2023 (11) TMI 1040 - HC - Customs

Container Freight Station bound by arbitration clause in e-bidding process for unclaimed imported consignments under Section 48

Suresh Kumar Prop. Shekhar Industries Versus Sattva Hi Tech and Conware Private Limited, MSTC Limited

The HC held that the first respondent, operating as a Container Freight Station under the Customs Act, 1962, was bound by the arbitration clause in the ... Appointment of Arbitrator to adjudicate the dispute between the petitioner and the respondents - clause 26 of the e-bidding-cum-e-auction bidding process - Auction of unclaimed imported consignments on behalf of Customs department - HELD THAT:- Prima facie, the respondents are governed by the terms of Handling of Cargo in Customs Areas Regulations, 2009. In terms of Section 48 of the Customs Act, 1962, if any goods are brought into India from a place outside India and are not cleared for home consumption or warehoused or transhipped within thirty days from the date of the unloading thereof at a customs station or within such further time as the proper officer may allow or if the title to any imported goods is relinquished, such goods may, after notice to the importer and with the permission of the proper officer be sold by the person having the custody thereof. Thus, the first respondent has power to sell the uncleared goods. The procedure for disposal of unclaimed/uncleared goods/cargo under Section 48 of the Customs Act has been clarified by the Commissioner of Customs, Chennai by Public Notification bearing F.No.S.Misc.28/2018-UCC dated 10.12.2018 - Therefore, it is not open for the first respondent to say that the first respondent is not governed by the arbitration clause although it is foisted on the first respondent by virtue of the status of the first respondent as the Container Freight Station under the Customs Act, 1962. Petition disposed off. Issues involved:The case involves the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, to resolve a dispute arising from an auction of imported goods conducted by the Customs Department.Details of the Judgment:Issue 1: Dispute Resolution through ArbitrationThe petitioner purchased imported goods in an auction but later found discrepancies in the quality of the goods. The auction terms provided for dispute resolution through arbitration. The petitioner issued notices to the respondents, who responded stating they were not bound by the arbitration clause as they were not direct parties to the agreement. The Court considered the arguments and appointed an arbitrator to resolve the dispute.Issue 2: Role of First RespondentThe first respondent, a custodian appointed under the Customs Act, claimed it was not the actual seller but merely a custodian of the goods. They argued that as the auction was conducted by the Customs Department, any dispute should be resolved with them. The Court analyzed the Customs Act provisions and regulations governing the handling and disposal of unclaimed goods by the first respondent.Issue 3: Validity of Arbitration ClauseThe first respondent contended that there was no valid arbitration clause binding them to arbitration for the dispute. They argued that there was no consensus ad idem and no contract between the petitioner and the first respondent regarding the auction. The Court examined the regulations governing the first respondent's actions and clarified the procedure for disposal of unclaimed goods under the Customs Act.Separate Judgment:The Court appointed Mrs. Elizabeth Seshadri as the arbitrator to adjudicate the dispute between the parties. The arbitrator was tasked with resolving the inter se dispute and passing an award in accordance with the Arbitration and Conciliation Act, 1996. The fees and charges of the arbitrator were to be borne by the parties equally, with provisions for recovery in case of one party being ex parte. The judgment allowed parties to seek further reliefs under Section 17 of the Act before the arbitrator, while preserving the respondents' rights to raise objections under Section 16.