Brahma Steyr Tractors Ltd. vs Union Of India & Ors.
2010 Latest Caselaw 4694 Del

           IN THE HIGH COURT OF DELHI AT NEW DELHI

                            W.P.(C) No. 8115 of 2002& CM Nos. 1103, 1767 &
                            9757 of 2003 & CM No. 5340 of 2009

                                             Reserved on: September 23, 2010
                                             Decision on : October 6, 2010

         BRAHMA STEYR TRACTORS LTD.               ..... Petitioner
                     Through: Mr. R.S. Sharma, Advocate.

                            versus


         UNION OF INDIA & ORS.                       ..... Respondents
                       Through: Mr. Jatan Singh, CGSC for UOI.
                        Mr. Buddy A. Rangnathan with
                       Mr. Gautam Talukdar, Advocates for R-3.
                       Mr. Mukesh Anand, Advocate for R-5.

         CORAM: JUSTICE S. MURALIDHAR

                  1. Whether reporters of the local news papers
                     be allowed to see the judgment?                        No
                  2. To be referred to the Reporter or not?                 No
                  3. Whether the judgment should be reported in the Digest? No
                                     JUDGMENT

06.10.2010

1. The Petitioner which is a private limited company having its registered

office at Chandigarh seeks a writ of mandamus directing the Director

General of Foreign Trade („DGFT‟) to pay the Mumbai Port Trust („MPT‟)

(Respondent No.3 herein) the demurrage charges claimed by MPT in

respect of Lot No. 6747 belonging to the Petitioner. An alternate prayer is

for a direction to the DGFT to reimburse the Petitioner the demurrage

charges. The Petitioner also seeks the quashing of the auction held by the

MPT on 7th November 2002 and for a direction to the MPT to decide the

Petitioner‟s representation dated 14th March 2002 regarding the levy of the

accumulated demurrage/port charges.

W.P. (C) No. 8115 of 2002 page 1 of 9

2. The Petitioner, a public limited company having its registered office at

Chandigarh, is stated to have been incorporated with the main object of

implementing a state of art technology project for manufacture of tractors of

48 HP. It is stated that on 5th November 1997, it entered into certain supply

agreements with a company in Austria whereby the items to be imported by

the Petitioner included two new machines and three second-hand machines.

The Petitioner claims to have obtained permissions from the government

for the import. The Petitioner imported 80% of the plant and machinery.

However, the DGFT declined to grant the Petitioner an EPCG licence for

two of the second-hand machines on the ground that under the new EXIM

policy effective from 1st April 1999, ECPG licence could be issued only for

new machines. The Petitioner was asked to submit an application for the

grant of a special import licence („SIL‟).

3. The case of the Petitioner is that it had entered into the supply agreement

in 1997 itself and, therefore, the imports were not covered under the new

EXIM policy, which became effective only from 1st April 1999.

4. The Petitioner filed a writ petition in the High Court of Punjab &

Haryana for the grant of SIL. However, in the meanwhile SIL was granted

to the Petitioner on 4th February 2001. Consequently the said the writ

petition was disposed of as having become infructuous. As regards the

demurrage charges that had accumulated, the High Court of Punjab &

Haryana gave liberty to the Petitioner to challenge the same after it was

communicated to the Petitioner.

W.P. (C) No. 8115 of 2002 page 2 of 9

5. According to the Petitioner, without any prior notice to it, MPT

advertised the Petitioner‟s imported machinery for auction on 7th November

2002. The machinery was purchased by Pushp Holdings Ltd. (Respondent

No.4 herein). The Petitioner states that MPT finally quantified the

demurrage as Rs. 1,99,73,633/- and communicated it to the Petitioner on

29th November 2002. The Petitioner was given the time till 2 nd December

2002 to pay the entire amount.

6. The case of the Petitioner is that the delay, if any, in Petitioner being

allowed to clear the imported goods was not on account of any default

committed by the Petitioner. At every stage it was the DGFT or the

Customs Department which had caused unnecessary delay. The SIL which

had been applied in January 2001 was finally granted to the Petitioner only

on 4th December 2001. The DGFT had erred in seeking to apply the new

EXIM policy although the imports were covered by agreements entered into

with the foreign supplier in 1997 itself.

