2015 (3) TMI 1300 - HC - Indian Laws

Court dismisses recovery suit for detention charges due to plaintiff's failure to mitigate losses.

The court dismissed the plaintiff's suit for recovery of Rs. 83,29,000/- as detention charges, ruling that the plaintiff did not mitigate its losses ... Suit for recovery for alleged detention charges upto to the date of the filing of the suit - Held that:- In the present case, despite lapse of considerable time, defendants No.1 to 5 were neither lifting the goods nor paying the detention charges. This conduct of defendants No.1 to 5 was a clear pointer to the plaintiff that the defendants No.1 to 5 had more or less abandoned the goods. There can be no reason or explanation as to why the plaintiffs have continued to keep waiting and did not take steps to mitigate their damages. The burden is on the petitioner to produce sufficient material to suggest malafides of the authorities concerned. It is a heavy burden which can be discharged ordinarily by initiating civil proceedings. Unless malafides are established, liability on the customs cannot be established. In the present case also in the written statement itself defendants No.1 to 4 have stated that the goods of the defendants were detained illegally as there was a demand of ₹ 50 lacs made by one of the Customs Department official for release of the goods. DW-1 in his evidence by way of affidavit has clearly pointed out the name of the official namely Mahesh Kumar Badha. It is stated that the said official has been chargesheeted for his conduct relating to the goods of Sanjeev Woolen Mills. His chargesheet has been filed alongwith affidavit though it has not been proved and has been given a mark as D-7. The said document has not been contested by the plaintiffs. It is an article of charge framed against Mahesh Kumar Badha the then Collector of Customs who was operating as Collector of Customs from January 1991 to January 1992. The allegation pertains to his conduct regarding Sanjeev Woolen Mills, namely, not allowing clearance of waste/woollen waste imported by the firm. In the light of the above categorical averments, and the evidence of DW-1 it is clear that defendants No. 1 to 4 have established malafides on the part of defendant No.6. However, defendants No.1 to 4 have filed no counter claim. In view of the judgment of the Division Bench of this High Court in the case of CWP 17976-77/2004, no liability can be thrust on defendant No.6. Defendant No.5 is not appearing and has been proceeded ex parte. The admitted position is that when the transaction took place in 1991 he was a partner of defendant No.1. He has exited sometime in 1993. If there is no liability of defendants No.1 to 4 no liability can also fall on defendant No.5. As already held that the plaintiffs are not entitled to claim detention charges on account of clause 18 of the Bill of Lading and the explanation to section 73 of the Contract Act for the period claimed in the suit i.e. March 1997 to March 2000. The onus regarding this issue was on defendant nos. 1 to 4. No submission has been made by defendant nos. 1 to 4 in regard this issue. Hence, hold that there is privity of contract between the plaintiff and defendant nos. 1 to 4. The onus to prove this issue was on defendants No.1 to 4. In the written submissions filed no submissions have been made to support this contention. In the present suit the plaintiffs claimed detention charges of only three years prior to filing of the suit. Hence, I hold that the suit is not barred by time. In view of my finding on issue no. 1 above, the present suit is dismissed with costs. The goods are still lying in a container with the plaintiff. The plaintiffs are free to take steps to destuff the container and dispose of the goods of defendant No.1 in the best possible manner. As value of the goods would have considerably reduced, no need is felt to appoint a court auctioneer. As defendants No. 1 to 5 have abandoned the goods, the plaintiff would be entitled to retain the sale proceeds from sale of such goods. Issues Involved:1. Entitlement of the plaintiff to recover Rs. 83,29,000/- from defendants No. 1 to 5 and the applicable rate of interest.2. Whether the suit is barred by Section 155 of the Customs Act.3. Whether the suit is barred by time.4. Whether there is no privity between the plaintiff and defendants No. 1 to 4.5. Relief.Detailed Analysis:1. Entitlement to Recovery and Interest:The plaintiff, a government-owned shipping company, sought recovery of Rs. 83,29,000/- as detention charges against defendants No. 1 to 5 for not taking delivery of consignments within the stipulated time. The plaintiff argued that the defendants were liable to pay detention charges as per the India-Pakistan-Bangladesh-Ceylon Tariff (IPBC Tariff) for containers provided by the plaintiff. The defendants contended that the suit was barred by limitation and that the Customs Department (defendant No. 6) was liable for the charges due to their mala fide detention of goods.The court noted that the goods were detained by the Customs Department, and a detention certificate was issued on 8.6.1993. However, the plaintiff did not take reasonable steps to mitigate its losses by disposing of the goods within a reasonable time, as required under Clause 18 of the Bill of Lading and Section 73 of the Indian Contract Act. The court concluded that the plaintiff was entitled to detention charges only up to 1995 and not for the period claimed in the suit (March 1997 to March 2000). Therefore, the claim for Rs. 83,29,000/- was not sustainable.2. Barred by Section 155 of the Customs Act:Section 155 of the Customs Act provides protection for actions taken in good faith under the Act. The court found that the Customs Department's detention of goods was not in good faith but was mala fide, as evidenced by the demand for a bribe by a Customs official. Since the suit was primarily against defendants No. 1 to 5, with an alternate prayer against defendant No. 6, the issue of Section 155 did not bar the suit. The court held that the suit was maintainable despite the mala fide actions of the Customs Department.3. Barred by Time:The defendants argued that the suit was barred by limitation as the detention certificates were issued in 1993, and the suit was filed in 2000. The court held that the plaintiff claimed detention charges only for the three years preceding the filing of the suit, which was within the limitation period. Therefore, the suit was not barred by time.4. Privity of Contract:The defendants contended that there was no privity of contract between the plaintiff and defendants No. 1 to 4. The court found that there was privity of contract as the defendants were partners in the firm that imported the consignments under the Bills of Lading issued by the plaintiff. Thus, the issue was decided in favor of the plaintiff.5. Relief:The court dismissed the suit with costs, concluding that the plaintiff was not entitled to the claimed detention charges for the period March 1997 to March 2000. The court also noted that the goods were still lying in the container and allowed the plaintiff to take steps to destuff the container and dispose of the goods in the best possible manner. The plaintiff was entitled to retain the sale proceeds from the sale of such goods as the defendants had abandoned them.Conclusion:The court dismissed the plaintiff's suit for recovery of Rs. 83,29,000/- as detention charges, holding that the plaintiff failed to mitigate its losses within a reasonable time. The suit was not barred by Section 155 of the Customs Act or by limitation, and there was privity of contract between the plaintiff and defendants No. 1 to 4. The plaintiff was allowed to dispose of the abandoned goods and retain the sale proceeds.