Bombay High Court
Gansons Limited And Ors. vs Union Of India (Uoi) And Collector Of ... on 24 January, 1990
Equivalent citations: 1990(31)ECR255(BOMBAY)
JUDGMENT D.N. Mehta, J.
1. The Petitioners herein have prayed in this Writ Petition for the issue of a writ of certiorari for quashing the order dated 28.7.1986 bearing No. REM/ DT-RR/G/3850 issued by Respondent No. 4, annexed as Exhibit 'M' to the Writ Petition. The Petitioners further prayed for a direction against Respondent No. 4 to withdraw or cancel the said order dated 28.7.1986 and to honour the detention certificate issued by Respondent No. 2 for the period from 1.6.1985 to 9.12.1985 in full, and to refund to the Petitioners an amount of Rs. 2,63,979-20 together with interest thereon at 18 per cent per annum, paid by the Petitioners to Respondent No, 4. In the alternative, the Petitioners prayed that in the event of Respondent No. 4 not being able to remit or refund full amount of demurrage charges under their rules, then Respondent Nos. 1, 2 and 3 be ordered and directed to reimburse and indemnify the Petitioners with regard to the balance of the amount together with interest at the rate of 18 per cent per annum,
2. Before I deal with the submissions made by Shri Mehta learned Counsel on behalf of the Petitioners, Shri Bulchandani, the learned Government Pleader on behalf of Respondent Nos. 1, 2 and 3; the Union of India and the Customs Authorities, and Shri Makhija the learned Advocate on behalf of Respondent No. 4, it will be pertinent to set out a few facts:
3. Sometime in March 1985. the Petitioners imported stainless steel hot-rolled plates under four REP licences issued to manufacturers and exporters under April-March 1985 Policy To that end, the Petitioners opened Letters of Credit in favour of foreign suppliers. Towards the end of March 1985, the Petitioners received intimation that the foreign suppliers had shipped the goods. On 20.5.1985, the Petitioners filed the Bill of Entry For Home Consumption together with licences with the Customs Authorities for the purpose of clearance of the goods from the Customs Authorities. The Customs Authorities, however, refused to grant permission to clear the goods on the ground that the licences produced by the Petitioners were not valid to cover the import of the said goods. The Petitioners thereafter produced another licence under AM-1984 Policy which, according to the Petitioners, was valid and covered the import of the said goods. The Customs Authorities, however, refused to grant permission to clear the goods even thereafter.
4. Sometime in June 1985, the Petitioners addressed a letter dated 14.6.1985 to the Assistant Collector of Customs regarding the waiver of show cause notice and requesting for a personal hearing, fly his letter dated 8.8.1985, the Chief Controller of Imports and Exports clarified the position that the licences held by the Petitioners were valid for importing the goods lying with the Customs Authorities. The Petitioners then approached the Customs Authorities for clearance, hut the same was not granted. On 9.9.1985, the Petitioners were served with an adjudication order dated 1.8 1985 passed by the Customs Authorities confiscating the said goods and giving an opportunity to the Petitioners to clear the goods on payment of a redemption fine of Rs. 3,00,000/-.
5. In November 1985, the Petitioners approached this Court and filed Writ Petition No. 2186 of 1985 against the Customs Authorities impugning the validity of the adjudication order dated 1.8.1985 and praying for clearance of the said goods or issuance of a detention certificate.
6. The High Court, by its order dated 7.11.1985, made the rule absolute in terms of prayers (a) and (b) setting aside the said impugned order of adjudication and directing the Customs Authorities to grant clearance of goods and to issue the detention certificate.
7. The Petitioners thereafter addressed a letter to Respondent No. 4, the Bombay Port Trust, hereinafter referred to as the "B.P.T.", to permit the Petitioners to clear the goods without payment of demurrage charges. Respondent No. 4, the B.P.T., by their letter dated 29.11.1985, called upon the Petitioners to forward certain documents.
8. On 9.12.1985, the Customs Authorities issued a detention certificate certifying that the goods had been held up on account of bona fide import trade formalities (I.T.C formalities) and the detention certificate was issued pursuant to the directions of the High Court for the period from 1.6.1985 to 9.12.1985
9. On 23.12.1985, the Petitioners paid the Customs duty on the said goods. The Petitioners, by their letter dated 26.12.1985 addressed to Respondent No. 4, furnished the documents required by the B.P.T. by their letter dated 29 11.1985.
