TMI Blog1975 (9) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... course, the Corporation was within to accept them and along with them the liability for the payment of demurrage. In the absence of any more facts we find it impossible on the record as it stands, to accept the appellants' claim against the 1st respondent. Therefore, hold that the claim against the 1st respondent must also fail. In the result, we confirm the decree of the High Court dismissing the appellants' suit, though for entirely different reasons. - C.A. 707 OF 1973 - - - Dated:- 9-9-1975 - CHANDRACHUD, Y.V., RAY, A.N. (CJ) AND MATHEW, KUTTYIL KURIEN, JJ. For The Appellant : K. S. Ramamurthi, S. Balakrishnan, N. M. Ghatate For The Respondent : A.K. Sen, J. S. Arora and H. K. Puri, G. L. Sanghi and Girish Chandra JUDGEMENT : The Judgment of the Court was delivered by CHANDRACHUD, J.-The Trustees of the Port of Madras, appellants herein, filed suit No. 158 of 1966 in the High Court of Madras for recovering a sum of ₹ 3,1 8,968.04 from the respondents by way of demurrage. The 1st respondent is a firm called M/s. Aminchand Pyarelal, the 2nd respondent is the Union of India and the 3rd respondent is the Collector of Custom, Madras. A learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent owned up the mistake and stated that the certificate was incorrect as the goods were detained in order to ascertain whether the Import Trade Control formalities were complied with and not for examination and assessment of duty under section 17(3) and (4) of the Customs Act. The case of the appellants is that due to the negligent mistake committed by the 3rd respondent in issuing the certificate, they charged to the 1st respondent a sum of ₹ 1963.60 only whereas it was liable to pay a sum of ₹ 3,20,951.64 by way of demurrage. The appellants called upon the 3rd respondent to pay up the balance but the latter, by his reply dated July 6, 1965 repudiated all liability, contending that the Union of India could not be held liable for the negligent or tortious acts of its officers done in good faith during the course of their official duties and that the appellants should seek J their remedy against the 1st respondent. Later, the appellants brought the present suit against the three respondents to recover the demurrage. The case of the appellants as made out in the plaint is that the liability of respondents 2 and 3 was in the region of contract or quasi-contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent, the Union of India, set out the various facts attendant upon the import of the goods and contended that the appellants had no cause of action against it or the 3rd respondent. The 3rd respondent adopted the written statement of the 2nd respondent. The High Court held that the levy of demurrage ill cases where the goods were detained by the Customs authorities for no fault or negligence on the part of the importer, was unreasonable and also beyond the powers of the appellants and that the appellants were not entitled to recover demurrage from any of the respondents. Two questions, mainly, arise for consideration in this appeal : firstly, whether the scale of fees under which the appellants charge demurrage is void as being unreasonable and as being beyond their powers; and, if the answer to the first question is in the negative, whether the 1st respondent is liable to pay the demurrage claimed by the appellants. Counsel for the appellants did not press the claim against respondents 2 and 3. The decision of the first question turns on the relevant statutory provisions but before considering the validity of the levy, it would be necessary to know the procedure which is ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory obligation to perform certain duties and equally so they have statutory powers to fix scales of fees and rates. The statute with which we are here concerned directly is the Madras Port Trust Act, 2 of 1905, (hereinafter called the Act ). It is necessary to notice the relevant provisions thereof in order to understand the controversy in this appeal. Section 5(1) defines the Board to mean the Trustee of the Port of Madras appointed under the Act. Section 5(12) defines Rate as including any toll, due, rent, rate or charge leviable under the Act. By section 7 the Board consists of 21 Trustees including the Chairman. Section 8 provides that the Chairman of the Board shall be appointed by the Central Government and the remaining trustees shall be (1) the Collector of Customs, Madras, (2) the Municipal Commissioner for the City of Madras, (3) the General Manager, M. S. M. Railway, (4) the General Manager, South Indian Railway; (5) one representative of the Mercantile Marine Department chosen by the Central Government; (6) one representative of the Defence Services chosen by the Central Government. (7) one representative of the State Government chosen by the State Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss, destruction or deterioration of goods of which it has taken charge is, subject to cerain provisions, that of a bailee under sections 151, 152 and 161 of the Indian Contract Act subject to certain modifications. Chapter VI of the Act which appears under the heading Imposition and Recovery of Rates contains provisions which have direct impact on the contentions raised