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2016 (10) TMI 1088 - HC - Customs‘Waterfall’ provision of Section 150 of the CA - auction of goods - import of 2,000 MT of Heavy Aromatics of South Korean origin from a Singapore supplier - orders injuncting respondent Nos. 1 & 2 from selling, transferring, alienating and/or creating any third party interest or parting with possession of 2002.01 MT of Heavy Aromatics pledged with the petitioner and lying in the bonded warehouse of respondent No. 2 at Mundra till such time as the entire dues of the petitioner were recovered from respondent No. 1 - Held that: - it requires to be noticed that, ordinarily, a direction under Section 9 of the Act will not be issued to a party which is not a party to the arbitration agreement. However, this Court has in a series of judgments held that Section 9 of the Act does not limit the jurisdiction of the Court to pass appropriate interim orders which might affect third parties deriving a title “from the party to the agreement unlike the third party having an independent right.” It is, therefore, seen that the owner of the goods is last in the sequence. The petitioner as a pledgee could at best be said to have stepped into the shoes of the owner and, therefore, in terms of Section 150 of the CA, the dues of the petitioner would have to await the settlement of the Customs duty and dues of respondent No. 2. The Court finds merit in the submission of Mr. Sibal that the sale of the goods can take place only in terms of Section 150 of the CA. The goods in question are imported and have not been cleared within a period of thirty days after such import. Sections 48 read with Sections 142A and 150 of the CA are straightway attracted. Therefore, the sale of the warehoused goods has to take place only in accordance with Section 150 of the CA and the proceeds thereof have to be applied in the manner provided therein. The dues of the Customs authorities and that of respondent No. 2 have a priority over those of the petitioner and the sale proceeds will have to be applied to settle the dues in that order. Consequently, the question of permitting the petitioner as a pledgee of the goods to bring the goods to sale by way of public auction does not arise. Without any unnecessary delay, respondent No. 2 should initiate the process, if it has not done so already, to bring the goods to sale by way of public auction after notice to the petitioner. The application of the proceeds of such auction sale will abide by the ‘waterfall’ provision of Section 150 of the CA - The interim orders passed by this Court, thus, far, stand vacated - petition disposed off.
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