1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO.531 OF 1987 The Board of Trustees of the Port of Bombay .. Plaintiffs Versus Britannia Industries Ltd. & Anr... Defendants Mr.U.J.Makhija i/b. Mulla & Mulla for plaintiffs Mr.David Gomes for defendant No.1. Mr.Abhay Parab for defendant No.2. CORAM : S.C.DHARMADHIKARI, J. Reserved: 13th September 2007 Pronounced: 8th December 2008. ORAL ORDER:- 2 . This is a suit by the Bombay Port Trust for recovery of a sum of Rs.1,85,83,877.74 with interest on this sum at the rate of 15% p.a. from the date of the suit till payment. 2. The suit is filed on 21st February 1987. The first defendants to the suit is Britania Industries Ltd., a public limited company. First defendant Britania is termed as "Importer/owner of the consignee" by the plaintiffs. Second defendant are impleaded in their capacity as shipping Agent. They are carrying on business as shipping and clearing Agents. The plea raised in the plaint is that the second defendant is also liable in its capacity as importer/owner of the goods. 3. This is a suit for recovery of the port trust charges. The plaint proceeds to allege that at all material times, the plaintiffs have been the owner of the docks at Bombay. Under the 3 provisions of Major Port Trust Act, 1963, as amended, (for short "Act"), the plaintiffs are required to take charge of the goods landed from the ship coming to Mumbai. Under the provisions of the said Act, the plaintiffs are entitled to charge and levy wharfage, demurrage and other charges in respect of the goods landed and stored by the plaintiffs in the docks at Mumbai, According to the scale of rates duly prescribed, published and brought into force under the provisions of the said Act and to realise the charges of sale of the consignment in respect of which the charges have accrued. 4. In or about December, 1982, A consignment of 47 coils steel sheets landed at the Port. The coils were part of a consignment landed at Mumbai. The same was booked by parties to whom a reference will be made in the subsequent paragraphs. The said consignments were manifested as Excess in the Import General 4 Manifest No.1110 of December 1981, of the vessel S.S.Arica. The General Landing date and the last free day of the cargo of the vessel were 29th December 1981 and 1st January 1982 respectively. The said consignment was outturned by the Assistant Manager, Indira Dock on 2nd April 1982 as excess landed. 5. The plaintiffs state that the said consignments were discharged by the said vessel upto the docks at Mumbai. The said consignment were lying uncleared for a protracted period of time. The same were listed for sale and sold in two different lots after completing all the statutory requirements as follows:- (a) 22 coils steel sheets were sold under Lot No.F-2703 on 27/7/1983 and 1/8/1983 out of which a sum of Rs.11,15,271.71 was realised; 5 (b) 25 coils steel sheets were sold under Lot No.F-2703-A on 19/10/1983 and 24/10/1983 for Rs.11,67,759.60. The aforesaid sales were made in both the lots on the aforesaid respective dates after completing all the statutory requirements. 6. The defendants are importers and/or owners of the said consignment within the said Acts, as such importers/owners the defendants were bound and liable to take delivery of and clear the said consignments within 7 clear days from the date of landing thereof and to pay wharfage, demurrage and other charges which accrued due thereon and were payable to the plaintiffs for the period during which the said consignment remained on the premises of the plaintiffs. 7. The plaintiffs state that as the said 6 consignment which was imported by the aforesaid vessel was uncleared for over two months from the date of landing thereof, the plaintiffs by their letter dated 29th June 1982 informed defendant No.2 that as the said consignment of 47 coils steel sheet lying uncleared for over two months from the date of landing thereof, the same were being put up for sale and under the provisions of Sections 61 and 62 of the said Act, and the proposed sale would be held on the proposed date mentioned in the said letter or any other subsequent date without further notice unless the same was cleared on payment within 10 days of the receipt of the letter. The plaintiffs further stated that the said consignments were liable to be sold either by public auction or by private agreement or by tenders without further notice. The 2nd defendants by their letter dated 22nd April 1982 addressed to the Docks Manager, inter alia, confirmed that the said two consignments of 47 coils were landed and delivered as excess 7 cargo. 