in this appeal. Section 42 empowers the Board to frame a scale of rates at which and a statement of the conditions under which any of the services specified in clauses (a) to (e) of the section shall be performed by the Board. Clause (b) refers to landing of goods from any vessel upon any land or building in the possession or occupation of the Board or at any place within the limits of the Board. Clause (d) refers to wharfage, storage or demurrage of goods on any such place . Sections 43 and 43-A also confer on the Board power similar to that conferred by section 42. By Section 44 every scale and every statement of conditions framed by the Board under sections 42, 43 and 43-A shall be submitted to the Central Government for sanction and, when so sanctioned and published in the official Gazette, such scale and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpiration of one month from the date on which the notice was served or published sell the goods by public auction. Section 62 preserves the right of the Board to recover the rates by a suit. Section 95 of the Act which appears ill Chapter XI called Bye Laws empowers the Board to make bye-laws not inconsistent with the provisions of the Act, inter alia, for the safe and convenient use of sheds, for the reception and storage of goods brought within the premises of the Board, for the mode of the payment of the rates leviable under the Act and generally for carrying out the purposes of the Act. Section 109 of the Act which has an important bearing on these proceedings provides that nothing contained in the Act shall affect any power vested in the Chief officer of Customs under any Law for the time being in force. Section 49 of the Customs Act, 52 of 1962, provides that where in the case of any imported goods, the Assistant Collector of Customs, is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time, the goods may, pending clearance, be permitted to be stored in a public warehouse or in a private warehouse if facilities for depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate, i.e. the rate at which the goods would in cur demurrage had there been no detention by the Customs. This concession in demurrage shall be limited to a period of 30 days plus one working day and demurrage shall be recovered at the full rate (i.e., third slab) for detention beyond the above said period. Under clauses (c) and (d) of Rule 13, period during which the goods are detained by the Port Health Authority and the periods during which the Board is unable to trace packages owing lo congestion of accommodation, wrong sorting or incorrect tallying are also treated as Free Days. The High Court dismissed the appellants suit for the following reasons: (1) The Scale of Rates fixed by the Board is in the nature of Bye-Laws; (2) Bye-Laws may be treated as ultra vires for the reasons, inter alia, that they are repugnant to the statute under which they are made or that they are unreasonable; (3) Viewed as a bye-law, Rule 13(b) under which the Board can charge demurrage for the period during which the goods are detained for no fault or negligence of the importer or his agent, is unreasonable and therefore void; (4) In principle, there can be no distinction between cases fallin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conditions under which any of the services specified in the section shall be performed. Section 43 confers an identical power in the Board in regard to certain other matters while section 43-A authorises the Board to prescribe consolidated rates. Provision for framing bye-laws is made in Chapter XI called Bye-Laws and section 95 which occurs in that Chapter mentions the various subjects on which the Board may frame bye-laws. Under Chapter XI, the Board has no power to frame bye-laws for fixing scales of rates or a statement of the conditions under which any of the services specified in sections 42, 43 and 43-A shall be performed. The nearest that section 95 touches the subject of rates is by clause (6) which refers to the mode of the payment of the rates leviable under this Act. The Board having expressly empowered by section 42 to frame. I scale of rates and a statement of the conditions under which it shall perform the services specified in the section and the Board having in terms exercised that power under the aforesaid section, there is no justification for supposing that in framing the scale of rates and the statement of conditions, the Board has purported to frame a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the transit area, the services have to be paid for at the scale of rates prescribed by the Board. In such matters, where services arc offered by a public authority on payment of a price, conditions governing the offer and acceptance of services are not in the nature of bye-laws. They reflect or represent an agreement between the parties, one offering its services at prescribed rates and the other accepting the services as those rates. (1)See Halsbury's Laws of England, 3rd Ed. Vol. 24, p. 510, paragraph 940 citing Kruce v. Johnson [1898] 2 Q.B. 91 at p. 96. As, generally, in the case of bye-laws framed by a local Authority, there is in such cases no penal sanction for the observance of the conditions on which the services are offered and accepted. If the services are not paid for, the