he said to be in the position of a bailee, it was in any case bound to return the seized property by reason of its statutory obligation or to pay its value if it had disabled itself from returning it either by its own act or by any act of its agents and servants.
26. After stating the said legal position we proceed to ascertain the compensation. At the outset it may be stated that the case law cited by the learned Counsel for the appellants does not help us in assessing the compensation because these cases define the meaning of the word "compensation"' and relate to compulsory acquisition of immovable property under the respective Legislation i.e. to say Land Acquisition Act etc., where provisions regarding the mode of assessment of compensation are itself provided. Likewise provisions for award of interest and its mode of calculation are also provided in these Acts. Respondents have not cited any case law to show as to how the compensation in the instant case should be ascertained and awarded. However, Section 161 of the Contract Act which speaks of bailee's responsibility when goods are not duly returned provides that "if, by the default of the bailee, the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time. Here reference may also be made to the decision of the Supreme Court rendered in the case of Dhian Singh v. Union of India , which contains a detailed discussion on the law relating to the ascertainment and award of damages under Section 161 of the Contract Act. That decision dealt with a case of wrongful detention of two motor trucks and it was held that the injured party was entitled to the value of the trucks as on the date of the verdict or judgment and also damages at a particular rate per day during the period when the injured party was prevented from making the use of the trucks by hiring out and earning income. There it was held that if a bailee refuses to deliver the chattel back on demand by the bailor the latter will be entitled at his election to pursue his remedy against the bailee for wrongful detention of the goods and recover either the goods in specie or its value on the date of the judgment. The said observations of the Supreme Court may be extracted as below with advantage-
(51). Winfield thus enunciates the position, in his treatise on Tort, 6th Edition at page 414:
The significance of the date of the refusal of the plaintiff's demand is that the defendant's failure to return the goods after that date becomes, and continues to be, wrongful, and damages are recoverable for wrongful 'detention' after that date until the goods are returned or payment of their value. The date of the defendant's refusal cannot convert a claim for the return of the goods into a claim for payment of their value at that date.
(52) It is, therefore, clear that in actions for wrongful detention the plaintiff is entitled on default of the defendant in re-delivering the goods to him, to payment in the alternative of the value of the goods thus wrongfully detained as at the date of the verdict or judgment, in other words, at the date of the decree. We are, therefore, of opinion, that the appellants were entitled to recover from the respondent the value of the said trucks which, as has been already stated, was Rs. 7,000 in the alternative on default committed by the respondent in re-delivery of the same to the appellants.
(Emphasis supplied)
27. Recently a Division Bench of the Calcutta High Court without noticing the aforesaid judgment of the Supreme Court in the case of Dhian Singh v. U.O.I. (supra) has also taken the same view in the case of Union of India v. Shambhunath Karmakar holding that where the order of confiscation of the seized goods is set aside, the Government is under an obligation to return the seized goods to the owner or pay the market price of such goods as on the date of netting aside of the order of confiscation. In that case also Collector of Central Excise vide his order dated 10.1.1964 ordered for the confiscation of gold and gold ornaments seized on 26th April, 1963. It appears that on April 1, 1966 an application for return of the confiscated gold and gold ornaments was made by the owner of the goods which was rejected by the Collector on 7.5.1966. Aggrieved, the owner took up the matter in writ before the Calcutta High Court wherein the owner was given a liberty to file a fresh representation before the Collector of Central Excise and the Collector was directed to reconsider the matter. Accordingly a fresh representation was made by the owner and on reconsideration, the Collector of Central Excise vide his Order dated 6th May, 1985 held that the confiscation order of seized gold passed on 10.1.1964 was not sustainable. Accordingly he ordered for release of confiscated gold. Since the gold was not returned by the authorities concerned the owner took up the matter again in the High Court where the trial Judge directed the Union of India and its officers either to return to the writ petitioner equivalent quantity of gold seized on 26.4.1963 or to pay the market price of such gold ax on the date of passing of the reconsideration order by the Collector, Central Excise on 6th May, 1985 whereby the order of confiscation was set aside. Thus, from this judgment also it is clear that where the order of confiscation of the seized goods is set aside and goods are not returned to the owner, the Government is under an obligation to pay the market price of such seized gold as on the date of the verdict or judgment.
28. In the instant case it is not in dispute that the invoice price (dated 1.5 1979) of the goods in question (i.e. 58 bales weighing in all (19917.25 Kgs of woollen rags @ 65 Cents per Kg. @ Exchange Rate Rs. 100/- : US Dollar 12) was Rs. 1,05.364.00 and the Bankers of the appellants charged Rs. 1,12,850.25 which includes the bank expenses. It is further not in dispute and is also clear from the judgment of the Supreme Court under reference that on 17th December, 1986 the Court directed waiver of the redemption fine and Mr. Salve, Counsel for the appellant therein agreed to pay the duty demanded when delivery was taken of the goods. It further appears that difficulty arose about the delivery of the goods and Calcutta Port Trust was issued a notice and ultimately the Hon'ble Supreme Court after hearing the respondents remanded the case to the Tribunal with the direction that in case the goods are not finally traceable, the Tribunal would do well to examine and decide what amounts of compensation in lieu of the goods should be payable to the appellants by its Order dated April 19, 1988. Thus in our considered opinion April 19, 1988 is the date of verdict or judgment for the purpose of deciding the amount of compensation as the goods are admittedly not available for delivery to the appellants. In the instant case as detailed out above the appellants had claimed the market value of the goods imported (i.e. 58 bales total weighing 19917.25 Kgs) as prevailing on 30.4.1987 at the rate of 98 Cents per Kg. i.e. to say US dollar 19,518.91 which when convert at the present Exchange Rate (1 dollar : 14.565) comes to Rs. 2,84,283.16. In support of their claim for the market rate prevailing on 30,4.1987 they have filed a copy of the Invoice No. 168 issued by KBSL Exports, Australia in favour of Rajan & Santosh Pvt. Ltd., Ludhiana wherein the rate of woollen Hosiery Rags is shown at the rate of 98 Cents per Kg. In rebutal the department has not filed any evidence but contended itself by drawing the attention of this Tribunal to their said affidavit wherein the appellants had stated the market value of 39 bales weighing 13500 Kgs as Rs 1.35.000/- on 31.3.1987. After considering the entire evidence on record and arguments advanced by the parties we are of the opinion that the appellants are entitled according to the valuation made by them in their affidavit before the Hon'ble Supreme Court on 31.3.1987. So calculated the value of 58 bales weighing 19917.25 Kgs comes to Rs. 1.99.195/- as the current international market value of the goods imported at the time of verdict or judgment of the Supreme Court. The contention of the respondents that the appellants should have taken the delivery of the imported goods on payment of a fine of Rs. 50,000/- according to the adjudication order dated 12.3.1981 passed by the Collector of Customs, Calcutta who adjudicated the case or at any rate should have taken the delivery of the goods on payment of a fine of Rs. 20,0001- as reduced by the Central Board of Customs and Excise on appeal on 25.11.1981 or on 31.7.1984 when this Tribunal upheld the redemption fine of Rs. 20.000/- in appeal and therefore this fact should also be taken into account while estimating the loss, has in our opinion no force because in the facts and circumstances of the case it is not a mitigating circumstance. We under stand that the aforesaid contention was raised on the analogy of Explanation to Section 73 of the Contract Act which provides that "in estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account." This explanation is not applicable to the instant case because Section 73 of the Contract Act is not applicable to it. liven otherwise in the case of Murlidhar v. Harish Chandra the Supreme Court had an occasion to interpret the said Explanation appended to Section 73 and recorded a caution that the rule that the Plaintiff cannot claim to be compensated for loss which was due to his own failure to behave reasonably after the breach must be applied with discretion because the party who is already in wrong by breaking the contract is not entitled to impose new and extra ordinary duties on the aggrieved party. In his work on "Law of Contract" Anson at page 570 (Twenty-fifth Edition) under the sub title "Duty to Mitigate Damage Suffered" after stating that "It follows from the rule that damages are compensatory only that one who has suffered loss from a breach of contract must take any reasonable steps that are available to him to mitigate the extent of the damage caused by the breach. He cannot claim to be compensated by the party in default for loss which is really due not to the breach but to his own failure to behave reasonably after the breach", stated as follows-
...It is a question of fact in each case whether he has acted as a reasonable man might have been expected to act, and he is not compelled to risk his commercial reputation...[See Finlay (James) & Co., Ltd. v. N.V. Kwik Hoo Tong H.M. (1929) I.K.B. 400 or to embark upon complicated litigation [See Pilkington v. Wood (1953) Ch. 770] in order to mitigate his loss.