8. The clearing agent, M/s.Orient Transport company on behalf of defendant No.1, the consignees of the said two consignments collected the ADO from defendant No.2 and noted the bill of entry for 47 coils in the customs house under Additional Entry No.7. The said coils were valued at Rs.9,87,345/- and the same were released by the customs on payment of customs duty amounting to Rs.5,45,968.35. The said clearing agents had by their letters dated 5th April 1982, applied for concessional levy of Port Trust charges but the same was rejected by the Assistant Accountant Revenue, Audit by his letter dated 12th July 1982. 9. It is the case of the plaintiffs that the consignment remained uncleared for a period over two months from the date of landing. In such circumstances, a notice was published in the 8 newspapers dated 28th June 1982 so also in Maharashtra Government Gazette on 1st July 1982 for sale of 47 coils. However, the sale took place in lots. In the first lot, 22 coils were sold and a sum of Rs.11,15,271.76 was realised, after deduction of several charges as specified more particularly in para 9 of the plaint. Thus, insofar as the first lot is concerned, a sum of Rs.18,69,254.37 towards Port Trust dues/charges remained in deficit. 10. The second lot of 25 coils was sold which fetched a sum of Rs.11,67,759.60 as stated in para 10 of the plaint, after deduction of expenses. Insofar as second lot is concerned, the deficit was computed at Rs.1,05,14,623.47. 11. On 14th July 1983, the plaintiffs intimated in writing to the defendants about sale of two consignments and requested the defendants to forward documents in respect of the goods to 9 enable the plaintiffs to ascertain the accrued charges. Finding that there is no response, two letters were addressed on 19th July 1986. The plaintiffs called upon the defendants to pay the sum as computed in respect of the consignment with interest. There was a reminder on 21st July 1986. However, it is the case of the plaintiffs that the defendants failed and neglected to give any reply to these letters. 12. In the light of the above, the present suit was filed. It is contended in the plaint that sums as computed are due and payable with interest. The suit has been filed in this Court because the consignments landed and were stored in Mumbai. The charges became due and payable in Mumbai and the entire cause of action has arisen in Mumbai. The suit claim is within limitation because the charges were crystalised after the consignments were sold. 10 13. After the institution of the suit, the writ of summons was duly served and thereupon the written statements are filed by both the defendants. Insofar as first defendant is concerned, the stand is that it is not liable to pay any sums much less as demanded. Apart from the objections on the ground of misjoinder/nonjoinder of proper and necessary parties, the suit claim being barred by limitation so also lack of privity it is contended that some time in June 1982, the second defendants, as the vessel’s agents represented to these defendants that the said 47 coils being excess landed from the said vessel, were lying in the BPT Docks without any one claiming the same. The aforesaid official documents as contained in Exh.1, 2 and 3 issued by the plaintiffs were also shown by the 2nd defendants to the 1st defendants to indicate that the said 47 coils were in fact excess landed and were lying in the docks without any claimant. The 1st defendants were also told 11 that the demurrage, if any, payable to the plaintiffs would be only about 1/8th of the normal demurrage charges, in view of the fact that the said 47 coils were excess landed and lying in the docks without any claimant. Relying on these representations officially confirmed by the plaintiffs by their official documents vide Exh.1, 2 and 3 above, that the said 47 coils were excess landed from the said vessel and lying uncleared in the BPT docks and since the 2nd defendants were looking for a buyer to purchase the said 47 coils and that the demurrage, if any, payable to the plaintiffs would be only 1/8th of the normal demurrage charges, these defendants offered to purchase the said 47 coils for a lumpsum price of Rs.2,00,000/- and in fact paid to the 2nd defendants deposit of Rs.25,000/- as advance. The letter dated 3rd June 1982 and the second defendants’ confirmation letter dated 5th June 1982 which also acknowledges the receipt of the sum of Rs.25,000/- as advance. The second 12 defendants by a certificate dated 5th June 1982 confirmed that there was no claim on the said 47 coils since these were excess landed from the said vessel and that the only charge for the clearances would be the customs duty, penalty and BPT charges. The second defendants by their letter dated 5th June 1982 addressed to the plaintiffs’ Docks Manager, requested them that the said 47 coils may be withdrawn from the auction proposed to be held by the plaintiffs in July 1982, since the 2nd defendants proposed to deliver the said 47 coils to the 1st defendants. The first defendants were also informed that the customs duty would be only Rs.5,45,968.35, apart from the demurrage, if any, payable to the BPT, being 1-8th of the normal demurrage charges. The first defendant accordingly made an advance deposit of Rs.5,45,958.35 as duty with the Customs Authorities. 