Container Corporation Of India ... vs Marut Nandan Overseas Ltd. And ...
2002 Latest Caselaw 2174 Del

JUDGMENT

A.K. Sikri, J.

1. M/s Marut Nandan Overseas Ltd., who is respondent No. 1 in the present appeal, filed Suit No. 1900/2000 on the original side of this court which is still pending adjudication. This suit is for declaration, mandatory injunction and recovery of loss, damages and compensation. The prayers made in the suit are to the following effect:

a) pass a decree in favor of the plaintiff for a sum of Rs. 9,50,644/- towards the loss and damages and compensation against the defendants No. 1, 2 and 6 severally and jointly, along with interest pendentelite and future at the rate of 24% p.a.

b) pass a decree for mandatory injunction directing the defendant No. 2 to immediately release the goods after deposit of the customs duty by the plaintiff as assessed and without any demurrage/detention charges and the defendant No. 3 & 4 be restrained from auctioning the goods.

c) declare that the plaintiff is not liable to pay the demurrage/detention charges and other incidental and ancillary charges to defendant No. 3 and 4 in respect of the consignment covered by B/E No. 221908 dated 19-2-2000 and 224675 dated 25-4-2000 and/or further declare that it is the defendants No. 1, 2 and 6 who are liable to pay the aforementioned charges.

2. The plaintiff/respondent No. 1 entered into a contract with a company known as M/s Unique International FZE, Sharjah and purchased Furnace Oil from that company. This Furnace Oil was put into drums and packed into 16 containers. The containers were loaded on to shipping vessel and were to be delivered to the plaintiff/respondent No. 1, who was the consignee of these goods, at ICD, Tughlakabad. The goods reached the ICD, Tughlakabad. However, when the plaintiff/respondent No. 1 sought clearance of these goods, the customs authorities refused the permission to clear the consignment on the ground that the Furnace Oil was a hazardous substance. As the plaintiff/respondent No. 1, because of refusal of permission by the customs authorities, could not get the goods cleared, it filed the aforementioned suit with the prayers quoted above. The defendant No. 1 in the suit is the Union of India and defendant No. 2 is the Commissioner of Customs. Defendant No. 3 is the Container Corporation of India (who is appellant in this appeal). The plaintiff/respondent No. 1 also arrayed defendant No. 4, who is the shipping agent of defendant No. 5 which is a shipping company based at Singapore. Defendant No. 5 is the owner of the containers. As per the contract between the defendant No. 5 and the plaintiff/respondent No. 1, the defendant No. 5 has to recover its charges for hiring of the containers by the plaintiff/respondent No. 1 and transportation from UAE to ICT, Tughlakabad, Delhi from the plaintiff/respondent No. 1. Since the container Corporation of India Ltd./appellant (for short 'CCIL') manages cargo handling containers at ICD (dry port), apart from other places, it was arrayed as defendant No. 3 by the plaintiff/respondent No. 1 in the aforesaid suit.

3. It may be mentioned that Along with the suit, the plaintiff/respondent No. 1 also filed an application under Order XXXIX Rule 1 & 2 of the Code of Civil Procedure (CPC). In that application the learned Single Judge of this court passed an ex-parte order dated 31st August, 2000 directing the Commissioner of Customs to release the goods covered under the Bill of Entry No. 224675 dated 25th April, 2000 after the deposit of the customs duty as assessed and without detention/demurrage charges. The CCIL was also restrained from auctioning the consignment. The respondent No. 3 read with Section 151 CPC for setting aside the ex-parte order 31st August, 2000. On this application the learned Single Judge passed an order for inspection of the goods by three laboratories who gave the report that goods in question were off specifications and contained several contaminers and waste. Finding that the goods were of hazardous nature and suffered from various contaminers, the learned Single Judge dismissed the application of the plaintiff/respondent No. 1 holding that such goods could not be allowed to be floated in the market. Ex-parte order dated 31st August, 2000 was vacated and application of the Customs authorities under Order XXXIX Rule 4 CPC was allowed.

