Bombay High Court
Union Of India Throught He Secretary ... vs Smt. Laxmiben Wd/O Morarji Dedhia And ... on 7 May, 2025
2025:BHC-AS:20914
FA-1333-2024.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
Digitally
signed by
TALLE
TALLE SHUBHAM
SHUBHAM ASHOKRAO
ASHOKRAO Date:
2025.05.07
FIRST APPEAL NO. 1333 OF 2024.
18:41:31
+0530
1. Union of India, ]
Through the Secretary, Ministry of ]
Finance, New Delhi through The ]
Commissioner of Custom (Import) having ]
office at New Custom House, Ballard ] ... Appellant.
Estate, Mumbai - 400 001. ] [Org. Defendant]
Versus
1. Smt. Laxmiben W/o Morarji Dedhia ]
2. Shri. Praful Morarji Dedhia (Deleted) ]
2a. Mrs. Bharti Praful Dedhia ]
2b. Mr. Vishal Praful Dedhia ]
2c. Mrs. Mayuri Sunil Vishariy ]
3. Shri. Jitendra Morarji Dedhia ]
4. Smt. Indira Kantilal Gosar ]
5. Smt. Chandrika Mahendra Furia ]
6. Smt. Daksha Prakash Vohra ]
All above India Inhabitant of Mumbai, ]
All above Residing at Chitrakoot, R.B. ]
Mehta Marg Ghatkopar (East), Mumbai- ] ...Respondents.
400077 ] [Org. Plaintiffs]
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Mr. Jitendra B. Mishra , Ms. Megha Bajoria, Mr. Rupesh Dubey for the Appellant.
Mr. Ketan Parekh i/by Mr. K. R. Parekh & Co., for Respondent Nos. 3 to 6.
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Coram : Sharmila U. Deshmukh, J.
Reserved on: April 29, 2025.
Pronounced on : May 7, 2025.
JUDGMENT :
1. The First Appeal is at the instance of Original Defendant
impugning the Judgment dated 25th July, 2013 passed by the City Civil
Court in Suit No. 8817 of 1992 partly decreeing the suit and directing
the Appellant to pay Rs. 4,75,226/- to Respondent with further interest
@ 10% p.a. from the date of suit i.e. from 10th July, 1992 till realisation.
2. The suit was initially filed in the High Court being Suit No.
2076 of 1992 and was subsequently transferred to the City Civil Court
and renumbered as Suit No. 8817 of 1992. For sake of convenience the
parties are referred to by the status before the Trial Court.
3. The Plaintiff came with the case that he was carrying out
warehousing business in the name of style of M/s. Morarji
Warehousing. On 7th July, 1984 one M/s. Ashok Traders stored 2297
bags in the Plaintiff's godown on payment of warehousing charges.
The Assistant Collector of Customs addressed communication dated
13th July, 1989 to the Plaintiff informing him that the goods of M/s.
Ashok Traders lying in the Plaintiff's godown was purchased by Ms.
Solvent Chemicals in an Auction held on 29 th June, 1989 and the goods
are to be delivered to the representative of custom authorities. By the
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said communication, the Plaintiff was called upon to forward the
warehousing charges bill to the Assistant Collector of Customs
directly. The communication was received on 15 th July, 1989 and as per
the instructions goods were delivered to the Custom Officer. The
Plaintiff prepared his bill for warehousing charges for the period from
7th July, 1984 to 14th July, 1989 amounting to Rs. 4,20,351/- @ Rs. 3/-
per month per bag and forwarded the same to the Assistant Collector
of Customs along with his letter dated 20 th March, 1991. As there was
default in payment of warehousing charges the suit came to be filed.
As per the particulars of claim, Rs. 4,20,351/- was charged for the
period from 7th July, 1984 to 13th July, 1989 with further interest @
24% p.a. aggregating to Rs. 3,02,622/- and the claim was for Rs.
7,22,973/-.
4. The suit was resisted by the Defendant raising objection on
ground of limitation. It was further contended that for purpose of
clearance of the goods from Custom, M/s. Ashok Traders did not have
valid license and the goods which were imported without valid license
were kept in the godown of the Plaintiff and the Plaintiff was an
abettor in receiving the goods fraudulently. It was contended that the
Plaintiff had not entered the particulars of goods in the records of the
warehouse. It was further contended that by communication dated 30 th
July, 1989, the Plaintiff was called upon to forward the bill for
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warehousing charges within 15 days however, the same was forwarded
after lapse of about one year. It was denied that there was any contract
between the Plaintiff and Defendant that the warehousing charges will
be paid by Defendant and the claim came to be denied.