14. The second defendants by a delivery order 13 dated 5th June 1982 requested the plaintiffs’ Docks Manager to deliver the said 47 coils to the first defendants. However, when the first defendants’ clearing agents, Orient Transport Co., approached the plaintiffs for clearing the said 47 coils, the plaintiffs, without prior notice and for no apparent reason changed their stand and refused to deliver the said 47 coils as excess landed cargo by accepting 1/8th demurrage charges and demanded full demurrage charges. The plaintiffs by their letter dated 13th July 1982 purported to record that, after careful scrutiny of the Import General Manifest and other relevant documents, they had come to the conclusion that the cargo was not at all excess landed from the said vessel and purported to demand full demurrage charges. By a letter dated 13th July 1982 the plaintiffs’ Deputy Manager informed the plaintiffs’ Assistant Manager (Sales) that if the consignment was not cleared within ten days from the date of the receipt of the said letter, the 14 said 47 coils should be sold by public auction. If the cargo was manifested and not excess landed the suit ought to have been directed against the person who is named in the manifest and not these defendants. 15. In substance, the argument is that defendant No.1 agreed to purchase 47 coils only because the plaintiffs had initially confirmed and certified that the said 47 coils were excess landed from the vessel and lying uncleared in the docks. However, plaintiffs represented that in respect of these 47 coils, which is excess landed cargo, demurrage would be computed at the rate of 1/8th of the normal charges. Thus, on this basis that the first defendant agreed to purchase 47 coils. However, these defendants were prevented by the plaintiffs from lifting the said cargo because, suddenly and without any notice, the plaintiffs changed their stand. Plaintiffs stated that the status of the Cargo is not 15 "excess landed" but "manifested cargo". Therefore, placing reliance upon the letter dated 13th July 1982, it is contended by the first defendant that the plaintiffs demanded full demurrage charges. Once this demand was made, the first defendants intimated to the second defendants that they are not interested in the said cargo any longer. Once such an intimation was given, then, there is no question of first defendant paying any sums much less the sum demanded. Consequently, they prayed for dismissal of the suit. 16. The second defendant has filed written statement and more or less similar contentions are raised. Additionally, it is contended that these defendants by a delivery order dated 5th June 1982 requested the plaintiffs’ Docks Manager to deliver the said 47 coils to the first defendants. However, when the first defendants’ clearing agents, Orient Transport Co. approached 16 the plaintiffs for clearing the said 47 coils, the plaintiffs, without prior notice and for no apparent reason changed their stand and refused to deliver the said 47 coils as excess landed cargo by accepting 1/8th demurrage charges and demanded full demurrage charges. The plaintiffs by their letter 13th July 1982 purported to record that, after careful scrutiny of the Import General Manifest and other relevant documents, they had come to the conclusion that the cargo was not at all excess landed from the said vessel and purported to demand full demurrage charges. After relying upon a letter of the plaintiffs dated 13th July 1982 addressed to the agent of first defendant, the second defendant states that by the said letter plaintiffs’ Dy.Manager informed plaintiffs’ Assistant Manager (Sales) that if the consignment was not cleared within ten days from the date of the receipt of the said letter, the said 47 coils would be sold by public auction. If the cargo was manifested and not 17 excess landed the suit ought to have been directed against the person who is named in the manifest and not the second defendants. Further the second defendant took steps to clear the 47 coils by giving the offer to the first defendants and the first defendant has accepted the