TaxTMI 
TaxTMI 
2017 (3) TMI 280
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....ts against payments. Facing a grave loss M/s Metal Distributors (UK) Ltd., requested the present petitioner, if they were interested in purchasing the goods. It is pertinent to mention that the present petitioner and the original consignees are no where related, and the present petitioner is a third party to the sales. On 23.03.1992, the petitioner through his agent applied to the Customs Authorities to have the Bills of Entry substituted in their name for the 37 consignments for which the original consignees had filed Bills of Entry, and also applied to file Bills of Entry for the remaining 41 consignments lying unclaimed. The formal agreement between the M/s Metal Distributors (UK) Ltd. and the petitioner was entered subsequently, in April of 1992. That on 05.05.1992 the Clearing Agent of the petitioner wrote to the Customs Authorities seeking an amendment of the IGM so that the goods could be cleared. This was followed by a communication dated 03.06.1992 from the original exporter i.e. M/s Metal Distributors UK that the petitioner had agreed to buy the aforesaid consignments since the original importers had failed to clear the goods. It is pertinent to mention that o....
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.... decline grant of remission of the entire demand towards demurrage on account of non-clearance of the goods. 5. However, before us, a twofold submission is made by the appellant: (i) that the appellant acquired title to the goods long after they arrived in the 1st respondent's port and discharged from the vessel which carried the goods. Therefore, demurrage payable for the period anterior to appellant's acquisition of title to the goods is to be collected from the steamer agent of the vessel; and the appellant incurs no liability in law to pay the demurrage - since the 1st respondent rendered no service to the appellant during that period; (ii) In the alternative, it is argued that in view of the facts and circumstances of the case, the appellant is entitled for complete remission of the amount claimed towards demurrage on account of delayed clearance of the goods. According to the appellant - a substantial portion of the delay occurred because of the non-clearance of the goods by the customs department. (iii) An ancillary submission in this regard is that the 1st respondent granted complete remission of the amount payable towards demurrage in the case....
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....DS to be a body corporate to administer, control and manage the port of Bombay. Different BOARDS came to be constituted for different major ports in the country. The 1st respondent is admittedly one of the BOARDS constituted under Section 3(1) of THE ACT. 9. We shall now examine the provisions of THE ACT insofar as it is relevant for the purpose of this case. 10. Section 35(1)^7 of the Act obligates BOARDS to execute various works, within or even without the limits of the ports^8 being administered by each of the BOARDS, of the nature indicated under Section 35(2)(a) to (l). An examination of the tenor of the various clauses indicates that such works are intended to facilitate creation of ports which can be conveniently used by (vessels^9) for loading and unloading of cargo etc. 11. Section 37 to 42 of the Act authorise BOARDS to compel sea going vessels to use the works executed by BOARDS for landing or shipping of any goods or passengers, subject to various conditions specified under the said provisions. 12. Section 41(1) contemplates the publication of a notified order. By such an order, BOARD may "(i) declare that such dock, berth, wharf, quay, stage, jetty or pier ....
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.... and when rendered. 18. Section 48 prior to its amendment (by Act 15 of 1997) authorised every BOARD administering each of the major ports to prescribe a scale of rates for various services rendered by that BOARD. Section 48 (pre 1997 Amendment)^12 "Section 48. Scales of rates for services performed by Board or other person.-(1) Every Board shall from time to time frame a scale of rates at which and a statement of the conditions under which, any of the services specified hereunder shall be performed by itself or any person authorised under section 42 at or in relation to the port or port approaches- (a) transshipping of passengers or goods between vessels in the port or port approaches; (b) landing and shipping of passengers or goods from or to such vessels to or from any wharf, quay, jetty, pier, dock, berth, mooring, stage or erection, land or building in the possession or occupation of the Board or at any place within the limits of the port or port approaches; (c) cranage or porterage of goods on any such place; (d) wharfage, storage or demurrage of goods on any such place; (e) any other service in respect of vess....
