:1: bgp IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.2012 OF 1996 M/s.Rasiklal Kantilal & Co. a partnership firm duly registered under the provisions of the Indian Partnership Act,1932 and having its address at 145, Kika Street, 1st Floor, Bombay – 400 004. ..Petitioners Vs. 1. The Board of Trustees of Port of Bombay, a statutory authority, established and functioning under the provisions of the Major Port Trusts Act,1963, having its office at Vijay Deep, Shoorji Vallabhdas Marg, Bellard Estate, Bombay-400038. 2. The Chairman, Bombay Port Trust, having his office at Vijay Deep, Shoorji Vallabhdas Marg, Bellard Estate, Bombay-400038. 3. The Assistant Docks Manager (Sales Branch Office) Bombay Port Trust, having his office at Bellard Pier Passenger Terminal Building, Indira Docks, Bombay-400038. 4. Union of India ..Respondents :2: Mr.D.B.Shroff, Senior Advocate a/w. Mr.Ashok Singh and Mr.Anupam Surve i/b. Haresh Mehta & Co. for petitioners. Mr.U.J.Makhija a/w. Mr.P.Khandar i/b. Mulla & Mulla for respondent Nos.1 to 3. Ms.S.V.Bharucha for respondent No.4. CORAM :- V.C.DAGA & K.K.TATED,JJ. JUDGMENT RESERVED ON : 8TH MARCH, 2010 JUDGMENT PRONOUNCED ON : 12TH APRIL, 2010 JUDGMENT (PER : V.C.DAGA,J.) 1. This petition filed under Article 226 of the Constitution of India is directed against the act of refusing to grant remission of demurrage charges of 80% of first 150 days and 50% beyond 150 days by the 1st respondent in violation of their own guide-lines which provide for such remission when the detention of the goods by the Custom is for bonafide operations and ITC facilities. FACTUAL BACKDROP: 2. The petitioners is carrying on the business, inter alia, as dealers and importers of diverse goods, including zinc ingots and copper wire bars. 3. Respondent No.1 is the Board of Trustees of the Port of Bombay established and functioning under the provisions of the Major Port Trusts Act,1963 (“the MPT” for short) governed by the rules and regulations framed thereunder. :3: 4. One M/s.Metal Distributors (UK) Ltd., London in the normal course of business contracted to supply 78 consignments of zinc and copper wire bars to five different parties/consignees in India. The said consignments were shipped during the period September to November, 1991. As per the terms of the contract, the property in the goods were to pass to the consignees only upon their retiring the documents presented for payment through bank. The said dealings with the five parties/consignees were on Cash against Documents (“CAD” for short) basis. The total quantity involved was (approx.) 1135 MT of zinc and 460 MT of copper wire bars. The total C.I.F. Value of the said goods was (approx) Rs.7.50 Crores. 5. According to the petitioners, the aforesaid five consignees failed and neglected to retire documents. It appears that the Custom Authority started investigation against those five parties with regard to the validity of import and in the matter of advance licenses held by them. Failure on the part of those five consignees to retire documents put the foreign suppliers in a problematic situation. On one hand, the documents were not being retired and on the other hand, the demurrage was mounting day by day. Getting back the said goods by way of re-export would not have been commercially viable. In the circumstances, the foreign supplier was left with no alternative but to search for new customer i.e. local party in India, who would agree to retire the said documents and arrange for payment of the blocked amounts to the foreign suppliers. 6. In the aforesaid peculiar circumstances, it appears that through local agents of the said foreign supplier negotiations were ensued with the petitioners. The petitioners being known importer of the types of goods involved agreed to purchase the said goods by retiring the documents of title in respect of those 78 consignments against payment. :4: As already mentioned, the subject goods had already landed during the months of November,1991 to January, 1992 at Bombay Port. 7. The factual context reveal that the property in the goods had not passed to and in favour of any of the said five parties. The title was with the exporter. According to averments made in the petition, the petitioners entered into a diverse contracts with the foreign supplier between 10th April, 1992 and 28th April, 1992 wherein, the petitioners agreed to purchase the said goods on the terms and conditions set out in the respective contracts and that exporter/supplier issued fresh invoices in favour of the petitioners. 8. It appears from the averments in the petition that though the documents were not retired by any of the afore-stated consignees, but some of them had filed bills of entry (before the petitioners came into picture) seeking clearance of certain goods covered by 37 bills of entry. In respect of the remaining 41 consignments, no bills of entry were filed by any of the said five consignees. The petitioners having contracted to purchase the said goods, took up themselves the task of getting IGM amended and also produce other documents including the Bills of entry, where the earlier parties had filed the same, for obtaining the clearance of the goods with the Custom Authorities. 9. The Petitioners also approached the Shipping company’s local agents – M/s.Trans World Shipping Services (I) Pvt. Ltd. and others to seek necessary amendment in I.G.M. The said local agents of Shipping Company accordingly made applications for amendment of the I.G.M. in terms of diverse letters addressed by them during the period April, 1992 to June,1992 to the Custom Authorities. The petitioners also filed the requisite amendment applications under the provisions of Section 149 and 30 of the Custom Act,1962. However, none of the said applications :5: were entertained by the Custom, as such, the claim of the petitioners as the legitimate consignee was not recognized by the Custom authorities. 