offer of second defendants and also taken steps to clear the goods. On account of the action of the plaintiff, the sale is not finalised otherwise this situation would not have arisen. There was no occassion to sell the said goods in auction sale. If the plaintiff had disclosed the name of importer of said 47 coils, these defendants would have taken appropriate steps in the matter and would have informed the importer to clear his consignment from plaintiffs but the plaintiffs have failed to give the name of importer of the consignment and for the said reason this situation has arisen and not because of any fault on the part of these defendants. The plaintiffs have dragged these defendants in these 18 proceedings and are raising a claim against them which is illegal, bad in law and is Time barred. 17. The second defendants have denied their liability on the ground that they are agents of the vessel on which the cargo was loaded. They have nothing to do with the cargo. Consequently it cannot be stated that the second defendants are liable to pay the port trust charges. This plea is raised in para 15 of the written statement by contending that the second defendant could not have taken delivery of the said consignments. 18. After the pleadings were complete, this Court passed the following order framing issues:- ". Heard both sides. Perused the pleadings of both parties. The following issues are framed:- 19 (1) Whether the plaintiffs prove that the first defendants are the importers/owners of the suit consignment and that the first defendants imported a consignment of 47 coils of the steel sheets in or about December 1982? (2) Whether the plaintiffs prove that the suit consignment of 47 coils of steel sheets were lying in their docks for a protracted period of time and/or that they complied with all the statutory requirements before they sold the suit consignment? (3) Whether the plaintiffs prove that from the sale of the 22 coils of steel sheets the total amount realised was Rs.11,15,271.76 and/or that there remained a deficit of Rs.80,69,254.37 as Port Trust charges in respect of the said 22 coils and/or that the alleged sale deficit became due and payable by the first defendants to the plaintiffs? (4) Whether the plaintiffs prove that from the sale of 25 coils of steel sheets the amount realised was Rs.11,67,759.60 and/or that there remained a deficit of Rs.1.05,14,623.37 as Port Trust charges in respect of the said 25 coils and/or that the alleged sale deficit became due and payable by the first 20 defendants to the plaintiffs? (5) Whether the plaintiffs prove that they are entitled to recover interest at 15% p.a. or at any other rate on the sum of Rs.1,85,83,877.74 from the first defendants from the date of the suit till payment or realisation? (6) Whether the first defendants prove that the suit is bad in law for nonjoinder of proper and necessary parties, the plaintiffs having failed to join or implead the importers and/or consignees and/or the consignors of the suit consignment as party defendant to the suit, the said importers and/or consignees and or consignors being proper and necessary party of the suit? (7) Whether the first defendants prove that the plaintiffs’ suit claim is barred by the law of limitation? (8) Whether the first defendants prove that the plaintiffs are guilty of gross negligence and delay in the discharging of their dues in respect of the suit consignment as statutory bailees under the provisions of Major Port Trusts Act, 1963 read with the provisions of Indian Contract Act? (9) Whether the first 21 defendants prove that they offered to purchase the suit consignment of 47 coils of the steel sheets because the plaintiffs had officially confirmed and certified that the said 47 coils were excess landed from the vessel S.S.ARION and lying uncleared in the plaintiffs’ Docks in which case the demurrage, if any, payable by the first defendants in respect of the said 47 coils as excess landed cargo would have been only 1/8th of the normal demurrage charges? (10) Whether the plaintiffs are entitled to any reliefs as prayed for in the plaint as against the first defendants? (11) What order and decree? Issue No.7 be decided as preliminary issue. The suit be placed for deciding preliminary issue and/or for recording of evidence after six weeks. In the meantime, parties to exchange affidavits of documents, if any, and complete inspection and discovery." 