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.... not necessary for deciding the case on hand. 23. Under Sections 61 and 62 of the Act, such detained goods could be sold by the BOARD either by public auction or otherwise, subject to conditions stipulated in those Sections and following the procedure specified thereunder without the need to file a suit for the recovery of the amounts due to the BOARDS. 24. The dispute in this case centres around demurrage. Therefore, we deem it appropriate to examine the meaning of the expression "demurrage". The expression "demurrage" is not defined under the Act. Strictly speaking, the expression demurrage in the world of shipping meant- "DEMURRAGE in its strict meaning, is a sum agreed by the charterer to be paid as liquidated damages for delay beyond a stipulated or reasonable time for loading or unloading, generally referred to as the lay-days or lay-time. Where the sum is only to be paid for a fixed number of days, and a further delay takes place, the shipowner's remedy is to recover unliquidated "damages for detention" for the period of the delay. The phrase "demurrage" is sometimes loosely used to cover both these meanings."^18 The circumstances in which and the nature of....
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.... (i) that the goods in question were shipped by the exporter on Cash against Document Basis (CAD), therefore the title of the goods would remain with the exporter till such time, the importer "retires the documents against payments"; (ii) The owner of the vessel is a bailee of the shipper. The 1st respondent is sub-bailee of the owner of the vessel through his steamer agent for the vessel from the point of their discharge from the vessel till the point when title in the goods passed to the appellant. 30. The 1st respondent, on the other hand, argued that the question regarding the liability of the appellant to pay the demurrage was never raised before the High Court nor did the High Court consider that question and, therefore, the appellant may not be permitted to make the said submission.^23 31. In our opinion, though the question was not raised before the High Court, the appellant need not be barred from raising this question before us because it is a pure and substantial question of law. No enquiry into any fact is really necessary to decide the said question of law. The only fact which is not clearly established on record is the point of time at which the title....
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....ras Port Trust acted as the agent of the consignee. This submission was rejected. This Court held: "57. If the Board was an agent of the consignee, it was bound to deliver the goods to the consignee and should not have any rights of retaining the goods till the payment of the rates and other dues for which it had a lien on the goods. The provision of there being a lien on the goods for the payment of the dues of the Board or the freight, make it clear that the Board did not have the custody of the goods as an agent of the consignee." The appeal was allowed by this Court upholding the authority of the port trust to collect the 'rate' from the steamer agent. 34. This Court held that BOARD receives goods as a sub-bailee from the bailee (ship owner) through the bailee's agent (See para 49^25 of the judgment). This Court upheld the impugned provision which fastened the liability upon the steamer agent. This Court opined that the goods were delivered to the BOARD by the consignor's bailee (the ship owner) through the steamer agent (the bailee's agent) making the BOARD a sub-bailee. Therefore, the service rendered by the BOARD is a service to the owner of the ship. ROWTH....
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.... "Para 10. While it is correct that the liability to pay demurrage charges and port rent is statutory, in the absence of any specific bar under the statute, such liability can reasonably fall on a steamer agent if on a construction of the provisions of the Act such a conclusion can be reached. Determination of the aforesaid question really does not hinge on the meaning of the expression "owner" as appearing in Section 2(o) of the 1963 Act, as has been sought to be urged on behalf of the appellant though going by the language of Section 2(o) and the other provisions of the Act especially Section 42, an owner would include a shipowner or his agent. Otherwise it is difficult to reconcile how custody of the goods for the purpose of rendering services under Section 42 can be entrusted to the Port Trust Authority by the owner as provided therein under Section 42(2). At that stage the goods may still be in the custody of the shipowner under a separate bailment with the shipper or the consignor, as may be. Even dehors the above question the liability to pay demurrage charges and port rent would accrue to the account of the steamer agent if a contract of bailment between the s....
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....E ACT. 38. The essence of bailment is possession and the consent of the owner of the goods is not necessary.^30 The distinction between possession and custody of goods is also noted by jurists.^31 In this context, the language of Section 49(2) is significant - "A Board may...... take charge of the goods.......". But we do not propose to examine the significance as the same is neither argued nor necessary. In our opinion, for the purpose of the present, we must also mention here Section 63 of THE ACT authorises the BOARD to sell the goods "placed in their CUSTODY". This Court also recognised that bailment can come into existence even otherwise than by a contract. "The State of Gujarat Vs. Memon Mahomed Haji Hasam (Dead) by LRs, AIR 1967 SC 1885, paras 5 and 6 "5. ......Bailment is dealt with by the Contract Act only in cases where it arises from a contract but it is not correct to say that there cannot be a bailment without an enforceable contract. As stated in "Possession in the Common Law" by Pollock and Wright, p. 163. "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 re....