29. In the instant case the appellants imported woollen rags but the Customs Authorities treated it as a synthetic waste and therefore the Collector of Customs who adjudicated the case confiscated the goods giving an option to clear the goods on payment of a fine of Rs. 50.000/- vide his Order dated 12.3.1981. On appeal the Central Board of Excise and Customs also held that the goods imported were not woollen rags but instead of absolute confiscation directed the mutilation of the imported goods to the satisfaction of the Collector of Customs, Calcutta by the importers at their cost and under Customs supervision so as to render them unfit for use except rags and after payment of appropriate duty and a redemption fine of Rs. 20.000/- as a condition precedent for the release of the goods imported. The said order of the Board reads as follows -
...The Board takes a lenient view and directs that after the goods are mutilated to the satisfaction of Collector of Customs, Calcutta, by the importers at their cost and under Customs supervision so as to render them unfit for use except rags and after payment of appropriate duty, the goods be released on payment of a fine of Rs. 20.000/...
30. On appeal this Tribunal also confirmed the said order of the Board. It is only on appeal before the Hon'ble Supreme Court that the Court waived the fine and directed that the goods be delivered to the appellants on payment of the appropriate duty and since the goods were not traceable the Court further remanded the case with the aforesaid directions. Under these circumstances the behaviour of the appellants in not paying the redemption fine and getting the delivery of the goods imported cannot be a circumstance to mitigate the loss/compensation.
31. As regards interest-The appellants have claimed interest on the market value of the imported goods at the prevailing Bank rate from 14.7.1979 to September 1988 amounting to Rs. 4,67,938.15 and cited the case of Province of W.B. v. Basant Properties Ltd. (supra). In reply it was contended by the respondents that it is a case of compensation/damages and "there can be no damages on damages" in the facts and circumstances of the case.
32. We have considered the submissions. At the outset it may be stated that there is no provision in the Customs Act for payment of any interest to the trader if the goods have been seized and later ordered to be delivered on being found not contravening any provision of law. It is, therefore, clear that in such cases there is no statutory obligation to pay any interest. The only obligation is to return the goods. It may be stated that wherever the Legislature intended that the interest should also be paid alongwith the sale proceeds where the goods had been seized and later sold on being found not contravening any provision of law, such provisions for payment of interest are made in the Act itself. To illustrate, in Essential Commodities Act, 1955, Section 6-C imposes a statutory duty upon the authorities to pay interest. Under Sub-section (2) of Section 6-C, when an order of confiscation passed under Section 6-A is modified or annulled by the State Government in appeal or where in a prosecution instituted for the contravention of the Order in respect of which an order of confiscation has been made under Section 6-A the person concerned is acquitted the authorities shall return the goods seized or pay the sale proceeds of the goods seized together with reasonable interest in case the goods were already sold. There is no such provision as stated above in the Customs Act. In other words, no statutory obligation is cast upon the authorities to pay any inter-jest where the order of confiscation is set aside in appeal and the confiscated goods are not returned. Even under Section 161 of the Contract Act while assessing the amount of compensation the Courts generally never award any interest on the amount of compensation so determined. For, under Section 161 the bailor is entitled to damages for the loss, destruction or deterioration of the goods but not to any consequential damages. The compensation so awarded to a bailor under Section 161 is in the nature of damages awarded to compensate the loss of the goods to him. The Courts would not allow in addition interest on that amount because to do so would be to award damages upon damages which the Courts would generally never do. See 1955 Madh BLJ HCR 400. A Division Bench of the Madhya Pradesh High Court in 1961 MPLJ 1282 also took the similar view and held that the Plaintiff was not entitled to any interest on the price of the cloth bailed. In the case of Province of W.B. v. Basant Properties Ltd. (supra) cited by the learned Counsel for the appellants a Division Bench of the Calcutta High Court held that in requisition proceedings, the Court has ample power to award interest by way of damages on the compensation money although the answer to the question as to whether interest should be awarded in a particular case has also the quantum of such interest would undoubtedly depend on the facts of each individual case and upon the Court's judicial discretion. This case is distinguishable on its own facts. That was a case of compulsory acquisition of immovable property under Defence of India Rules, 1939. Whereas in the instant case we are concerned with the compensation to be awarded for non-delivery of the goods seized. At this stage it would be interesting to note that the same High Court (Calcutta High Court) in the case of S.K. Ray v. Governor-General of India AIR 1949 Cal 591 while dealing with the liability of a bailee under Section 161 held that where a passenger deposits his luggage in the clock room of a railway, and the luggage is lost, then, in the absence of any conditions limiting the liability, the passenger is entitled to the entire value of the goods lost, but he is not, as a rule, entitled to any consequential damages resulting from their loss. Thus, keeping in view the said legal position and the facts and circumstances of the case particularly when we have allowed the market value of the goods imported as prevailing on the date of verdict/judgment we do not think it proper to exercise our discretion to award any interest on the amount of compensation determined by us as above. Thus we reject the said contention.