10. The Petitioners thereafter addressed a letter dated 30.12.1985 to the Chairman of the B.P.T., Respondent No. 4, requesting for remission of detention charges. Respondent No. 4, requesting for remission of detention charges Respondent No. 4, however, denied the request.
11. On 10.1.1986, the Petitioners paid a sum of Rs. 2,63,979-20 Ps. as demurrage charges to Respondent No. 4 under protest as they wanted urgent clearance of the goods.
12. The Petitioners by their letter dated 13.1.19S6 requested the B.P.T. Authorities for remission and/or refund of the demurrage charges.
13. On 26.6.1986, the Petitioners by their Advocate's letter to the B.P.T., Respondent No. 4, claimed remission of 80 per cent under the B.P.T. Rules. The B P.T. Authorities, by their letter dated 28.7.1986 rejected the Petitioners' application for remission. The Petitioners have impugned this letter in this writ Petition,
14. In December 1986, the Petitioners filed the present Writ Petition and the same was admitted on 10.12.1986.
15. On the above facts, Shri Mehta, learned Counsel appearing on behalf of the Petitioners, has urged the following submissions:
16. Shri Mehta, firstly, urged that the goods had been detained by the Customs Authorities on a wrong assumption that the licences produced by the Petitioners did not adequately cover the imported goods. Shri Mehta stated that the Petitioners ought not to be made to suffer the demurrage charges, for the error committed by Respondent No. 4.
17. The second submission made by Shri Mehta was that under the policy laid down by the B.P.T , Respondent No. 4, the B.P.T, Authorities could not deny the Petitioners' prayer for remission to the extent of 80 per cent for a period of 150 days when it was held that the licences, which were produced by the Petitioners, were valid and adequate and further when the Court had directed the Customs Authorities to issue the detention certificate,
18. The third submission made by Shri Mehta was that alternatively if the B.P.T. Authorities, Respondent No. 4, were held to be not accountable for refunding or remitting the demurrage charges, then Respondent Nos. 2 and 3, the Customs Authorities, ought to be called upon to make good the demurrage charges for the entire period.
19. Lastly Shri Mehta submitted that the order passed by the B.P.T. Authorities, Respondent Mo. 4, dated 28,7.1986 refusing the request for remission of demurrage charges was an invalid and illegal order for the reason (a) that it did not assign any reason for the conclusion arrived at by the B.P.T, Authorities, and (b) that the Petitioners' application tor a personal hearing was not considered and no hearing was afforded to the Petitioners.
20. Now, it is pertinent to set out at this stage the provisions of Section 53 of the Major Port Trusts Act, 1963 (Act 38 of 1963),
53. A Board may, in special cases and for reasons to be recorded in writing, exempt either wholly or partially any goods or vessels or class of goods or vessels from the payment of any rate or of any charge leviable in respect thereof according to any scale in force under this Act or remit the whole or any portion of such rate or charge so levied.
Under the provisions of this section, the B.P.T. Authorities laid down a policy of exemption of demurrage on goods detained by the Customs Authorities, and the remission of demurrage fees according to certain guidelines. Paragraphs 4.10 and 4.11 of this Policy Statement are relevant for the purpose of the issue before us Paragraph 4.10 is in the following terms:
4.10. The best course seems to be to charge a rate per day which corresponds to our minimum charge for handling, storage, care and custody of the goods after the expiry of the free days. Wharfage constitutes handling costs plus storage charges for a period of four days. Deducting handling costs, the balance represents storage charges for a period of four days. It is estimated that, excluding the handling costs, storage charges per day are equal to 20% of total wharfage. It is, therefore succeested that for the entire period of certified detention we may retain per day 20% of the wharfage to cover the services referred to herein.
Para 4.11 is in the following terms:
4.11. The period for which the concession is allowed may be retained at 150 days, the broken periods, if any, shown in the detention certificates being added up for this purpose. Cases in which the certified period of detention exceeds 150 days may be put up to the Remission Committee for decision on merits.