7. On 17th December 2002, this Court passed an interim order to the effect

that if the Petitioner furnished on or before 8th January 2003 a bank

guarantee for the sum of Rs. 1 crore then "the MPT shall not take steps

pursuant to the auction held on 7th November 2002." The Petitioner could

not furnish the bank guarantee but filed an application being CM No. 270 of

2003 pointing out that the auction itself had been cancelled. This

application was disposed of on 14th January 2003 clarifying that there was

no need to furnish any bank guarantee. In CM No. 13817 of 2002 it was

clarified by this Court that it would be open to the MPT to take steps for a W.P. (C) No. 8115 of 2002 page 3 of 9 fresh auction in accordance with law after giving the Petitioner notice of

such auction. On 28th January 2003, this Court disposed of CM No. 1103 of

2003 issuing the following directions:

"1. Auction of the machinery belonging to the Petitioner which is lying with Respondent No.3 scheduled for 29th January 2003 may go on if Respondent No.3 so desires. However, it s hall not be confirmed till the next date of hearing to ensure that no third party rights are created.

2. Without prejudice to the rights and contentions of the parties, Petitioner shall deposit a sum of Rs. 1 crore within two weeks from today with Respondent No.3.

3. Petitioner‟s application seeking remission of demurrage charges is pending with Respondent No.3. According to Respondent No. 3, Petitioner has not supplied certain documents because of which the same could not be considered although it is the case of the Petitioner that these documents were supplied. Without going into this dispute learned counsel for the Petitioner states that the documents as demanded by Respondent No.3 shall be supplied within seven days. On receiving these documents Respondent No.3 shall take decision about remission of the demurrage charges within two weeks thereafter.

List the application for hearing on 26th February 2003 along with the main Writ Petition.

Copy of the Order be given DASTI to all the parties."

8. On 16th September 2005, by a detailed order this Court permitted the W.P. (C) No. 8115 of 2002 page 4 of 9 Petitioner to amend the writ petition subject to payment of Rs. 25,000/- as

costs. The purpose of the amendment was to incorporate facts arising out

of the developments subsequent to the filing of the writ petition.

9. Mr. R.S. Sharma, learned counsel appearing for the Petitioner submitted

that at every stage the delay in the Petitioner being permitted to clear the

imported goods was on account of either the DGFT, the Customs

Department or the MPT itself. In the circumstances to require the Petitioner

to pay the entire demurrage was not justified. It is submitted that the MPT

acted in violation of Section 62(1) of the Major Port Trusts Act, 1963

(„MPT Act‟) read with Section 61(3) thereof. The Petitioner had already

deposited Rs. 1 crore with the MPT pursuant to the orders of this Court. It

is submitted that the clearing agent of the Petitioner also approached the

Customs with a letter dated 10th March 2003 for obtaining a no objection

certificate („NOC‟). The Petitioner also submitted a bill of entry of the

goods imported by it on 5th May 2003 for noting the same so that the

Petitioner could clear the goods lying with the MPT. A reply was received

from the Customs Department only on 30th May 2003 requiring the

Petitioner to provide the lying position of the goods in order to note the bill

of entry. The Petitioner‟s clearing agent wrote to the MPT on 3rd July 2003

to ascertain the lying position of goods and this was confirmed by the MPT

on 10th October 2003 which was then forwarded to the Customs

Department. It was submitted that the Customs Department failed to note

the bill of entry earlier and therefore the Petitioner was unable to clear the

goods.

W.P. (C) No. 8115 of 2002                                             page 5 of 9
 10. Appearing for the MPT, Mr. Gautam             Talukdar, learned counsel

submitted that in terms of Section 58 of the MPT Act demurrage became

payable immediately on the landing of the goods at the port. Under Section

59 the Board of the MPT had a lien in respect of the imported goods for the

dues owing to the MPT on account of all charges including demurrage.

Under Section 59(2) of the MPT Act such lien would have priority over all

other liens. Section 61 of the MPT Act makes it clear that after the expiry

of two months from the time when any goods have passed into its custody

or during a shorter time where the goods are of perishable nature, the Board

of the MPT could sell all or a portion of the goods by auction or, for reasons

to be recorded in writing, by private agreement or so much thereof as in the

opinion of the Board was necessary. Under Section 61(2) ten days‟ advance

notice had to be given. It is submitted that the MPT had acted strictly as per

the provisions of the MPT Act and had committed no illegality. Referring

to the decisions of the Supreme Court in International Airports Authority

of India v. Grand Slam International 1995 3 SCC 151, Union of India v.