5. The Plaintiff examined himself and deposed as to the
contents of the plaint. He produced the communication dated 13 th July,
1989 addressed by the Assistant Collector of Customs, evidencing
delivery of the goods to M/s. Solvent Chemicals, delivery order dated
13th July, 1989 issued by the Assistant Collector of Customs and copies
of correspondence. The Plaintiff was cross examined and the case put
up was that there was no privity of contract between the Plaintiff and
the Defendant and therefore no warehousing charges are required to
be paid.
6. The Defendant examined the Deputy Commissioner of
Customs who deposed as to the contents of the written statement. He
produced the order passed by the Collector of Customs by which
personal penalties were inflicted on M/s. Ashok Traders, the Plaintiff
and others. He deposed that by letter dated 13 th July, 1989 the
Plaintiff was asked to submit the bill to the Defendant within 15 days
which has been submitted after lapse of 1 ½ year and therefore barred
by law of limitation. In cross-examination DW-1 has admitted that the
consideration for the goods was received from M/s. Solvent Chemicals
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and the goods were delivered by Plaintiff to M/s. Solvent Chemicals.
7. The Trial Court by the impugned Judgment held that the
communication dated 13th July, 1989 is part of promise by the Assistant
Collector of Customs for payment of the warehousing charges for the
goods and the communication amounts to contract between the
Plaintiff and Defendant. On the aspect of limitation the Trial Court
held that on 20th March, 1991 the Plaintiff has submitted the bill for
warehousing charges and the period of limitation will run from 15 th
July, 1989 when the goods were handed over to the Assistant Collector
of Customs therefore the suit filed on 10th July, 1992 is within period of
limitation. The Trial Court noted that there was no contractual rate of
interest agreed upon between the parties and restricted the claim to
10% interest on the warehousing charges of Rs. 4,75,226/-
8. Mr. Mishra, learned Counsel appearing for the Appellant
would submit that the goods stored in the Plaintiff's godown were
imported without license and removed from the Bombay Port Trust. He
submits that pursuant to show cause notice issued to M/s. Ashok
Traders and Plaintiff, penalties came to be inflicted on them. He
submits that the goods were auctioned by the Custom Department and
the Plaintiff was directed to deliver to the auction purchaser the goods
and to submit the bill within 15 days however the same came to be
submitted after 1 ½ year. He points out to the confiscation order to
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contend that upon confiscation, the goods vested absolutely with the
Defendant and relies upon Section 126 of the Customs Act, 1962. He
would further submit that the suit claim was for the period from 7 th
July, 1984 when the goods were stored by M/s. Ashok Traders and
therefore the same was barred by limitation in the year 1992.
9. Per contra, Mr. Parekh, learned Counsel appearing for the
Respondent would submit that by communication of 13 th July, 1989 the
Assistant Collector of Customs called upon the Plaintiff to deliver the
goods to the auction purchaser and to raise the bill for the warehouse
charges. He submits that the Trial Court has rightly held that the
communication constitutes contract between the parties and therefore
the liability is upon the Assistant Collector of Customs to satisfy the
invoice raised. He would submit that though interest of 24% was
sought the same has been restricted to 10%.
10. The following points would arise for consideration.
(a) Whether the communication of 13th July, 1989 constitutes
contract between the Plaintiff and the Defendant imposing liability on
Defendant for payment of warehousing charges ?
(b) Whether the Plaintiff is entitled to warehousing charges from
the date when the goods were lodged in the Plaintiff's godown by M/s.
Ashok Traders or from the date that the ownership of the goods
vested in the Defendant ?
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(c) Whether the suit is barred by limitation ?
11. It would be necessary to note the relevant dates for the
purpose of determining the issue of limitation as also the period for
which the liability of the warehousing charges can be imposed upon
the Defendant. On 7th July, 1984 M/s. Ashok Traders had stored goods
in the Plaintiff's godown. On 10th August, 1987, the Collector of
Customs passed an order of confiscation of goods lying with the
Plaintiff and imposed penalties upon M/s. Ashok Traders as well as the
Plaintiffs and others under the provisions of Section 126 of Customs
Act, 1962. It will apposite to reproduce Section 126 of the Customs
Act, 1962 which reads thus:
"126. On confiscation, property to vest in Central
Government
(1) When any goods are confiscated under this Act,
such goods shall thereupon vest in the Central
Government.