21. The policy of the B.P.T. Authorities, therefore, in the matter of remission charges, appears to be that the B.P.T. in deserving cases would remit 80 per cent of the demurrage Chargesand retain 20 per cent as Service or Handling charges and this remission would be for a period of 150 days only. Each case would be put up before the Remission Committee which would consider the same on merits.
22. At this stage, it will also be pertinent to point out the Public Notice issued by the Principal Controller of Customs and Central Excise, Bombay, dated 29.7.1985 with regard to the procedure for the issuance of detention certificates. This Public Notice considered the various types of cases under which a detention certificate could be issued by the Custom House The pertinent part of this Public Notice is paragraph 2, Clause (a). The rest of the clauses are not relevant for the purpose of this discussion. Paragraph 2, Clause (a) is in the following terms:
2. Under the orders in force, the following are the only types of cases where a regular Detention Certificate could be issued by the Custom House for facilitating the importers to get remission of demurrage charges. These are:
a) Where the goods are detained by the Custom House for bona fide operation of Import Control formalities without any default on the part of the importers.
23. Now, it is pertinent to point out here that, in the instant case, the detention certificate was issued by the Customs Authorities pursuant to the order of this Court in Writ Petition No. 2186 of 1985 dated 7.11.1985.
24. The short question which needs to be decided in the instant case is whether the B.P.T Authorities, Respondent No. 4, were justified in rejecting the application of the Petitioners for remission of the demurrage charges. The detention certificate, which was issued by the Customs Authorities on 9.12.1985, indicated that the cause of detention of the goods was the bona fide operation of the I.T.C. formalities. Therefore, the detention certificate would indicate that the detention of the goods was not due to any fault of the Petitioners, the importers. Now, Shri Mehta has submitted that since the importer was not at fault for the detention of the goods, the B.P.T. Authorities ought to have granted remission for the full period of 226 days for which the demurrage was paid by the Petitioners. Shri Mehta has also contended that the entire amount of the demurrage should have been paid to his clients. I am afraid it is not possible to accept this submission of Shri Mehta in view of the Policy Statement of the B.P.T. Authorities, Respondent No. 4, stated heretofore in paragraphs 4.10 and 4.11, which ultimately became part of Resolution No. 635 of 1975. Under those rules, the B.P.T. Authorities decided that the remission of the demurrage charges would be only to the tune of 80 per cent, keeping the 20 per cent towards service charges including handling costs and storage charges. Paragraph 4.11 laid down that the concession of remission would be applicable only to the extent of 150 days The Remission Committee was empowered to decide each case on merits. The Petitioners, therefore, under the policy decision of the B.P.T. Authorities, Respondent No. 4, would be entitled only to 80 per cent of the demurrage charges for a period of 150 days.
25. Since there was a delay in the clearance of the consignment in question the Petitioners became liable to pay demurrage to the Port Trust. That the Petitioners did in the instant case. The Collector of Customs pursuant to the direction of this Court, issued a detention certificate in which it was stated that the goods had been detamed for bona fide import control formalities. The detention certificate was issued so as to facilitate the claim for remission of demurrage from the B.P.T. Authorities.
26. Now Shri Mehta is right when he stated that in the order dated 28.7.1986 the B.P.T. Authorities, Respondent No. 4, had not assigned any reason for rejecting the request for remission of demurrage charges and fur her that the Petitioners had not been given a hearing before rejecting their request Now, it is pertinent to point out that Section 53 of the Major Port Trusts Act 1963 laid down that the Board was empowered in special cases after recording its reasons in writing exempt either wholly or partially any goods or vessels from payment of any charges. The section did not cast any obligation on the Board to record reasons for denying the request for remission.