33. As regards the claim for loss of profits due to Joss in production on account of non-delivery of the goods imported-The appellants had claimed an amount of Rs. 79,669.00 by way of loss in production due to non-receipt of the imported goods calculated on the basis of average profit at the rate of 4% per kg. As aforesaid under Section 161 the bailor is entitled to damages for the loss, destruction or deterioration of the goods but not to any consequential damages, the loss of profits on account of loss in production is not an ordinary consequence of non-delivery. Even under Section 73 of the Contract Act for breach of contract such loss of profits is seldom allowed. Thus, apart from the fact that the said claim is not substantiated by any acceptable evidence on record and the loss of profits, if any, is not an ordinary consequence of non-delivery, we reject the aforesaid claim for loss of profits on account of loss in production due to nondelivery of the imported goods, more particularly when we are awarding the market value of the imported goods as compensation.
34. As regards costs-The appellants had claimed Rs. 15,717.91 as Travelling expenses from Ludhiana to Calcutta and Delhi incurred during the litigation and also Rs. 19,120.00 as legal expenses paid to the Counsels for defending the case. The Supreme Court while directing the tribunal to determine the amount of compensation etc. has left the matter of costs to the discretion of the Tribunal by stating that "costs to be in the discretion of the Tribunal". Under the Civil Law generally the costs follow the event. Sub-section (1) of Section 35 of the Code of Civil Procedure provides that costs shall be in the discretion of the Court and Sub-section (2) of the same Section provides that where the Court directs that any costs shall not follow the event, the Court shall state its reasons in writing. The appellants have not substantiated their claim for travelling expenses and legal expenses by producing any receipt or other connected documents. They have simply filed a chart showing the details of travelling expenses and the amount of fees paid to their respective Advocates, though they have given numbers of few cheques and demand draft through which payments were made to their Advocates. Considering that the goods were imported in 1979 and the appellants succeeded before the Supreme Court only in 1988 i.e. to say after litigating for about 9 years, we think it proper to award Rs. 5.000.00 as costs to the appellants.
35. As regards liability to pay compensation. It was contended by Shri M. ChandrasekhSiran, learned Counsel for the Customs Authorities (respondent No. 1 herein) that the liability to account for the goods in question was of Calcutta Port Trust (respondent No. 2 herein) and if at all any compensation is payable to the appellants it is to be paid by the Calcutta Port Trust and not by the Customs Authorities. In reply, Shri Ranjan Mukherji, learned Counsel for the Calcutta Port Trust submitted that the question of liability of the Customs Authorities (respondent No. 1 herein) to account for the goods in question stands concluded by the Hon'ble Supreme Court itself in its judgment under reference. Elaborating on his arguments he submitted that Hon'ble Mr. Justice B.C. Ray, in his judgment had categorically recorded a finding that Customs Authorities (respondent No. 1) were liable for the loss or damages that has been caused to the appellant by the destruction of the imported goods from their custody and possession. (Pages 9 and 10 of the judgment). He highlighted that the Majority of the Judges also agreed with the said judgment proposed by Hon'ble Mr. Justice B.C. Ray as would appear from the opening paragraph of the judgment (page 1) which reads as follows-
We have had the benefit of reading the judgment proposed by my learned Brother Ray. J. We agree with the conclusion that the respondent No. 1 is liable for the loss or damage to the goods and would like to briefly indicate the reasons for such conclusion.
and further that In view of these provisions in the Act, there can be little scope to disputed that until the goods is cleared for home consumption, the scheme of the Act requires the goods to remain in the hands of the Customs authorities and obviously the statutory liability to account for the goods would be of the authorities under the Act charged with the responsibility of keeping the goods.
36. In his rejoinder Shri M. Chandrasekharan submitted that the judgment under reference should be read as a whole. So read it would be clear from the following observations appearing in the Majority judgment that the Tribunal has to decide about the liability to account for the goods imported or to pay compensation either jointly or singly by both the two respondents i.e. to say the Customs authorities and the Calcutta Port Trust -
19 bales, as alleged, appear to be missing and 39 bales are said to be available. The appellants have contended that the goods has not been properly preserved and parts of some of the bales have been taken out to be made into independent bales. These allegations have not been accepted by the respondent No. 1. Respondent No. 2 has totally denied any liability in the matter. In case it is ultimately found that the Customs authorities by themselves have the total liability to account for the goods or in case their liability in that behalf has to be shared by the Calcutta Port Trust and even though one or both are liable to account for the goods and they fail to do so. in what manner the appellants would in such eventuality be compensated are matters which require factual consideration and would warrant reception of evidence....
37. At one stage it was also argued by the learned Counsels appearing for the parties m all humihty that there is an apparent contradiction in the findings of the Majority judgment.
38. We have considered the submissions made by the parties. At the outset we may state that there is no contradiction in the judgment as apprehended by the learned Counsels for the parties. From the judgment it is clear that affidavits and counter-affidavits were filed by the parties and with the aid of provisions of the Customs Act, Major Port Trusts Act, 1963 and the various Notifications it was argued on behalf of the Customs Authorities that they were not liable to account for the loss of the goods in question. Likewise it was also argued on behalf of the Calcutta Port Trust that they were also not liable. After considering the submissions made by the Counsels and the affidavits and the counter-affidavits on record Hon'ble Mr. Justice B.C. Ray held that the imported goods remained in the Customs area and these were subsequently confiscated by the Collector of Customs and further that the imported goods were not handed over to the custody of the Port Trust and therefore it is the Customs Authorities who are in possession and control of the said imported bales of wollen rags and they cannot shirk their responsibility for the loss and damage of the said goods and they are liable to pay the value of the goods to the appellant as damages in order to re-compensate the appellant. The said observations runs thus-
...It is also clear from the averments made on behalf of respondent No. 2, the Calcutta Port Trust, as stated hereinbefore that the imported goods remained in the Customs area and these were subsequently confiscated by the Collector of Customs. The imported goods were not handed over to the custody of the Port Trust. Therefore it is the Customs authorities who are in possession and control of the said imported bales of woollen rags and they cannot shirk their responsibility for the loss and damage of the said goods and they are liable to pay the value of the goods to the appellant as damages in order to re-compensate the appellant...
and further that ...In the instant case as not a single document has been produced before this Court by the Customs Authorities showing that the goods were handed over to the custody and possession of the Board of Trustees and that the Board issued any receipt for that as required under Section 42 read with Section 43 of the said Act. Therefore, under no circumstances can the Board of Trustees be held responsible for the loss or destruction of the said imported goods. As stated hereinbefore the imported goods were kept unloaded in the customs area and were confiscated and as such the respondent No. 1 is liable for the loss of damages that has been caused to the appellant by the destruction of the imported goods from their custody and possession...