22 19. Although, this order proceeds to state that Issue No.7 be decided as preliminary issue, it appears that parties led evidence and ultimately, agreed that all issues be taken up and decided together. However, it further appears that on 27th November 2003, additional issues were framed and settled. That order reads thus:- ". Advocates for the plaintiffs, defendant No.1 and defendant No.2 are present. Defendant No.2 has filed his written statement in September 2003 and therefore, though the issues have already been framed and settled, following issues are added:- (1) Whether the plaintiffs proves that the defendant No.2 is liable to pay the deficit amount as prayed? (2) Whether the plaintiffs 23 prove that the amount as prayed is legally permissible and they can charge and claim from the defendants and particularly defendant No.2? (3) Whether the defendant No.2 proves that the consignment in question was of manifested cargo and was not excess cargo? "It appears that while framing issues earlier, this Court has directed that issue No.7 be decided as a preliminary issue. All the Advocates however, agree that since the suit is pending since 1987 all the issues should be decided simultaneously and issue No.7 need not be decided as a preliminary issue. Therefore, earlier order to that extent is modified. "Parties to file affidavit of documents and complete discovery and inspection before 18th December 2003. Plaintiffs to file affidavit of evidence before 18th 24 December 2003. S.O. 18th December 2003." 20. Plaintiffs examined one Sanjeev Kumar, their Assistant Docks Manager. His affidavit in lieu of examination in chief is marked as Exh.P-1. He deposes that in or about December 1981, the vessel "S.S.Ariom" arrived at port of Mumbai and discharged at the port the cargo intended to be landed at the Port. Import General Manifest (for short IGM) was filed on behalf of the owners of the vessel by Defendant No.2, who were agents of the owners of the said vessel. The same was filed with the Customs Department and a copy thereof was furnished to the plaintiffs. In IGM total 802 coils of steel sheets pertaining to four items in the Import General Manifest viz., 1, 3, 4 and 5 were shown as being brought for discharge at the port of Mumbai. All the 802 coils were discharged in December 1981/ January 1982. The General Landing 25 date and the last free day of the cargo of the said vessel fell on on 29th December 1981 and 1st January 1982. 21. In paras 3, 6, 7 and 9 the witness states thus:- "3. After furnishing the Import General Manifest showing that 802 coils of steel sheets were being discharged at the port, the second defendants amended the Import General Manifest with the customs authorities showing total of 755 coils against item Nos. 1, 3, 4 and 5 of the Import General Manifest. In view of the said amendment since 802 coils were discharged into the custody of the plaintiffs an outturn report was drawn by the Central Documentation office of the plaintiffs showing 755 coils as against item Nos. 1,3, 4 and 5 as manifested 26 were discharged by the said vessel and 47 coils were excess landed by the vessel because the same could not be connected to any other items of import general manifest. The second defendants by their letter dated 22nd April 1982 addressed to the Docks Manager of the plaintiffs confirmed that 47 coils were excess landed by the said vessel and that they had removed the same to Haji Bunder Dump. I produce the said letter dated 22nd April 1982." "6. By a letter dated 29th June 1982 the plaintiffs informed the second defendants that the said 47 coils were lying uncleared for over two months and they were being put up for sale and would be sold on the date mentioned therein unless the said coils were cleared on payment of charges within ten days from 27 the date of receipt of the said letter. I produce a copy of the said letter dated 29th June 1982 addressed by the plaintiffs to the second defendants." "7. M/s.Orient Transport Company acting on behalf of the first defendants as clearing agents had by their letter dated 5th April 1982 addressed to the plaintiffs applied for concessional levy of Port Trust Charges. That application was however rejected by the plaintiffs by their letter dated 13th July 1982. I say that the original letter from Orient Transport Company is misplaced. I however, produce a copy of the plaintiffs letter dated 13th July 1982 addressed to the said M/s.Orient Transport Company. A copy of the said letter was also endorsed to and served upon the second defendants." 28 "9. After the consignments were advertised for sale by a letter dated 10th July 1982, M/s.Orient Transport Company - Clearing Agents of the first defendants requested the plaintiffs to withdraw the said coils from sale. By another letter dated 10th July 1982 M/s.Orient Transport Company again requested the plaintiffs to withdraw the consignment from sale since application for remission made by them