10. According to the petitioners, since they were not recognized as the owners or importers or the consignees of the said goods, there was no question of making them responsible for payment of demurrage charges and holding them vicariously liable, more particularly having regard to the facts that the goods were all along detained for bonafide custom operations and ITC facilities. 11. On 3rd June,1992, the foreign supplier addressed a letter to the Custom Authorities, inter alia, stating therein that the five parties had failed to retire the documents for a fairly long time and abandoned their claims in respect of the Bills of Entry filed by them earlier, as such they were left with no other alternative but to re-sell their goods to the new buyer viz. the petitioners herein. The said supplier confirmed that the petitioners were liable to make payment on the presentation of documents through their bankers and were entitled to clear the said goods. 12. According to the petitioners, the C.I.F. value of the said goods, as stated hereinabove, was approximately Rs.7.50 Crores. The duty payable in respect thereof worked out to approximately Rs.5.50 Crores. Upon amendment being granted, the petitioners were ready and willing to get the goods cleared. According to the petitioners, on 8th June,1992, the bankers of the petitioners – Dena Bank, Share Bazar Branch, confirmed receipt of the said documents from the foreign bank drawn by the said foreign suppliers upon the petitioners and the said bankers had called upon the petitioners to make payment of the bills at the earliest. Since the amendment was not granted in the I.G.M. as also in the said Bills of entry, as was applied for by the Shipping Company’s :6: local agents as also by the petitioners, both of them were rendered totally helpless in the matter. 13. On 5th May,1992, the Custom House Agent of the petitioners had addressed a letter to the Assistant Collector of Custom, interalia; recording therein that in respect of 10 out of 78 Bills of Entry presented by the Petitioners, Thokka was given on 1st May,1992 meaning thereby that the said Bills of Entry were accepted by the Custom Department for clearance of the goods. However, as recorded in the said letter, when the said CHA again approached the Custom Department for Thokka for remaining 68 bills of entry, CHA was informed that the said 68 bills of entry as also the earlier 10 bills of entry where Thokka was granted, will not be accepted due to initiation of investigation against the importers pending with the S.I.I.B. of the Custom. 14. The said afore-action of the Custom Department was a subject matter of challenge in the Writ Petition No.1397 of 1992, which was admitted on 4th August, 1992. During the pendency of this petition, Trustees of BPT purported to put up certain consignments for sale by auction. In such circumstances, the petitioners again approached this Court by another Writ Petition bearing No.2464 of 1992. However, the petitioners could not get stay of the auction sale. With the result, the petitioners were required to approach Apex Court by way of SLP, which was, ultimately, converted into an appeal and disposed of on 3rd December, 1992 directing BPT not to deliver or part with the consignments pursuant to the sale effected by the BPT in favour of respondent Nos.6 and 7 to the SLP. The petitioners were directed to pay charges for the two consignments. The petitioners made payments, subject to final orders in the Writ Petition No.2464 of 1992. :7: 15. The petitioners, during the course of hearing of the petition No.1397 of 1992, on 4th August,1992, were advised to make representations to the Custom Authorities for obtaining clearance of the goods by setting out facts in detail. Accordingly, the petitioners made representation for grant of clearance of the goods covered by the said 78 bills of entry. The Custom Authorities appears to have considered the representations made by the petitioners. A letter was given to the petitioners by the Custom Authorities inter alia; stating therein that with regard to the 37 consignments, which were in the name of the said earlier five consignees, the investigations were still in progress and as such, permission to amend the I.G.M. in case of those 37 consignments could not be granted. However, as regard the rest of the 41 consignments, the permission for amendment of the I.G.M. was granted by the Custom vide their letter dated 20th August, 1992 on the terms and conditions set out therein. Thus, for the first time, on 4th September, 1992, the petitioners’ claim as consignee/importer/owner was recognized and accepted vis-a-vis 41 bills of entry are concerned. In other words, 41 bills of entry were noted for the first time in the name of petitioners on 8th September, 1992. 16. According to the petitioners, BPT cannot claim demurrage charges from the petitioners right from the date of landing of the goods till 8th September, 1992. The petitioners, with this contention, again approached 1st respondent for grant of remission of demurrage charges on the basis of the practice followed by it and requested for grant of spot remission at least from 1st May, 1992 reserving their right to claim further remission pursuant to the Central Government circular dated 24th January, 1992. 