Board can exercise its statutory lien on the goods under section 51 and enforce that lien under section 56 of the Act; or else, the Board may take recourse to the alternative remedy of a suit provided for by section 62. With this, the entire reasoning of the High Court on the first aspect of he matter must fall because Rule 13(b) has been declared ultra vires on the basis that it is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be made out against it, and decline to determine whether it would have been wiser or more prudent to make the bye-law less absolute, nor will they hold that it is unreasonable because considerations which the court would itself have regarded in framing such a bye-law have been overlooked or rejected by its framers. n In the first place, Port Trusts are bodies of a public representative character who are entrusted by the legislature with authority to frame a scale of rates and statement of conditions subject to which they shall or may perform certain services. Port Trusts are not commercial organisations which carry on business for their own profit. Sections 39(1) and (2) of the Act cast on the Board an obligation, according to its powers, to provide all reasonable facilities, if so required by any owner, for various kinds of services mentioned in clauses (a), (b) and (d) of section 39(1), which include services in regard to landing of goods between vessels and docks in possession of the Board and receiving, storing or delivering goods brought within the Board's premises. The Board under section 39(3) shall, if required, take charge of the goods for the purpose of performing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Assistant Collector of Customs, if he is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time, to permit that the goods may, pending clearance, be stored in a public warehouse and if such a, facility is not available, then in a private warehouse. This provision together with section 44(2) of the Act constitutes a measure of mitigation. In face of these considerations, it is impossible to characterise the scheme for the levy of rates as arbitrary or unreasonable. The High Court contrasted clause (b) of Rule 13 with its clause (d) and held that there is no distinction between the two classes of cases and if cases falling under clause (a) are wholly exempt from the payment of demurrage, so ought to be those falling under clause (b). The error of this conclusion lies in equating cases falling under clause (b) with those falling under clause (a). The two clauses deal with different sets of cases: clause (a) deals with cases where the goods are detained for examination under sections 17(3) and (4) or for chemical test under section 144 of the Customs Act, other than for the ordinary processes of appraisement; clause (b) d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the power conferred on it by section 42 of the Act. If section 42 were to authorise the Board to fix rates of 'Demurrage'. it might perhaps have been arguable that the Scale of Rates and the Statement of Conditions must conform to the accepted meaning of the word 'Demurrage'. But the statute has placed no such limitation on the power of the Board to fix the rates. By Section 42 power is conferred on the Board to frame a scale of rates at which and a statement of the conditions under which any of the services 1 specified in the section shall be performed . And the Board has fixed the scale of rates and the statement of conditions for the services it may have to perform. It is difficult to see in what manner or respect the Board has exceeded its power under section 42. The High Court seems to have thought that the Board had the limited right to fix rates of demurrage and therefore rates could only be levied on goods which were not removed from the Board's premises due to some fault or negligence on the part of the importer or his, agent. The High Court was probably misled in this conclusion by the use of word 'demurrage' in clause (d) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emurrage. Respondent 2 is the Union of India against whom and respondent 3. the appellant's claim is said to reside partly in the region of contract or quasi-contract . We are unable to spell out any such basis on which the claim of the appellants could rest. The issuance of an incorrect 'Detention Certificate' by the 3rd respondent cannot also help the appellants to fasten the liability for demurrage on respondents 2 and 3 on the ground of their negligence. As observed by the High Court, all the relevant facts were before the appellants who could, with reasonable care, have avoided the consequences flowing from the Certificate issued by the 3rd respondent. As regards the appellants' claim against the 1st respondent, the High Court was prepared to hold the latter liable to pay the demur rage except for the fact that the scale of rates was unreasonable and beyond the power of the Board. As we have set aside the High Court's findings on those points, it has to be examined whether the 1st respondent is liable to pay the demurrage. Unfortunately, parties fought in the High Court a legal battle and gave no importance to facts on which the liability of the 1st res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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