(underlining ours)
39. The Majority of the Judges after considering the provisions of Sections 45, 47, 49, 125 and 126 of the Customs Act also held that the scheme of the Act requires the goods to remain in the hands of the Customs authorities and obviously the statutory liability to account for the goods would be of the authorities under the Act charged with the responsibility of keeping the goods. These observations run thus-
In view of these provisions in the Act, there can be little scope to dispute that until the goods is cleared for home consumption, the scheme of the Act requires the goods to remain in the hands of the Customs authorities and obviously the statutory liability to account for the goods would be of the authorities under the Act charged with the responsibility of keeping the goods.
It further appears from the Majority judgment that same dispute regarding the availability of a part of the goods imported was also raised before the Supreme Court and it was contended by the appellants therein that the goods had not been properly preserved and parts of some of the bales have been taken out to be made into independent bales-which were denied by both the respondents. In these circumstances the Majority held that these matters require factual consideration and would warrant reception of evidence and therefore case was remanded to the Tribunal directing the Tribunal to dispose of the said question after giving reasonable opportunity to both the parties and in case the goods are not finally traceable and the liability to account for the goods is fixed in the hands of one or both of the respondents, the '.tribunal would do well to examine and decide what amount of compensation in lieu of the good should be payable to the appellants leaving the costs in the discreation of the Tribunal.
40. Thus from a reading of the majority decision it is clear that it held that the statutory liability to account for the loss of the goods would be of the authorities under the customs Act charged with the responsibility of keeping the goods and remanded the case to the Tribunal to decide and fix the responsibility of either of the respondent or both of the respondents after receiving the evidence, if any and alter hearing the parties in view of the allegation and counter allegation regarding the availability of the part of the goods imported and the care taken by the concerned authority to preserve the goods imported and from a reading of the Minority decision it is also clear that it not only held that the Customs Authorities are statutorily liable under the Customs Act to account for the loss of goods in question but also held on the evidence available before the Court that not a single document has been produced before the Court by the Customs Authorities showing that the goods were handed over to the custody and possession of the Board of Trustees and that the Board issued any receipt for that as required under Section 42 read with Section 43 of the Major Port Trusts Act, 1963 and therefore the Customs Authorities and not the Board of Trustees were liable for the loss or damages that has been caused to the appellant by the destruction of the imported goods from their custody and possession and directed the appellant to take appropriate proceedings for determination of the damages and for recovery of the same in accordance with law.
41. On remand, we in compliance with the directions given by the Hon'ble Supreme Court gave the repeated opportunities to the parties to produce evidence, if any, to adjudicate the issues involved in the case as directed by the Hon'ble Supreme Court, in compliance both the parties, i.e. to say the appellants and the respondents made it clear that they do not want to adduce any oral evidence and would produce certain documents to support their respective claims. Accordingly the appellants submitted their claim amounting to Rs. 8,66,728.22, which according to the appellants be awarded to them by way of compensation since the goods imported are not available for delivery to them according to the respondents themselves now. Calcutta Port Trust, respondent No. 2 filed the affidavit sworn by one Shri Girindra Bhushan Chakraborty, Commercial Supervisor, Calcutta Port Trust on 2.7.1988 and also the copy of the counter-affidavit alongwith its enclosures sworn by the said deponent on 18.3.1987 and filed before the Hon'ble Supreme Court (which finds reference in the judgment of the Hon'ble Supreme Court under reference) and also a copy of letter dated 12th of November. 1981, addressed to Foreman, Fairlie Warehouse, Calcutta Jetty by O/C, Glive Warehouse and a copy of letter dated 11.10.1966 written by Under Secretary to the Government of India, Ministry of Transport & Aviation. Department of Transport and Shipping alongwith its Annexures addressed to the Chairman, Calcutta Port Commissioners, Calcutta. It is significant to note that despite the several opportunities the respondent No. 1 i.e. to say Collector of Customs did not file any document either to support his case or to rebut the case of the appellants or the respondent No. 2.
42. Shri M. Chandrasekharan, learned Counsel appearing for the respondent No. 1, that is to say Collector of Customs contended that it is admitted by the Calcutta Port Trust in their affidavit sworn by bhri Girindra Bhuson Chakraborty, the Commercial Supervisor, Calcutta Port Trust on 18.3.1987 that 45 bales out of 58 bales landed at Docks in between 18.9.1979 and 18.10.1979 and till 2.1.1980 no step to remove the goods from the Port areas, i.e. from the custody of the Port Trust was taken. This admission on the part of the Port Trust Authority is sufficient to prove that the imported goods were taken possession of by the Port Trust and were in their custody. He further submitted that from a plain reading of Section 45 of the Customs Act, 1962 it is clear that the proper authority and the proper officer mentioned in that Section obviously means the Port Authority. To butress his submission he cited the case of India Steam Ship Co. Ltd. v. U.O.I. wherein interpreting Section 45 of the Customs Act, 1962 it was held by a Single Judge of the Delhi High Court that the said Section provides that "all imported goods unloaded in a Customs area shall remain in the custody of such person as may be approved by the Collector of Customs until they are cleared for home consumption and a complete record of the goods has to be maintained by the said person. The removal can be permitted in accordance with the permission in writing of the proper officer. The proper authority and the proper officer obviously means the Port Authority in the circumstances of the present case." He further submitted that once the Port Authority has taken charge of the goods for the purpose of performing the service or services, no liability for any loss or damage which may occur to them shall attach to the Customs Authority and the Port Authority shall be liable for the loss, destruction or deterioration of goods of which it has taken charge. He emphasised that under Section 43 of the Major Port Trusts Act, 1963 the position of Port Trust Authority is that of a bailee under Sections 151, 152 and 161 of the Indian Contract Act, 1872, omitting the words "in the absence of any special contract" in Section 152 of that Act, But in the instant case the Port Trust Authority did not take as much care of the goods as a man of ordinary prudence would, under the similar circumstances have taken of his own goods of the same bulk, quality or value as of the goods lost. In this connection, he invited our attention to paras 3 and 4 of the affidavit dated 18.3.1987 filed by the Calcutta Port Trust wherein Shri Girindra Bhuson Chakraborty, Commercial Supervisor, Calcutta Port Trust had, inter alia, stated that ''39 bales have been lying since its landing at different points of Docks in a very deteriorated condition" and "9 bales which were lying at 8 K.P.D. were pilfered for which a Police Report No. C8/127 dt. 6.9.1980 was made. It is a fact that due to long storage the condition of the bales was deteriorated and are lying in a loose and damage condition". After inviting our attention as aforesaid Shri M. Chandrasekharan submitted that this admission itself proves that the Port Authorities were negligent and did not take as much care of the goods as a man of ordinary prudence would, under the similar circumstances, have taken of its own goods of the same bulk, quality or value as of the goods deteriorated or lost. In aid of his submission he cited the case of Shipping Corporation of India v. U.O.I. AIR 1976 Andh. Pra. 251 wherein it was held by a Division Bench of the Andhra Pradesh High Court that the Board, i.e. to say Port Trust Authority is responsible for loss which may have occurred to the goods in their custody. He further submitted that it was the duty of the Port Trust Authority to maintain tally at the time of lauding of the cargo with appropriate marks in respect of cargo without any remarks or numbers and to furnish a copy of such tally sheet to the Customs Officer at the earliest which the Port Trust Authorities have failed to do so with the result any out turn report prepared and forwarded by them long thereafter to the Customs Authorities (though the forwarding of such out turn report is not established on record) is of no consequence. To support his contention he cited the case of Shaw Wallace & Co. v. Asstt. Collector wherein while laying down certain guidelines it was held by a Single Judge of the Bombay High Court that the Port Trust Authority shall maintain tally at the time of landing of the cargo and a copy of the tally sheet shall be furnished to the Customs Officer at the earliest and the Customs Authorities shall ascertain whether any cargo was short landed on the basis of the copy of the tally sheets furnished by the Port Trust Authority and not on the basis of any out turn report forwarded by the Port Trust Authority long thereafter. In this background he submitted that the Port Trust Authorities are themselves liable for the alleged short landing of 13 bales since they have failed to prove that any such tally sheet was prepared at the time of landing of the cargo or it was ever forwarded to the Customs Authorities. Lastly, Shri M, Chandrasekharan, learned Counsel for the appellants submitted that in any case the Customs Authorities cannot be held to be liable for the loss of the imported goods which may be due to any mis-feasance mal-feasance or non-feasance of its employee and relied upon the case of Trustees, Port of Bombay v. Premier Automobiles Ltd. wherein it was held that the Board of Trustees were not liable for the damage caused to the goods due to the acts of its employees appointed under the Bombay Port Trust Act, 1879.
