1987 (1) TMI 88 - SC - Customs

Issue detention certificates in respect of the consignments in question as directed by High Court Held that - The orders passed by the High Court in the proceedings to which the Port Trust was not a party which had the effect of prejudicially affecting the interests of the Port Trust would not be binding on it in view of the violation of the principles of natural justice. the High Court erred in not imposing any condition on the 1st respondent for protecting the interests of the Port Trust even in the writ petition to which it was a party. The impugned orders are contrary to the public notice issued by the customs authorities as well as the rules of the Port Trust. Having regard to the peculiar circumstances of this case in which the goods have already been cleared the orders of the High Court of Bombay against which these appeals are filed therefore to be modified appropriately in order to protect the interests of the Port Trust. Accordingly at the conclusion of the hearing of these appeals we passed an order on 16-12-1986 before reserving the appeals for judgment directing the 1st respondent to furnish within eight weeks a bank guarantee of a nationalised Bank in favour of the appellant for due payment of Rs. 3, 04, 004.25 paise to the appellant on demand without any demur being the balance of wharfage and demurrage charges in the event of the 1st respondent not succeeding ultimately in Writ Petition No. 122 of 1986 and on failure to furnish such bank guarantee within eight weeks to pay in cash Rs. 3, 04, 004.25 paise to the appellant forthwith. This shall be the final order in these appeals.

Issues Involved:
1. Issuance of detention certificates by customs authorities.
2. Payment of demurrage charges to the Port Trust.
3. Bank guarantee requirement for customs duty and demurrage charges.
4. Principles of natural justice and involvement of the Port Trust in legal proceedings.

Detailed Analysis:

1. Issuance of Detention Certificates by Customs Authorities:
The High Court directed the customs authorities to issue detention certificates for the consignments imported by the 1st respondent, which were detained due to disputes over customs duty and discrepancies in the description of goods. The customs authorities complied and issued detention certificates, allowing the 1st respondent to claim remission of demurrage charges from the Port Trust. The Supreme Court noted that the High Court should have issued notice to the Port Trust before compelling the customs authorities to issue detention certificates, as the Port Trust was vitally interested in securing its own interests regarding demurrage charges.

2. Payment of Demurrage Charges to the Port Trust:
The Port Trust argued that the High Court erred by not ensuring the payment of demurrage charges due to it in case the 1st respondent failed in its legal contention. The Supreme Court recognized the Port Trust's statutory right to recover demurrage charges and noted that demurrage charges are imposed to ensure quick clearance of cargo and prevent the use of port premises as a warehouse. The Court emphasized that the Port Trust's interests should have been protected by requiring a bank guarantee for demurrage charges, similar to the requirement for customs duty.

3. Bank Guarantee Requirement for Customs Duty and Demurrage Charges:
The High Court had directed the 1st respondent to furnish a bank guarantee for the disputed customs duty but did not impose a similar requirement for demurrage charges payable to the Port Trust. The Supreme Court held that the High Court should have required the 1st respondent to furnish a bank guarantee for demurrage charges as well, to protect the Port Trust's interests. Consequently, the Supreme Court modified the High Court's order, directing the 1st respondent to furnish a bank guarantee of Rs. 3,04,004.25 or pay the amount in cash within eight weeks.

4. Principles of Natural Justice and Involvement of the Port Trust:
The Supreme Court emphasized the violation of principles of natural justice, as the High Court passed orders affecting the Port Trust's interests without making it a party to the writ petitions. The Court highlighted that the Port Trust, being a statutory body, was entitled to be heard before any order prejudicially affecting its interests was passed. The Supreme Court concluded that the High Court's orders were not binding on the Port Trust due to this violation and modified the orders to protect the Port Trust's interests.

Conclusion:
The Supreme Court modified the High Court's orders to require the 1st respondent to furnish a bank guarantee or pay the demurrage charges in cash, ensuring the protection of the Port Trust's interests. The customs authorities were directed to complete the adjudication proceedings expeditiously. The appeals were disposed of with these modifications, emphasizing the importance of involving all interested parties in legal proceedings and safeguarding their rights.

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