Sanjeev Woolen Mills (1998) 9 SCC 647 and Om Shankar Biyani v. Board

of Trustees, Port of Calcutta (2002) 3 SCC 168 it is submitted that the

payment of demurrage to the MPT was a separate liability which could not

be linked up with any default that have been committed by the Customs

Department.

11. Mr. Mukesh Anand, learned counsel appearing for the Customs points

out that the bill of entry was not filed by the Petitioner with the Customs for

nearly four years after the actual import which took place in 1999. In terms

of Section 46 read with Section 48 of the Customs Act, 1962 no importer W.P. (C) No. 8115 of 2002 page 6 of 9 could be permitted to clear the goods for import without filing a bill of

entry. As an importer the Petitioner ought to have known this position as

well as the requirement of obtaining an NOC. It is submitted that there was

no delay on the part of the Customs Department and in that in any event no

direction could be issued to it to pay demurrage charges.

12. The above submissions have been considered. In Grand Slam

International which was decided by a majority of 2:1 it was clarified by the

Supreme Court as follows:

"41. The purpose of the Customs Act on the one hand and the Major Port Trusts Act and the International Airports Authority Act on the other hand are different. The former deals with the collection of Customs duties on imported goods. The latter deals with the maintenance of sea-ports and airports, the facilities to be provided thereat and the charges to be recovered therefore. An importer must land the imported goods at a seaport or airport. He can clear them only after completion of Customs formalities. For this purpose, the sea-ports and airports are approved and provide storage facilities and Customs officers are accommodated therein to facilitate clearance. For the occupation by the imported goods of space in the sea-port or airport, the Board or the Authority which is its proprietor is entitled to charge the importer. That until Customs clearance the Board or the Authority may not permit the importer to remove his goods from its premises does not imply that it may not charge the importer for the space his goods have occupied until their clearance."

13. The above position was reiterated in Shipping Corporation of India

W.P. (C) No. 8115 of 2002 page 7 of 9 Ltd. v. C.L. Jain Woolen Mills AIR 2001 SC 1806. However in the said

judgment the Court in para 5 made it clear that the provisions of the MPT

Act were not being discussed. The Court also noticed that there was no

inconsistency between the judgment in Grand Slam International and the

subsequent judgment in Sanjeev Woolen Mills. The position has been

further crystallised in Union of India v. R.C. Fabrics (P) Ltd. (2002) 1

SCC 718 where in para 16, the Supreme Court set aside a direction issued

by the High Court for the Customs Department to pay the demurrage,

container charges and ground rent and held the decision to be contrary to

the settled position as explained in Grand Slam International.

14. In Om Shankar Biyani, the Supreme Court reiterated the position with

reference to the MPT Act. In para 18 it was observed as under:

"18. In our view the proposition that the bailee, who exercises a lien, is not entitled to charge rent for storage of goods can never apply to a case where the lien is exercised for non-payment of rent or storage charges. If such a proposition were to be accepted it would lead to catastrophic results. It is well known that in most cities, particularly port cities like Calcutta and Bombay, storage space is at a premium. If such a proposition were accepted then all that a person need to do is to make a demand for removal of the goods without offering to pay the storage charges. If the bailee were to refuse to allow clearance and exercise his right of lien, as he is bound to do, the bailor's purpose would be served. He would thereafter have rent free storage space.

He could then continue to store the goods free of rent. On the other hand, if the bailee were to permit clearance, in almost all cases, his charges would not be subsequently paid W.P. (C) No. 8115 of 2002 page 8 of 9 and he would have to then pursue the bailor for recovery of his charges. This could never be the law."

15. In view of the clear position in law explained in the above decisions, it

is not possible for this Court to accept the prayer of the Petitioner and issue

a mandamus to the Customs Department to either reimburse the Petitioner

the demurrage charges or to pay the demurrage charges directly to the MPT.

16. After adjusting the amount deposited with it by the Petitioner, it will be

open to the MPT to recover the balance amount of demurrage from the

Petitioner in accordance with law. As far as the Petitioner is concerned, it

will have to avail of other remedies, if available in law, to seek

reimbursement of the demurrage charges paid by it. The writ petition and

pending applications are dismissed.

                                                           S. MURALIDHAR, J
OCTOBER 6, 2010
dn




W.P. (C) No. 8115 of 2002                                             page 9 of 9