43. On the other hand it was contended by Shri Rajan Mukherjee learned Counsel for the Calcutta Port Trust-respondent No 2 herein that only 45 bales were landed at Docks in between 18.9.1979 and 18.10.1979 and the entire goods were confiscated by the Collector of Customs vide his adjudication Order dated 12.3.1981. Consequently, on confiscation the subject goods vested in the Central Government under Section 126 of the Customs Act, 1962 and the Port Authority lost all control over the said imported goods. He stressed that on confiscation the Port Authority confiscating the goods to remove the same to the allotted Warehouses Elaborating on his submissions he submitted that after confiscation of the subject goods on 12,3.1981 only 6 bales were removed by the Customs Authorities from 1 K.P.D. to their confiscated goods godown on 8.8.1981 and the remaining 39 bales were lying since their landing at different points of Docks and since on confiscation of the subject goods the same vest in the Central Government the Port Authority could not give delivery to anyone nor could dispose of the same by way of sale under Sections 61 & 62 of the Major Port Trusts Act, 1963. He further submitted that since the Customs Authorities failed to remove the subject goods on confiscation on 12.3.1981 despite requests 9 bales which were lying at 8 K.P.D, were pilfered for which a Police report dated 6.9. J980 was made and due to long storage the condition of the bales deteriorated. In a nutshell, he submitted that on confiscation on 12.3.1981 the Port Trust Authority lost their control over the subject goods and the same remained lying in the Port premises at the sole risk of the Customs Authorities and there was absolutely no negligence or failure to take reasonable care of the goods on the part of the Calcutta Port Trust. Without prejudice to these contentions Shri Rajan Mukherjee, learned Counsel also submitted that as no receipt as mentioned in Sub-section (2) of Section 42 of the Major Port Trusts Act, 1963 was ever given by the Board, /.«. to say the Calcutta Port Trust no responsibility for loss of subject goods can be fastened upon the Calcutta Port Trust in view of the Proviso to Sub-section (1) of Section 43 of the Major Port Trusts Act. He further submitted that in the absence of any statutory notice under Section 120 of the Major Port Trusts Act, the Calcutta Port Trust cannot be held liable for any loss and also relied upon the case of Trustees, Port of Bombay v. Premier Automobiles Ltd. (supra) to show that the Calcutta Port Trust was not liable for the damages which might have occurred due to the acts of its employees.
44. Before adverting to the submissions advanced by the learned Counsel for the respondents it would be convenient to state the relevant provisions of the Customs Act and the Major Port Trusts Act, 1963.
45. Chapter VII of the Customs Act deals with the clearance of Imported goods and Export Goods. Sections 45 to 49 under the Chapter deal with the Clearance of Imported Goods. Section 47 makes provision for clearance of goods for home consumption and provides that where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption. Section 48 lays down the procedure in case of goods not cleared, warehoused or transhipped within 45 days after unloading. Section 49 makes provision for storage of imported goods in Warehouse pending clearance but such storage is permissible only when the importer applies for it. Chapter XIV of the Customs Act provides for confiscation of goods and conveyances and imposition of penalties. Section 125 provides that "Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods [or, where such owner is not known, the person from whose possession or custody such goods have been seized] an option to pay in lieu of confiscation, such fine as the said officer thinks fit..." When such option is not given or even if such option is given it is not availed of under Section 126 the goods are confiscated and upon such confiscation such goods vest in the Central Government and the officer adjudging confiscation takes the whole possession of the confiscated goods. The said Section 126 runs as follows-
126. On confiscation, property to vest in Central Government.-
(1) When any goods are confiscated under this Act, such goods shall thereupon vest in the Central Government.
(2) The officer adjudging confiscation shall take and hold possession of the confiscated goods.
46. Besides the aforesaid provisions we also find Section 141 under Chapter XVII of the Customs Act which provides that all conveyances and goods in a Customs area shall, for the purpose af enforcing the provisions of the Act, be subject to the control of officers of the Customs.
47. The Major Port Trusts Act 1963 was enacted by the Parliament for the constitution of port authorities for certain major ports in India & to vest the administration control and management of such ports in such authorities and for matters connected therewith. The Act came into force from February 29. 1964. Initially, the Act applied to Major Ports of Cochin, Kandla and Visakhapatnam and the provisions of the Act were made applicable to the Port of Bombay, Madras and Calcutta only from February 1, 1975. Section 3 of this Act provides for constitution of Board of Trustees and Section 5 provides that every Board constituted under the Act shall be a body corporate having perpetual succession and a common seal with power to acquire, hold or dispose of the property. Section 33 of the Act enables the Board to enter into or perform any contract necessary tor the purpose of its functions under the Act, while Section 34 of the Act lays down the mode of executing such contracts on behalf of the Board. Chapter V of the Act deals with works and services to be provided at Ports and Section 42 deals with the performance of the services by the Board or other person authorised by the Board. The services include receiving, removing, shifting, transporting, storing or delivering goods brought within the Board's premises. Sub-section (2) of the same Section provides that a Board may, if so requested by the owner, take charge of the goods for the purpose of performing the service or services and shall give a receipt in such a form as Board may specify. Section 43 of the Act speaks of the responsibility of the Board for the loss, destruction or deterioration of the goods of which it has taken charge and lays down that the responsibility of the Board would be that of a bailee under sections 151, 152 and 161 of the Indian Contract Act 1872, omitting the words "in the absence of any special contract" in Section 152 of that Act. However, it carves down an exception and provides that no responsibility under this section shall attach to the Board-(a) until a receipt mentioned in Sub-section (2) of Section 42 is given by the Board ; and (b) after the expiry of such period as may be prescribed by regulations from the date of taking charge of such goods by the Board.