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.... the rates or rent for services rendered with respect to the goods. The right of the BOARD is unquestionable. The only question is: from whom can the BOARD recover - we emphasise the question is not who is liable. Depending on the nature of the relationship between the consignor and consignee, the liability may befall either of them. 40. On the other hand, in the light of the legal position declared by the Constitution Bench in ROWTHER-I, the 1st respondent is a sub-bailee of the goods bailed by consignor (bailor) to the ship-owner (bailee). The goods are bailed through the agent (steamer agent) of the bailee. The appellant is only a person claiming through the bailor, without any direct contractual relationship with the 1st respondent. 41. Title to the goods is irrelevant even in the cases of a bailment arising under a contract. Any person who is capable of giving physical possession of goods can enter into a contract of bailment and create bailment. Under Section 148 of the Contract Act, 'bailment', 'bailor' and 'bailee' are defined as under: "A 'bailment' is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the ....
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....tioned shall pass, upon or by reason of such consignment or endorsement, shall have transferred to and vested in him all rights of suit, and be subject to the same liabilities in respect of such goods as if the contract contained in the bill of lading had been made with himself. 44. It can be seen from the above that the 1856 Act enacts a fiction that the consignee to whom the property in the goods shall pass shall be "subject to the same liabilities in respect of such goods as if the contract contained in the bill of lading had been made with himself". Bill of lading is evidence of a contract32 between the shipper (consignor) and the owner of the ship by which the owner of the ship agrees to transport the goods delivered by the consignor to a specified destination and deliver it to the consignee. Delivery of goods pursuant to a bill of lading creates a bailment between the shipper and the owner of the ship. Obviously the legislature knew that a consignee under a bill of lading is a 3rd party to the contract but intrinsically connected with the transaction and thought it necessary to specify the rights and obligations of the consignee. Hence, the fiction under the 1856 Act, that....
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....ken charge of by it in certain circumstances, details of which we have noticed earlier. 48. If the ACT authorises the 1st respondent to recover its dues by bailing the goods under bailment, in those cases where the consignee does not turn up to take the delivery of the goods within the time stipulated under Sections 61 or 62 of the ACT, to deny the right to demand and recover the amounts due from the consignee when he seeks delivery of the goods under bailment would be illogical and inconsistent with the scheme of the ACT. Such right, in our view, undoubtedly enables the 1st respondent to claim various amounts due to it, from any person claiming delivery of the goods either the bailor or a person claiming through the bailor for the services rendered w.r.t. the goods. Denying such a right on the ground that the person claiming delivery of the goods acquired title to the goods only towards the end of the period of the bailment of the goods with the 1st respondent would result in driving the 1st respondent to recover the amount due to it from the bailor or his agent who may or may not be within the jurisdiction of the municipal courts of this country (by resorting to a cumbersom....
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....espondent so chooses as a matter of policy. As a matter of fact, remission of a part of the demurrage was granted by the 1st respondent. 51. Now, we come to the submission that the respondent's decision to decline remission to the appellant is discriminatory because remission was granted in the case of a similarly situated consignee called Gilt Pack. Unfortunately, though the High Court noted the rival submission in the context of the allegation of discrimination, it did not record any conclusion on that count. 52. From the facts available on record, we are of the opinion that firstly, the cases of Gilt Pack and appellant are not identical. Gilt Pack was the case where the original consignee sold the goods to a third party on high seas even before their arrival into India. It so transpired that the purchaser did not have an appropriate license under the relevant law to import the goods. In view of the said problem, the goods were detained for some time and eventually the original consignee himself cleared the goods^40. It is in the said circumstances Gilt Pack was granted remission. We are not concerned with the question whether the discretion was appropriately exercised in t....