27. Shri Makhija has relied on an unreported decision of a learned Single Judge of this Court in the case of Eastern Associates Co. v. The Trustees of the Port of Bombay and Ors. (Miscellaneous Petition No. 550 of 1968) decided by Vimadalal, J. on 25.9.1969. Dealing with a submission similar to the one made by Shri Mehta, the learned Judge was pleased to conclude:
Turning to the fourth proposition of Mr. Dhanuka viz. that the Remission Committee was bound to give a hearing to the Petitioners and its decision rejecting the application for remission without giving the Petitioners a hearing was, therefore, violative of the rules of natural justice is concerned the same must be rejected for two reasons (1) no personal hearing was ever asked for by the Petitioners in the correspondence or at any stage till the present Petition came to be filed and (2) in view of the decision of the Supreme Court in the case of Kapur Singh v. Union of India it can no longer be contended that opportunity for personal hearing is art essential ingredient of the rules of natural justice. In a more recent, unreported decision dated 20th February 1969 in Civil Appeal No. 352 of 1966, the Supreme Court has laid down that at the highest, what can be said is that whether in a given case before a quasi-judicial authority the parties are entitled to an oral hearing must depend upon the nature of the enquiry the character of the evidence and other relevant circumstances, and that if the rules of natural justice are observed, normally the party concerned cannot complain that solely because he was not given an opportunity of being personally heard, the order is liable to be set aside There is nothing by way of the nature of enquiry of the character of material before the Remission Committee which Mr. Dhanuka has been able to point out which would make it incumbent upon the Remission Committee to have afforded a personal hearing to the Petitioners in the present case.
28. In the instant case also. I find that the Petitioners at no stage had asked the Remission Committee to give a personal hearing. This being the case. I do not think that Shri Mehta's contention can be accepted that in the absence of a personal hearing the order passed by the B.P.T. Authorities dated 28.2.1986 was bad.
29. With regard to the submission made by Shri Mehta that the delay in the instant case was not due to any fault of the Petitioners, and therefore the Petitioners should be allowed the full remission for the entire period I may only point out that in the case of Port of Bombay v. I.G. Supplying Co. , the Supreme Court was pleased to observe:
The position therefore is that even though the delay in clearing the goods was not due to the negligence of the importer for which he could be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law the validity of which cannot be questioned. The claim cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is responsible.
30. As I have stated heretofore, the Petitioners at best could claim only up to 80 per cent of the demurrage charges and that too for a period of 150 days under the Policy Statement of the B.P.T. Authorities.
31. Now, Shri Makhija has relied upon an affidavit filed by Shri Vinayak Shankar Kulkatni, the Assistant Docks Manager of the B.P.T., Respondent No. 4. In that affidavit, the reasons given for denying the claim made by the Petitioners for remission of the demurrage charges are three in number. Firstly, that the Customs Authorities by the order of adjudication dated 1 8.1985 had given an opportunity to the Petitioners to clear the goods on payment of redemption fine of Rs. 3,00,000/-. According to Shri Makhija the Petitioners could have taken delivery of the goods on 9.9.1985 after payment of fine of Rs. 3,00,000/-. Instead, they filed Writ Petition No 2186 of 1985. Therefore, according to Shri Makhija, the delay was due to the act of the Petitioners in not taking delivery of the goods earlier. Now it is difficult to accept this submission made by Shri Makhija There was no obligation cast on the Petitioners to pay the redemption fine of Rs. 3,00,000/- and to clear the goods. The Petitioners had a right to approach this Court for having the order, which was passed without any basis, set aside The Petitioners, therefore, cannot be held guilty of delay in this respect.
32. Shri Makhija then stated that the Petitioners filed Writ Petition No. 2186 of 1985 after a delay of one month and nineteen days and for this delay also, they ought to be held responsible. Now, I feel that Shri Makhija would be in the best position to appreciate that a writ petition cannot be filed overnight; that the legal advisors have to be instructed, the lawyers have to prepare a brief, draft a petition, engage Counsel and thereafter set the wheels of justice in motion. All this certainly takes time, and for this length of time, which certainly cannot be stated to be unduly protracted the Petitioners cannot be held to be guilty of causing delay. Shri Makhija then stated that although the High Court passed the order for issuing the detention certificate on 7.11.1985, the detention certificate was passed by Respondent Nos. 2 and 3, the Customs Authorities, only on 9.12.1985, i.e., after thirty-two days Shri Bulchandani rightly pointed out that the Customs Authorities had to obtain a certified copy of the order of this Court, that they had to forward the order of the Court together with the relevant papers to their Legal Department and obtain their opinion. It was only after the necessary formalities had been complied with that the detention certificate was issued on 9.12.1985. The explanation given by Shri Bulchandani appears to be plausible and reasonable. In any event, assuming that there was a delay on the part of the Customs Authorities in issuing the detention certificate the Petitioners could not be penalised and mulcted for the fault of the Customs Authorities.