48. Section 120 of the Act deals with limitation of proceedings in respect of things done under the Act and provides that no suit or other proceedings shall be commenced against a Board or any member or employee thereof for anything done, or purporting to have been done, in pursuance of this Act until the expiration of one month after notice in writing has been given to the Board or him stating the cause of action, or after six months after the accrual of the cause of action.
49. With this background, it would now be convenient to consider the contentions advanced by the learned Counsel for the parties. After interpreting Sections 45, 47, 49, 125 and 126 of the Customs Act, as stated above, the majority of judges have held in the order under reference that in view of these provisions in the Act, there can be little scope to dispute that until the goods are cleared for home consumption, the scheme of the Act requires the goods to remain in the hands of the Customs authorities and obviously the statutory liability to account for the goods would be of the authorities under Act charged with the responsibility of keeping the goods. Even after remand, Shri M. Chandershekharan, the learned Counsel for the Customs authorities-respondent No. 1-did not produce any evidence either orally or documentary to show that the customs authorities charged with the responsibility of keeping the goods under the Customs Act were, in no way, liable to account for the subject goods in the present case except that Section 45 when it speaks of proper officer or proper authority, it means the Port Authority as held by a Single Judge of the Delhi High Court in the case of India Steamship Co. Lid. v. Union of India (supra).
50. We have considered the submissions. In the case of India Steamship Co, Ltd., (supra) the Delhi High Court in the facts and circumstances of that case held that the proper authority and the proper officer obviously means the Port Authority Section 45 of the Customs Act provides that save as otherwise provided in any law for the time being in force, all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Collector of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII, and the person having custody of any imported goods in a customs area, whether under the provisions of this Section or under any law for the time being in force to keep a record of such goods and send a copy thereof to the proper officer. Sub-section (34) of Section 2 of the Customs Act defines "proper officer" in relation to any function to be performed under the Customs Act, means the officer of Customs who is assigned those functions by the board or the Collector of Customs. Section 2(6) defines the Board and says that 'Board* means the Central Board of Excise and Customs constituted under the Central Board of Revenue Act, 1963.
51. The customs authorities have not produced any evidence before us to show that the Calcutta Port Trust took charge of the subject goods for the purpose of peforming the service or services mentioned in Sub-section (1) of Section 42 of the Major Port Trusts Act, 1963 or the Board (Calcutta Port) issued or gave any receipt for that purpose as required under Sub-section (2) of Section 42 of the Act. On the other hand, we find from the adjudication order dated 12.3.1981 that on the arrival of the subject goods, samples were drawn from the consignment for test purposes and since on testing the imported woollen rags were found to be acrylic rags, a show cause notice dated 2.1.1980 was issued to the State Trading Corporation with a copy to the appellants and ultimately the subject goods were confiscated by the Collector of Customs by his order dated 12.3.1981.
52. Section 141 of the Customs Act expressly provides that all conveyances and goods in a customs area shall, for the purpose of enforcing the provisions of the Customs Act, be subject to the control of officers of the customs. Under these circumstances, when the subject goods remained in the customs area and were subsequently confiscated by the Collector of Customs and in the absence of any evidence on record to show that the subject goods were handed over to the custody of the Port Trust according to law it can safely be concluded that the Customs authorities were in possession and control of the subject goods and, therefore, liable to account for the subject goods or to pay damages in case of failure to deliver the subject goods to the appellants.
53. The contention of Shri M. Chandershekharan, learned Counsel for the Customs Authority that since the Calcutta Port Trust have admitted the landing of at least 45 bales of woollen rags at the Dock and the same were in' their custody and possession, their position was that of a bailee and therefore, they were bound to take as much care of the goods as a man of ordinary prudence would, under the similar circumstances have taken of his own goods of the same bulk, quality or value as of the goods lost and since they have failed to take the care required under sections 151, 152 and 161 of the Indian Contract Act, the Calcutta Port Trust is liable for the loss of the goods in question, has in our considered opinion no force.
54. From the affidavit dated 18.3.1987 filed by the Commercial Supervisor of the Calcutta Port Trust (which has not been rebutted by any acceptable evidence by the respondent No. 1), we find that the subject goods landed at the Dock in Calcutta in between 18.9.1979 and 18.10.1979. From the order of confiscation dated 12.3.1981 passed by the Collector of Customs, we find that on arrival of the goods samples were drawn for the purpose of testing and a show cause notice dated 2.1.1980 was issued and ultimately the subject goods were confiscated. From the said affidavit filed by the Calcutta Port Trust, we also find that till 2.1.1980 when the show cause notice was issued, no steps were taken by the Customs authorities to remove the subject goods from the port area. From the said affidavit, we further find that even after passing of the confiscation order by the Collector of Customs on 12,3.1981, the confiscating authorities did not remove the subject goods and it is only on 8.8, 1981 that the Collector of Customs removed only 6 bales from 1 KPD to their confiscated goods godown From the said affidavit, we also find that at no stage the Collector of Customs took any step to remove the subject goods from the port except with respect to six bales as stated above. Thus, under these circumstances, the questions that arise for our consideration are-(i) whether apart from the Proviso to Sub-section (1) of Section 43 read with Section 42(2) of the Major Port Trusts Act, 1963, the Calcutta Port Trust failed to take as much care of the goods as a man of ordinary prudence would, under the similar circumstances, have taken of his own goods of the same bulk quality or value as of the goods lost, as alleged by the respondent No. 1 and (ii) whether the absence of any receipt mentioned in Sub-section (2) of Section 42 absolves the Calcutta Port Trust of their responsibility for the loss of the subject goods.
55. As regards question No. 1, it was contended by the Customs authorities that the Calcutta Port Trust failed to take as much care of the goods as a man of ordinary prudence would have under the similar circumstances, taken of his own goods of the same bulk, quality and value as of the goods lost. This allegation was refuted by the Calcutta Port Trust. Before we decide this question, it would be advantageous to advert to the legal position as regards the responsibility of a bailee under sections 151, 152 and 161 of the Contract Act. It is well settled that when goods entrusted to a bailee are lost or damaged, there is the initial presumption of negligence or failure to take reasonable care of the goods on the part of the bailee ; though such presumption may be rebutted by the bailee. To escape the liability for the loss or damage, onus of proof is on the bailee that he had taken necessary precautions and care required under the law. If the bailee places before the Court evidence to show that he had taken reasonable care to avoid damage which is reasonably foreseeable or had taken all reasonable precautions to obviate risks which may be reasonably apprehended, he may be absolved of his responsibility. See Trustees of the Port of Madras v. Home Insurance Co. Ltd. and Cochin Port Trust v. Associated Cotton Traders Ltd. .
