TMI Blog1984 (9) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... arch 15, 1984, asked for the approval of the Director-General of Shipping for the sale of the said two vessels for the purpose of scrapping as required under Section 42(1) of the Merchant Shipping Act, 1958, as both the vessels had lost their sea-worthiness. The Assistant Director-General of Shipping by two separate letters dated April 10» 1984 replied to the company in identical terms. One of such letters is set out below : "Government of India Ministry of Shipping and Transport Directorate General of Shipping 'Jahar Bhavan' Walchand Hirachand Marg No. 7-SDB (1I)/84 10th April, 1984. The Scindia Steam Navigation Co. Ltd., Bombay. Subject:. -Permission for sale of M.V. Jalatarang for scrapping. Dear Sirs, I am to refer to your letter No. OP/Teeh/4240, dated 15th March, 1984 on the above subject and to convey the approval of the Director General, in principle, for the sale of your vessel 'Jalatarang' for scrapping in India subject to the following conditions: (i) Formal sanction as required under S. 42(1) of the M.S. Act, 1958 will be issued on hearing from you the name of the buyer and sale price; (ii) The vessel should be free from all encumbrances a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sept. 19, 1984. So the said two ship breakers are out of A» picture and it is not necessary for us to consider their contentions and/or offers made by them. 5. It is not in dispute that M.V. Jaltaranga and M.V. Jalagirija which are foreign vessels were manufactured in 1963. They were purchased by the company in 1969 with the permission of the Reserve Bank of. India. They were brought to India also in 1969. The first port of call in India was Madras in the case of M.V. Jaltaranga and Bombay in the case of M.V. Jalagirija. Thereafter, they were registered under the Merchant Shipping Act as Indian flag-ships. 6. After the ships were purchased and brought to India and registered as Indian flag vessels, the MSTC was constituted by the Central Government as a canalising agency under the Import and Export Policy. Appendix 5 to the Import and Export Policy, 1984-85 contains the list of items, import of which is canalised through public sector agencies including MSTC. MSTC is the canalising agency in respect of items 42 to 47 of Appendix 5. Item 47 is as follows: "47. Old ships, vessels, etc., for breaking". Para 150 under Chapter VI of the Handbook of Import Export Procedures, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articipate in the tender and a fair price could be obtained by the company. Accordingly, the learned Judge directed the company to issue fresh advertisements giving details of the ships as per model tender form ;. mentioned in the guidelines of MSTC, and that such advertisements should be issued once in Calcutta, once in Madras and once in Bombay. The company was directed not to accept any offer below Rs. 85 lakhs for M.V. Jalataranga and Rs. 73 lakhs for M.V. Jalagirija. Further, the learned Judge directed the Director General of Shipping that before granting permission under Section 42(1) of the Merchant Shipping Act, he should consider whether the price obtained by the company for the two vessels was fair and reasonable. The writ applications were disposed of accordingly. 8. It has been already stated that four appeals have been preferred against the judgment of the learned Judge two by the appellant and the other two by the MSTC. While the appeals filed by the appellant are directed against the above directions given by the learned Judge, those filed by MSTC are directed against the finding of the learned Judge that at the time the ships were imported into India, MSTC was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company to MSTC for obtaining 'no objection certificates' to be issued by MSTC as a condition for the grant of sanction under Section 42(1) of the Merchant Shipping Act. Counsel submits that the guidelines framed by MSTC are also inapplicable -to the company, and the learned Judge acted in excess of his jurisdiction in giving the aforesaid directions which are in conformity with the guidelines of MSTC. Moreover, Counsel submits, the learned Judge having himself noticed that the company is not an authority within the meaning of Art. 12 of the Constitution, should not have given such directions to the company. 12. On the other hand, it is urged by Dr. Pal, learned Counsel appearing on behalf of MSTC that in terms of the said exemption notification set out above, when a foreign ocean going vessel comes to an Indian port, there is no importation of such vessel as it does not cross the customs barrier, although it may become Indian property and an Indian Flag vessel. The importation would take place only after the vessel loses its sea worthiness and is broken up and converted into scraps, for, in that case, the scraps would be taken out of the customs barrier and get mixed up wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essel will be treated as an Indian flag ship or vessel, but it cannot be said that it has been imported into India. We have no hesitation in rejecting the contention of MSTC that unless a ship is broken up and converted into scrap and taken out of the customs barrier, there is no importation of the ship. The decision of the Madras High Court in K.R. Ahmed Shah v. Addl. Collector of Customs, Madras- 1981 E.L.T. 153, which has been relied on by MSTC, is not applicable to the facts and circumstances of the instant case. In that case, the question related to imposition of terminal tax as was in the case of the Supreme Court in Express Mills v. Municipal Committee, A.I.R. 1958 S.C. 341. The two other Supreme Court decisions relied on by MSTC, namely. State of Travancore-Cochin v. S.V.C. Factory (A.I.R. 1953 S.C. 333) and J.V. Gokal Co. (P) Ltd. v. Asst. Collector of Sales Tax (A.I.R. 1960 S.C. 595) also do not help the contention of MSTC inasmuch as the Supreme Court in both the cases was concerned with the question of interpretation of the words 'in the course of the import of the goods' or 'in the course of the export of the goods' occurring in Art. 286(1) of the Constitution. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in holding that MSTC was not the canalising agency of the Government in regard to the two ships in question which were imported in 1968 and, as such, the Central Government cannot insist on the production of 'no objection certificates' from MSTC for the purpose of grant of approval under Section 42 (1) of the Merchant-Shipping Act. 16. We are now to consider whether, and how far the learned Judge was justified in directing the publication of advertisements in certain Newspapers inviting offers for the sale of the said two ships for the purpose of scrapping. The learned Judge also directed that the two ships should not be sold below certain amounts as fixed by the learned Judge. Under Section 42(1) it is the concern of the Central Government to grant approval for the transfer or acquisition of any Indian ship or any share or interest therein. It has been already pointed out that the Director General of Shipping in his letter dated April 10, 1984, which has been set out above, has laid down the conditions for granting approval for the sale of the two vessels in question for scrapping. It has been already noticed that although four conditions have been mentioned in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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