(2) The officer adjudging confiscation shall take and
hold possession of the confiscated goods."
12. The provision makes it clear that upon the order of
confiscation being passed, the ownership of goods vest absolutely in
the Collector of Customs and therefore from 10 th August, 1987, the
Defendant was the owner of the goods lying in the Plaintiff's godown.
The Collector of Customs did not lift the goods upon passing of the
order of confiscation on 10th August, 1987 and continued to store the
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same in the Plaintiff's godown. On 13th July, 1989, communication was
addressed by the Collector of Customs to the Plaintiff informing the
Plaintiff that M/s. Solvent Chemicals is the successful auction
purchaser and directed the Plaintiff to deliver the goods to the said
party. The communication called upon the Plaintiff to submit the bill
for warehousing charges to the Assistant Collector of Customs for
settlement within a period of 15 days. On 15 th July, 1989, the Plaintiff
acted upon the requisitions of the communication dated 13 th July, 1989
and delivered the goods to M/s Solvent Chemicals and thereafter
raised bill for Rs. 4,20,351/- on 20th March, 1991.
13. In evidence, there is no explanation by Defendant as to
why the Plaintiff was asked to raise the invoice upon the Defendant if
there was no liability to pay. There is also no explanation as to why the
ware-housing facilities of Plaintiff were continued to be used after the
ownership of goods vested in the Defendant. The evidence indicates
that liability to pay the warehousing charges is not denied by the
Defendant and their case is that invoice was required to be raised
within a period of 15 days which was raised after period of 1 ½ years.
Upon transfer of ownership of the goods in the year 1987, the
Defendant having availed the warehousing facility of the Plaintiff, the
liability of payment of warehousing charges is on the Defendant. The
communication dated 13th July, 1989 calls upon the Plaintiff to raise
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the bill for warehousing charges which constitutes a contract between
the Plaintiff and Defendant. Even if there was no communication, as
the Defendant claims ownership of goods, the Defendant would be
liable to pay the charges.
14. By issuance of communication dated 13 th July, 1989 as the
ownership of the goods stood vested in the Defendant on 10 th August,
1987 the communication of 13th July, 1989 impliedly accepts the
liability of payment of warehousing charges from date of confiscation.
There is no term or condition in the said communication as to when the
amount under the invoice raised would become due and payable. The
period of limitation would commence from the date of communication
dated 13th July, 1989 as it was on that date that the Plaintiff was called
to raise the invoice and the suit which was filed on 10 th July, 1992 was
therefore within limitation.
15. In the year 1984, the goods belonged to M/s Ashok Traders
and the ownership came to be vested in the Defendant only upon the
confiscation order passed on 10 th August, 1987 from which date the
Defendant would be liable to pay the warehousing charges. Therefore,
the claim for the period from 7th July, 1984 to 10th August, 1987 is
required to be excluded.
16. The Trial Court has rightly considered that the
communication of 13th July, 1989 constitutes a contract. Having
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accepted the ownership of the goods lying in the Plaintiff's warehouse
and calling upon him to release the goods, the Defendant are liable for
payment of the warehousing charges.
17. Though the claim in the suit is for period from 7 th July,
1984, the Plaintiff will be entitled to the warehousing charges only
from the date of confiscation order when the ownership of the goods
vested in the Defendant i.e. from 10 th August, 1987 to 13th July, 1989 @
Rs. 3/- per month per bag for 2297 bags stored in the Plaintiff's
godown, which amounts to Rs. 1,65,384/-.
18. In light of the above, the Appeal is partly allowed and the
following order is passed:
::ORDER::
a) First Appeal is partly allowed.
b) The suit is partly decreed.
c) The Defendant shall pay Rs. 1,65,384/- to the Plaintiff with
interest @ 10% p.a. from the date of the suit i.e. from 10 th July, 1992
till payment or realisation.
19. In view of the disposal of First Appeal, nothing survives for
consideration in the pending Civil/Interim Applications and the same
stand disposed of.
[Sharmila U. Deshmukh, J.]
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