56. In the instant case, except a bald statement in the affidavit dated 18.3.1987 that nine bales which were lying at 8 KPD were pilfered for which a police report dated 6.9.1980 was made and that it is a fact that due to long storage, the condition of the bales were deteriorated and are lying in a damaged condition, the Calcutta Port had not produced any evidence Even they have not produced a copy of the said police report dated 6 9 1980 One does not even know the contents of the said police report. The circumstances under which the said nine bales were pilfered as alleged by the Port Authorities are also not on record, it was nobody's case that the goods when imported were in a deteriorated and damaged condition. In these circumstances, we have no hesitation in holding that the Calcutta Port Trust had failed to prove that they had taken reasonable precaution against damage or loss of goods. The Calcutta Port Trust had failed to rebut the initial presumption of negligence. Therefore, the Calcutta Port Trust cannot be absolved from its liability to meet the claim for damages if otherwise permissible under law.
57. As regards second question, as to whether the absence of any receipt mentioned in Sub-section (2) of Section 42 read with Section 43 of the Major Port Trusts Act, 1963 absolves the Port authorities from their responsibility of bailee or liability to pay the compensation, it was contended by Shri Rajan Mukherjee, the learned Counsel for the Calcutta Port Trust, that the Board of Trustees of the Calcutta Port Trust issues or give receipt under Sub-section (2) of Section 42 of the Major Port Trusts Act, 1963 not by way of an evidence of the agreement between the patties but only for the purposes of enforcement of liability as provided under Section 43 of the Major Port Trusts Act. On the other hand, it was argued by Shri M. Chandershekharan appearing for the Customs Authorities that once the factum of actual delivery or possession of the goods at least of 45 bales in the instant case, is admitted by the Port Authority, the basic liability of the Calcutta Port Trust to account for the goods begins. We have considered the submissions and find much force in the contention raised by Shri Rajan Mukherjee, the learned Counsel for the Calcutta Port Trust. It is true that under the Contract Act, the responsibility of a bailee to take as much care of the goods as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value as the goods bailed begins from the time the goods are entrusted to him but in the instant case, we are not concerned with the common law or the provisions of bailment contained in the Contract Act nor it would be permissible for us to travel beyond the provisions of the Major Port Trusts Act. 1963. For, the Major Port Trusts Act, 1963, is a complete code in itself and the comprehensive scheme provided under Chapter V for "Works and Services to be provided at ports", excludes the provisions of other statutes. Sections 42 and 43 find place under the said Chapter. For convenience, sections 42 and 43 of the Major Port Trusts Act, so far as material for the controversy in hand, may be extracted as below:
42-Performance of services by Board or other person-(I) A Board shall have power to undertake the following services:
(a) x x x x x x x
(b) receiving, removing, shifting, transporting, storing or delivering goods brought within the Board's premises ;
(c) x x x x x x x
(d) x x x x x x x
(e) x x x x x x x (2) A Board may, if so requested by the owner, take charge of the goods for the purpose of performing the service or services and shall give a receipt in such form as the Board may specify." (3) x x x x x x x (4) x x x x x x x (5) x x x x x x x (6) x x x x x x x (7) x x x x x x x 43-Responsibility of Board for loss, etc, of goods-(1) Subject to the provisions of this Act, the responsibility of any Board for the loss, destruction or deterioration of goods of which it has taken charge shall-
(i) in the case of goods received for carriage by railway, be governed by the provisions of the Indian Railways Act, 1890 ; and
(ii) in other cases, be that of a bailee under sections 151, 152 and 161 of the Indian Contract Act, 1872, omitting the words "in the absence of any special contract" in Section 152 of that Act:
Provided that no responsibility under this section shall attach to the Board-
(a) until a receipt mentioned in Sub-section (2) of Section 42 is given by the Board ; and
(b) after the expiry of such period as may be prescribed by regulations from the date of taking charge of such goods by the Board. (2) x x x x x x x
58. From a close reading of the aforesaid provisions it is clear that the responsibility of the Board for loss, etc. of the goods arises only after a receipt mentioned in Sub-section (2) of Section 42 is given by the Board. In other words, under the Proviso to Sub-section (1) of Section 43, responsibility for the loss, destruction or deterioration of the goods bailed attaches to the Board only when a receipt mentioned in Sub-section (2) of Section 42 is given by the Board.
59. In the instant case Customs Authorities have not produced any receipt as required under Sub-section (2) of Section 42 of the Major Port Trusts Act. The contention of the learned Counsel for the Customs Authorities that apart from the fact that no receipt as required under Sub-section (2) of Section 42 of the Act was given the liability to account for the subject goods or to pay the compensation accrued to the Calcutta Port Trust the moment they admitted that at least 45 bales landed at the Dock and some of the bales were pilfered from their godown, at the first blush appears to be attractive but on a careful consideration of the matter we reject the said contention. Under Common Law, in case of bailment an agreement or concluded contract can be spelt out from the actual entrustment of the goods bailed to the bailee but under the Major Port Trusts Act, 1963 no responsibility as that of a bailee can be fastened on the Calcutta Port Trust for the loss, destruction or deterioration of goods bailed in the absence of any receipt mentioned in Sub-section (2) of Section 42 of the Act. In the instant case the Calcutta Port Trust had produced a form of receipt which is issued by the Board under Sub-section (2) of Section 42 of the Act. The said receipt reads as below:
FORM (See Regulation 3) CALCUTTA PORT TRUST Part I : Receipt under Section 42(2) of the Major Port Trusts Act, 1963 (38 of 1963).
Receipt for Import Cargo Receipt No. ...
1st
Landed during 2nd shift of the...day of...
3rd
19. from the...
(name of vessel)
By the Board of Trustees for the Port of Calcutta the following packages, Contents and state of the contents unknown.
--------------------------------------------------------------------------------
Marks Number of packages (Total Defective packages
Description -------------------- number and their
packages unnumbered of condition and
to be stroke tallied packages number
(five in a division)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total number of packages to be writing in figures and words.
Shed Clerk Tally Supervisor Docks Manager/Supdt. J & W ----------- ------------------ ---------------------------- Words not applicable to be scored out.