33. Finally Shri Makhija contended that the detention certificate issued by the Customs Authorities was not in proper form as it did not comply with the proforma issued by the B.P.T. Authorities. Now, I have perused the detention certificate issued by the Customs Authorities, and with the help of Shri Makhija, I have also compared the detention certificate issued in the instant case by the Customs Authorities with the proforma which has been annexed to the Public Notice issued by the Customs Authorities. The only deviation in the detention certificate issued in this case is the addition of the following words in Clause 8:
In terms of Bombay High Court's Order in W.P. No. 2186 dated 7.11.1985.
In Clause 8 it has been stated that the cause of the issue of the detention certificate was due to the bona fide operation of the ITC formalities and thereafter the above words have been added. I do not think that the detention certificate could be faulted merely because of the addition of the words that the detention certificate was issued in terms of the order of the High Court Now it appears to me that the reasons given by the Respondents in their affidavit-in-reply for rejecting the Petitioners application tor refund, and relied on and canvassed before the Court by Shri Makhija, can be said to be such that no reasonable person would rely on. To that extent, it appears to me that the order of the Petitioners dated 28.7.1986 is perverse.
34. Now, Shri Makhija has relied on the observations of the Supreme Court in the case of Dwarkadas Marfatia & Sons v. Board of Trustees, Bombay Port , to the effect:
It is not within the purview of a Court to substitute a decision taken by a constituted authority simply because the decision sought to be substituted is a better one. Learned Addl. Solicitor General, in our opinion is therefore right in contending that the appellant should not be allowed to contend that the decision of the Bombay Port Trust to allot the plot to the major holder is not one of the feasible means of achieving the objectives of development.
I may point out that in the same judgment Their Lordships at paragraph 25 were also pleased to observe:
Where there is arbitrariness in State action, Article 14 springs in and judicial review strikes such an action down. Every action of the Executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, it should meet the test of Article 14.
35. As I have pointed out heretofore in the order of the Secretary of the B.P.T. Authorities dated 27.8.1986, no reasons at all have been assigned for rejecting the claim for remission made by the Petitioners. I have dealt with the reasons given in the affidavit-in-reply, and I have come to the conclusion that the reasons given are such that no reasonable person would arrive at the conclusion arrived at by the Secretary. The order of the Bombay Port Trust Authorities, therefore, is certainly not one which is informed by reason and hence the same is perverse. On that ground, the order needs to be struck down.
36. Finally, with regard to the submission made by Shri Mehta that the Customs Authorities should be called upon to make good the amount of the remission in respect of the balance of the 76 days out of a total of 226 days, it must be pointed out that Respondent Nos. 2 and 3, in the instant case, have not committed any breach of a statutory duty. The Customs Authorities felt that the goods imported were not covered by the licences produced by the Petitioners and hence they passed the order of adjudication. It is obvious, therefore, that they were carrying out their duty in a bona fide manner. In these circumstances, to call upon Respondent Nos. 2 and 3 to make good the amount of the remission for 76 days would be to impose upon them a penalty. One has also to keep in mind the fact that the Customs Authorities have not received any amount which has been claimed by the Petitioners, There is also the further fact that there is no provision of law pointed out by Shri Mehta in the Customs Act under which I could proceed to levy the amount of the balance of 76 days' remission on Respondent Nos. 2 and 3. In these circumstances, I do not think I can comply with the request made by Shri Mehta and the submission is, therefore, rejected
37. In the result, rule is made absolute in terms of prayer (a) to the extent that the order passed by the Secretary of Respondent No. 4 dated 28.7.1986 is set aside Respondent No. 4 will remit/refund the amount of demurrage charges to the extent of 80 per cent of such charges for a period of 150 days. Rule against Respondent Nos. 2 and 3 to stand discharged. Each party will bear its own costs.
38. At the request of Shri Makhija, the operative part of this judgment is stayed till 19.3.1990.