4. At this stage, the defendants 4 and 5 filed application (IA No. 11658/2001) for release of the containers. This application has been allowed by the learned Single Judge vide impugned order dated 10th May, 2002 directing that the containers shall be destuffed within two months and shall be released to the defendants 4 and 5. Present appeal is filed by the CCIL against this order.

5. It may be relevant to point out at this stage that one day before passing of the impugned order, i.e., on 9th May, 2002 the defendants 1 and 2 (respondents 2 & 3 herein), namely, the customs authorities passed an order No. C.No.VIII(ICD)/6/Adj/Commr/33/2002/11103 as per which goods in question have been confiscated by the customs authorities under Section 111(d) of the Customs Act, 1962.

6. Having heard the learned counsel for the parties and having perused the material on record, we are of the opinion that the impugned order passed by the learned Single Judge is unsustainable for more than one reasons.

i) The first and foremost reason to upset the order is that no such application at the behest of the defendant No. 4 was maintainable. The suit has been filed by the plaintiff/respondent No. 1. The plaintiff/respondent No. 1 made an attempt for release of the goods as an interim measure. Such an application filed by the plaintiff/respondent No. 1 was dismissed after finding that the goods are of hazardous nature. In fact the nature of the goods being hazardous is not disputed at this stage. There is an order of confiscation of goods as well. When such an application filed on behalf of the plaintiff/respondent No. 1 for release of the goods was dismissed, how the application for release of containers filed on behalf of the defendant No. 4 could be maintainable? The suit is not filed by the defendant No. 4. In such a suit filed by the plaintiff, relief of this nature could not have been given to the defendants 4 and 5.

ii) Even otherwise once the goods are confiscated this confiscation has to be Along with containers. In so far as custom authorities are concerned, or for that matter CCIL is concerned, they have no privity of contract with defendants 4 and 5. Defendants 4 and 5 had given on hire the said containers to the plaintiff/respondent No. 1. Cause of action of the defendants 4 and 5, if at all was against the plaintiff/respondent No. 1. Even otherwise it was for the defendants 4 and 5 to bring out separate proceedings against the plaintiff/respondent No. 1, CCIL or Custom authorities and such an application could not have been filed in the suit filed by the plaintiff/respondent No. 1. With regard to maintainability of the application filed by the defendants 4 and 5 before the learned Single Judge in which the impugned order has been passed, the learned counsel submitted that the refusal of the learned Single Judge to grant the order of injunction

prejudicially affected the defendants 4 and 5. Since they were already parties to the suit, they sought the release of their containers by way of an application and the learned single Judge in exercise of his discretion, keeping in mind the equities of the case, directed release of the containers. For, in any other event the defendants 4 and 5 would have been constrained to file a separate suit or a writ petition to seek release of their containers and any court would lean in favor of a course of action which would not propel parties to indulge in multiplicity of litigation. This is an argument in despair. The defendants 4 and 5 cannot justify the maintainability of the application only on the ground by being presumptuous that had they filed a separate suit or writ petition the court would have granted them the order of release of the containers.

(iii) The CCIL had also pleaded before the learned Single Judge that the drums were leaking and if the leaking drums are destuffed, the operational area of the CCIL would be adversely affected thereby affecting the working and the operation of the ICD which is already working beyond its operational capacity and which caters to 65% of the Container Traffic of Import and Export from Northern India which also affects Import and Export which are very essential for the economy.

We are of the opinion that the learned Single Judge was not correct in brushing aside the aforesaid important aspect of the matter. The CCIL has pleaded paucity of space and its fears to destuff the leaking Furnace Oil putting into jeopardy not only the working conditions at the ICD but also the life of the personnel working therein and the inhabitants living in colonies and areas adjacent to the ICD.