60. The form of the receipt, we are informed at the BAR, is prepared in pursuance of the regulations made by the Calcutta Port Trust (it would also appear from the form itself). A perusal of this receipt would clearly establish that the receipt is not an agreement between the parties to undertake the services but is merely an acknowledgment of the receipt of the goods by the Board. It is impossible to spell out any agreement or concluded contract from this receipt to hold that the bailment is a contractual one and the provisions relating to a bailee as contained in the Contract Act are attracted. Another aspect of the matter is that the receipt is issued by the Board not as an evidence of the agreement between the parties but only for the purposes of enforcement of liability as provided under Section 43 of the Act. Section 43 provides that the responsibility of the Board for loss, destruction or deterioration of the goods, of which it has taken charge, shall be that of the bailee under Sections 151, 152 and 161 of the Contract Act. 1»72, omitting the words "in the absence of any special contract" in Section 152 of the Contract Act. It further provides that no responsibility shall attach to the Board until a receipt mentioned in Sub-section (2) of Section 42 of the Act is given by the Board. It is thus obvious from these provisions that the receipt under Sub-section (2) of Section 42 issued by the Board and secured by the owner is for enforcement of the liability under Section 43(1) of the Act and not as evidence of any agreement or contract.
61. In view of the above, the Calcutta Port Trust cannot be held liable for compensation nor the Customs Authorities can legally ask the Calcutta Port Trust to share the liability in that behalf at least with respect to 45 bales which were landed at the Dock as admitted by them (Port Authority). The case of Shipping Corporation of India v. Union of India (supra), cited at the Bar, does not help the Customs Authorities because in that case it was established that the receipt as required under Section 42(2) of the Major Port Trusts Act was given by the Board and on this established fact it was held that the Board was responsible for the loss of the goods from the moment the receipt was given.
62. At one stage, it was also argued by the learned Counsel for the Calcutta Port Trust that in view of Proviso (b) to Sub-section (1) of Section 43 of the Act no responsibility attaches to the Calcutta Port Trust after the expiry of such period i.e. 7 clear working days in the present case as per Notification No. G.S.R. 32F dated 1.2.1975 issued by the Government of India, Ministry of Shipping and Transport in exercise of power under Section 126 read with sections 42 and 43 of the Major Port Trusts Act, 1963, from the date of taking charge of such goods by the Board. In our opinion it is not necessary to delve upon this contention further in view of our findings that no liability attached to the Calcutta Port Trust as no receipt as required under Sub-section (2) of Section 42 of the Act was issued. However, to complete the record we may state [that in the case of Shipping Corporation of India v. Union of India (supra) cited at the Bar a similar contention was raised but it was repelled. Likewise, the contention of the learned Counsel of the Calcutta Port Trust that no statutory notice was issued as required under Section 120 of the Major Port Trusts Act does not require determination in the present case. However, it may be stated that here we are carrying out the directions given by the Supreme Court as stated above and therefore, no question of any notice arises in the present case.
63. The other common contention raised by the learned Counsels for [he respondents that neither the Customs Authorities nor the Calcutta Port Trust can be held liable for the loss of subject goods which might have been caused on account the act of their employees also cannot be accepted. In the instant case the Customs Authorities have not pleaded that by reason of the tortuous act of any government servant the subject goods were lost. Likewise, the Calcutta Port Trust has also not pleaded that by reason of the tortuous act of its employee the subject goods were lost except a bald statement in the affidavit that nine bales were pilfered-which we have rejected for want of evidence on record. Thus, this plea is not available to either of the respondents in the present case. Besides, under some what similar circumstances, when the seized and confiscated goods were not returned to the owner even though when the order confiscating the seized goods under Junagadh State Sea Customs Act (S.Y. 1998) was set aside by the Revenue Tribunal the Supreme Court in the case of State of Gujarat v. Memon Mohd. (supra) held that even if the Government cannot be said to be in the position of a bailee, it was in any case bound to return the said property by reason of its statutory obligation or to pay its value if it had disabled itself from returning it neither by its own Act or by any act of its agents or servants. In these circumstances, it is difficult to appreciate how the contention that the State Government is not liable for any tortuous act of its servant can possibly arise. The case of Trustees. Port of Bombay v. Premier Automobiles Ltd. (supra) decided by the Supreme Court and cited at the Bar is also distinguishable on the facts of that case inasmuch as in that case their Lordships were concerned with interpretation of Section 87 of the Bombay Port Trusts Act, 1879. The said section as existed at the material time reads as follows-
87. No suit or other proceeding shall be commenced against any person for any thing done, or purporting to have been done, in pursuance of this Act, without giving to such person one month's previous notice in writing of the intended suit or other proceeding, and of the cause thereof, nor after six months from the accrual of the cause of such suit or other proceeding.
The Board shall not be responsible for any misfeasance, malfeasance or non-feasance of any employee appointed under this Act.
(Emphasis supplied) Interpreting the aforesaid section their Lordships held that the Board was not liable for any damages which might have been caused on account of misfeasance, malfeasance or non-feasance of its employees appointed under the Bombay Port Trust Act in view of the Proviso to Section 87. The said Bombay Port Trust Act of 1879 now stands repealed after the passing of the Major Port Trusts Act, 1963, Section 120 of the Major Port Trusts Act, which corresponds to Section 87 of the Bombay Port Trust Act with certain modifications does not have such a Proviso in Section 120 of the Act so as to exonerate the Board from its liability for any misfeasance, malfeasance or non-feasance of its employee appointed under the Act, The said Section 120 is reproduced below for ready reference-
120- Limitation of proceedings in respect of things done under the Act-No suit or other proceeding shall be commenced against a Board or any member or employee thereof for anything done, or purporting to have been done, in pursuance of this Act until the expiration of one month after notice in writing has been given to the Board or him stating the cause of action, or after six months after the accrual of the cause of action.
Likewise Section 155 of the Customs Act, 1962 does not contain such a Proviso exonerating the Central Government from its liability for any misfeasance, malfeasance or non-feasance of its employee appointed under the Act. The said Section 155 is also reproduced below for ready reference-
155. Protection of action, taken under the Act-(1) No suit, prosecution or other legal proceeding shall lie against the Central Government or any officer of the Government or a local authority for anything which is done, or intended to be done in good faith, in pursuance of this Act or the rules or regulations.
(2) No proceeding other than a suit shall be commenced against the Central Government or any officer of the Government or a local authority for anything purporting to be done in pursuance of this Act without giving the Central Government or such officer a month's previous notice in writing of the intended proceeding and of the cause thereof, or after the expiration of three months from the accrual of such cause.
64. Thus we reject the aforesaid contention.
Conclusion-
65. In the result, we hold that the Customs Authorities by themselves have the total liability to account for the goods and in no case their liability in that behalf has to be shared by the Calcutta Port Trust and since both the respondents have admitted that the subject goods are not traceable for delivery, we, in accordance with our findings recorded above direct the Customs Authorities (respondent No. 1 herein) to pay Rs. 1,99.193.00 as the current international market value of the subject goods and Rs. 5,000.00 as costs total Rs. 2,04,195.00 to the appellants in lieu of imported goods within three months from the date of the receipt of the order. In default to pay within the given time, the respondent No. 1 would also pay interest at the rate of 12% per annum on the said amount from the date of receipt of this order till the date of payment.