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....appropriate writ, order or direction ordering and directing the Respondents 1 to 3 to forthwith grant remission and/or refund of the amount of Rs. alongwith interest thereon at the rate of 18% per annum from the date of payment of the respective amounts as per the statement annexed hereto and marked as Exhibit in favour of the petitioners; (d) In the alternative and without prejudice to the above; This Hon'ble Court be pleased to order the Respondents 4 and 5 to pay to the petitioners the deficit amount after considering the remission that has already been granted and that will be granted by the Respondent 1 to 3 along with interest thereon at 18% per annum from such date as this Hon'ble Court may deem fit; 2 Section 29. Arrival of vessels and aircrafts in India.-(1) The person-in-charge of a vessel ... entering India from any place outside India shall not cause or permit the vessel ... to call or ... - (a) for the first time after arrival in India; or (b) at any time while it is carrying passengers or cargo brought in that vessel or aircraft,at any place other than a customs port or a customs airport, as the case may be unless permitted....
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....y the Authority and not exceeding three-fourths of the rate with which she would otherwise be chargeable. 14 Section 50B. Port-due on vessels not discharging or taking in cargo.- When a vessel enters a port but does not discharge or take in any cargo or passengers therein, (within the exception of such unshipment and reshipment as may be necessary for purposes of repair), she shall be charged with a port-due at a rate to be determined by the authority and not exceeding half the rate with which she would otherwise be chargeable. 15 In Maritime Law by a long established practice a vessel is always referred to as "she". 16 Lien is defined in Halsbury's Laws of England (4th Edition, Volume 28 at page 221, para 502) as "In its primary or legal sense "lien" means a right at common law in one man to retain that which is rightfully and continuously in his possession belonging to another until the present and accrued claims are satisfied." 17 Section 59. Board's lien for rates.-(1) For the amount of all rates leviable under this Act in respect of any goods, and for the rent due to the Board for any buildings, plinths stacking areas, or other premises on o....
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.... to be made depends on the terms of the bill of lading and the custom of the Port. The case is no authority for the proposition that in all circumstances the master of the vessel is not responsible for the performance of the acts subsequent to his placing the goods in such a position that the consignee can get them, as contended for the respondents. The delivery contemplated in these observations, is not, in our opinion, equivalent to the landing of the goods at the quay as contemplated by the various provisions of the Act. 26 "......Once the goods are handed over to the Port Trust by the steamer and the steamer agents have duly endorsed the bill of lading or issued the delivery order, their obligation to deliver the goods personally to the owner or the endorsee comes to an end. The subsequent detention of the goods by the Port Trust as a result of the intervention by the Customs authorities cannot be said to be on behalf of or for the benefit of the steamer agents." 27 .....By the endorsement of the bill of lading or the issue of a delivery order by the steamer agents, the property in the goods vests on such consignee or endorsee, and thus it appears to be clear ....
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....k & Mulla, The Indian Contract and Specific Relief Acts, 13th Ed. Page 1931] 32 Called contract of affreightment 33 Section 42 (7) After any goods have been taken charge of and a receipt given for them under this section, no liability for any loss or damage which may occur to them shall attach to any person to whom a receipt has been given or to the master or owner of the vessel from which the goods have been landed or transhipped. 34 Board of Trustees of the Port of Bombay & Ors. v. Sriyanesh Knitters, (1999) 7 SCC 359. Para 17. ... This section is in two parts. The first part gives statutory right of lien to four categories only, namely, bankers, factors, wharfingers and attorneys of High Court and policy-brokers subject to their contracting out of Section 171. The second part of Section 171 applies to persons other than the aforesaid five categories and to them Section 171 does not give a statutory right of lien. It provides, that they will have no right to retain as securities goods bailed to them unless there is an express contract to that effect. Whereas in respect of the first category of persons mentioned in Section 171 the section itself....
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....icial authority is required. On the other hand the general lien contemplated by Section 171 of the Contract Act only enables the retention of the bailed goods as a security. Their retention does not give any power to sell the goods, unlike the power contained in Section 61 of the MPT Act. If payment is not made by the consignee to the wharfinger, in a case where Section 171 of the Contract Act applies, the wharfinger can only retain the goods bailed as security and will have to take recourse to other proceedings in accordance with law for securing an order which would then enable the goods to be sold for realisation of the amounts due to it. It may in this connection, be necessary for the wharfinger to file a suit for the recovery of the amount due to it and Section 131 of the MPT Act clearly provides that such a remedy of filing a suit is available to the Board." 38 It is not very clear from the record whether these guidelines were issued by the Government of India or guidelines framed by the 1st respondent. In the written submissions, the appellant describes the guidelines framed by the Government of India whereas under the judgment under appeal at para 24, it a....