2002 (2) TMI 104 - SC - Customs

Whether the Appellant allowed the goods to remain with the 1st Respondent knowing full well that further demurrage charges would be incurred? Held that - The 1st Respondent should have sold off the goods at that stage. They are a statutory body. Merely because there is no obligation to sell does not mean that they can allow the goods to lie around. By this time the 1st Respondent well knew that the Appellant was not paying the charges. Now the Court had permitted them to take recourse to such action as was available in law. Sale is contemplated in the Major Port Trusts Act itself. In our view the 1st Respondent should have now sold the goods. Apart from the fact that demurrage charges would have stopped running valuable godown space would also have become available to them. On facts of this case we feel that it would be just and proper that the 1st Respondent not be allowed to charge demurrage charges after 10th January 1992. If the Appellant wants clearance of the goods he has to pay all charges of the 1st Respondent till 10th January 1992. In the event of the Appellant not clearing the goods after paying all charges within 30 days from today the 1st Respondent will be at liberty to take action under Section 62 of the Major Port Trusts Act and also if permissible in law to do so to make a claim against the Appellant for recovery of the balance amount due after sale of the goods.

Summary

Issues Involved:
1. Seizure of imported goods by Customs authorities.
2. Payment of port charges and demurrage.
3. Right of lien under Section 59 of the Major Port Trusts Act.
4. Obligation to sell goods under Section 62 of the Major Port Trusts Act.
5. Responsibility for payment of demurrage charges.

Detailed Analysis:

1. Seizure of Imported Goods by Customs Authorities:
The appellant imported a consignment of bearings from Singapore, which landed at the Port of Calcutta on 13th July 1989. Before the goods could be cleared, the Customs authorities passed a seizure order on 1st August 1989 under Section 110 of the Customs Act. The appellant filed a writ petition in the High Court of Calcutta, resulting in an interim order on 27th September 1989 allowing the appellant to clear the goods on payment of duty based on the CIF value in the invoice and furnishing a bank guarantee for the difference in duty. The Customs authorities later applied for modification of this order, leading to a direction on 15th December 1989 that the goods be stored in a bonded warehouse.

2. Payment of Port Charges and Demurrage:
The appellant sought to remove the goods to the bonded warehouse without paying charges due to the 1st Respondent (port authorities), which was not allowed. The High Court, on 2nd February 1990, permitted removal without payment of port charges, accepting the appellant's undertaking to pay all charges upon adjudication. Section 58 of the Major Port Trusts Act mandates that port charges be paid before goods are removed. The High Court erred in permitting removal without payment, as the charges were undisputed and the appellant, interested in clearing the goods, should have paid and then sought reimbursement from the Customs authority.

3. Right of Lien under Section 59 of the Major Port Trusts Act:
Section 59 grants the port authorities a statutory lien on goods for unpaid rates and rents, allowing them to seize and detain goods until payment. The High Court's order allowing removal without payment undermined this statutory lien. The 1st Respondent's appeal against the High Court's order was rightly stayed, reaffirming their right to retain the goods until all charges were paid.

4. Obligation to Sell Goods under Section 62 of the Major Port Trusts Act:
The appellant argued that the 1st Respondent should have exercised their power of sale under Section 62 to mitigate further demurrage charges. The court noted that until 19th December 1989, the goods were under a seizure order, and subsequent court orders permitted clearance, preventing the sale of goods. However, by 10th January 1992, the 1st Respondent should have sold the goods as the court had allowed them to decide on the course of action. The failure to sell the goods after this date was unjustified, and the 1st Respondent should not charge demurrage after 10th January 1992.

5. Responsibility for Payment of Demurrage Charges:
The single Judge's order directed the Customs authorities to pay demurrage charges if adjudication favored the appellant. However, the appellate court held that the 1st Respondent could recover charges for the entire period the goods remained with them. The court clarified that the appellant must pay all charges up to 10th January 1992 for clearance of goods. If the appellant fails to clear the goods within 30 days, the 1st Respondent can take action under Section 62 and claim the balance amount due after the sale of goods.

Conclusion:
The appeal was disposed of with the clarification that the appellant must pay all charges till 10th January 1992 for clearance. The 1st Respondent is entitled to take further action if the appellant fails to clear the goods within the stipulated time. The judgment underscores the statutory rights of port authorities under the Major Port Trusts Act and the appellant's obligation to comply with these provisions.