(iv) The learned Single Judge has referred to the judgment of the Supreme Court in the case of Port of Madras through its Chairman v. KPV Sheikh Mohd. Rowther & Co. Pvt. Limited in support of the proposition that the liability of the warehouse charges is that of the consignee and not of the shipping owner or shipping agents and, therefore, the warehouse charges can be recovered from the plaintiff/respondent No. 1. However, in view of what we have observed above, this aspect of the matter as to who has to pay the warehouse charges is totally irrelevant inasmuch as in the instance case, the goods have been confiscated by the customs authorities. Similarly reliance placed by the learned Single Judge on the office memorandum dated 19th November, 1999 issued by the Government of India, Ministry of Finance was not relevant as that office memorandum deals with the situation where the goods are required to be detained for detailed examination, investigation etc. and not when the goods are confiscated.

7. This appeal warrants to be allowed on the above analysis and particularly on the ground of non-maintainability of the application of defendants 4 and 5. We may, however, note some other contentions raised by the appellant:

(a) It is the case of the CCIL that defendant No. 4, who is the agent of defendant No. 5, approached the CCIL's Mumbai office for carriage of 16 containers from Mumbai to ICD, Delhi sometime in March/April, 2000. The containers were booked by the defendant No. 4 on the basis of public notice of the CCIL which contained the terms and conditions for carriage of the containers, handing of containers and giving the delivery of the goods/containers at ICD Delhi. The relevant portion of public notice is as under:

"Import loaded containers shall be moved for destuffing only after all Customs and other formalities have been completed and customs examinations arranged by shipper/agent. CONCOR would reserve the right to decide which import containers and what kind of import commodities are to be destuffed in the ICD warehouse or in the nominated open space. For rest, the cargo will be left in the containers itself till final delivery is taken by the shippers or Customs/CONCOR disposes of the goods following procedure laid down by CONCOR and as specified in Indian Customs Act."

According to the appellant, the defendants 4 and 5 were bound by the terms of the aforesaid public notice as per which cargo has to be left in the containers itself till the final delivery is taken by the shippers or customs/CCIL disposing of the goods. This aspect of the matter has not been looked into by the learned Single Judge in the impugned order.

(b) The learned Single Judge has also overlooked another important aspect, i.e., after the goods are confiscated they vest in the Central Government by virtue of Section 126 of the Customs Act, 1962 which is to the following effect:

"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."

Thus the confiscated property now vests in the Central Government and it is the prerogative of the Central Government to deal with the goods in question in an appropriate manner and in the process to take decision as to what is to be done with the containers till then the containers cannot be released to the defendants 4 and 5.

(c) It may be pointed out at this stage that another submission of the appellant is that the Supreme Court in Writ Petition (C) No. 657 of 1995 entitled Research Foundation for Science v. Union of India vide order dated 20th May, 1998 ordered that the customs authorities and other authorities having custody of the hazardous waste are neither to release nor auction the said wastes till further order in that regard by the Supreme Court and the High Powered Committee was appointed by the Supreme Court in that regard. It is the submission of the CCIL that it is having 500 containers containing the hazardous waste as per the directions of the Supreme Court and if the containers are destuffed the CCIL will have no space and the operations of the defendant No. 3 will come to the grinding halt affecting the import and export of the goods and thus affecting the Indian economy vitally which will be against public interest.

However we are not expressing any final opinion of these submissions. Likewise the defendants 4 and 5 relied upon a judgment of the Bombay High Court. As and when the defendants 4 and 5 file appropriate independent proceedings, it would be open to the parties to take respective stands.

8. Learned counsel for the defendants 4 and 5 sought to argue that as the goods have been confiscated and property vested in the Central Government and the custom authorities, the appeal filed by the CCIL was not competent. However, this argument overlooks one relevant point, namely, the goods till they are removed by the customs authorities, are to be kept with the CCIL and it is the CCIL who was, in normal course, bound to carry out the directions contained in the impugned order dated 10th May, 2002 of the learned Single Judge. Therefore, as the CCIL has adversely been affected by the said order, it could maintain the present appeal.

9. Consequently, the appeal is allowed. Impugned order dated 10th May, 2002 passed by the learned Single Judge is hereby set aside. IA No. 11658/2001 filed by the defendants 4 and 5 is dismissed as not maintainable.