17. According to the petitioners, they were told to obtain the detention certificate before their request could be entertained. The :8: petitioners, thus, approached the Custom Department for issuance of the detention certificate so as to enable respondent Nos.1 to 3 to grant of remission of demurrage charges and to enable the petitioners to clear the goods upon payment of balance dues. 18. It appears that on 9th September, 1992, 41 detention certificates were issued by the Additional Collector for the period mentioned herein below: (A) In case of 9 detention certificates, the period of detention was certified from 1st May,1992 to 9th September, 1992 and, (B) in case of the remaining 32 detention certificates, the period of detention was certified as from 9th June,1992 to 9th September, 1992. All the above detention certificates, carried following endorsement. “..............for investigation which amending the IGM, finally amendment in I.G.M. allowed in favour of M/s.Rasiklal Kantilal & Co.Bombay.” 19. On 11th September, 1992, the Deputy Collector of Custom informed the BPT that the petitioner had filed 41 Bills of Entry. However, in order to investigate as to whether or not the change in the name in the IGM was sought due to fraudulent reasons or otherwise the subject goods were not allowed to be cleared. In the process, some time was lost in effecting amendment to IGM. The petitioner suffered huge amount of demurrage as such their request for remission of demurrage should be considered sympathetically. 20. On 14th September, 1992, the Assistant Commissioner of Custom also wrote to the BPT informing them that the petitioner had been allowed to clear 41 consignments, however, clearance of 37 :9: consignments had not yet been allowed since investigations was pending. It was further informed not to put goods on auction. The petitioner also represented to the Deputy Collector of Custom that out of 41 detention certificates, 32 detention certificates carried period of detention from 9th June,1992 to 9th September, 1992, which was not correct. Attention was also drawn to the letter dated 5th May, 1992. The said Deputy Collector was once again requested to revise the period mentioned in the 32 detention certificates. It appears that the Deputy Collector of Custom accepted the request made by the petitioners and agreed to mention and inform the BPT that the reason for detention was ITC formalities and pendency of the investigation by the Custom. 21. The respondent BPT vide its letter dated 7th October, 1999 did not accept clarificatory reason given by the Custom and went on to reject the claim of demurrage in respect of 41 bills of entry. The petitioners, finding rejection by the BPT erroneous again, vide their letter dated 10th October, 1992 requested BPT to reconsider the issue once again. BPT, vide its letter dated 9th July, 1993, again rejected the claim of the petitioners in respect of 19 consignments on the ground that the detention by Custom was for procedural action for amending the IGM. This was based on the detention certificate given on 9th September, 1992. The BPT again rejected the claim for remission on the balance 22 detention certificates on the same ground vide its letter dated 12th July, 1993. 22. The aforesaid act of the BPT is the subject matter of challenge in this petition on various grounds prominent amongst others are violation of guidelines framed by BPT and grant of identical remission to Gilt Pack requiring extension of the same treatment to the petitioners. :10: RIVAL SUBMISSIONS: 23. Mr.Shroff, learned Senior Counsel appearing for the petitioners urged that the respondents were not justified in refusing the benefit of remission of demurrage charges, once the Custom Authorities issued detention certificate certifying the cause of detention, “due to bonafide operation of ITC formalities”. 24. Mr.Shroff further submits that the respondents have erroneously rejected remission of demurrage charges for no fault of the petitioners, especially, when the goods were not available to the petitioners for clearance. He further criticized the act of respondents in not following mandate of Section 53 of the Major Port Trusts Act,1963 (“MPT Act” for short). He would submit that the guidelines framed by the BPT itself provides for remission asked for by the petitioners when the detention of the goods by the Custom was for bonafide operation of ITC formalities. 25. Mr.Shroff strongly urged that the remission had been refused on the ground that the first respondent did not grant remission for the period prior to the date of noting in the Bill of Entry. According to him, reason given is manifestly false. He pressed into service, the resolution of BPT dated 20th October, 1994 in the case of Gilt Pack (Pvt.) Ld. (“Gilt Pack” for short) wherein, according to him, in factually identical situation, the BPT has granted remission to the Gilt Pack for the period prior to the noting of the importer’s name in the Bill of Entry. In his submission, this act of respondent No.1 amounts to hostile discrimination against the petitioner and renders their action or decision wholly arbitrary, unreasonable and malafide in violation of the fundamental rights granted by Article 14 of the Constitution of India. :11: 26. Mr.Shroff, further submits that for the negligence or inaction on the part of the Custom, the petitioners cannot be allowed to suffer punishment and financial losses. He, thus, submits that the petitioners are entitled for the relief claimed in the petition and seeks direction directing the respondents to deposit the amount of Rs.1,91,14,798/- along with 18% p.a. interest thereon from the date of payment of the respective amounts, with this Court with liberty to the petitioners to withdraw the same unconditionally . PER CONTRA : 27. Mr.Makhija, learned Counsel for the respondents submits that, in the petition, prior to its amendment, the petitioners had claimed writ of mandamus directing respondent Nos.4 and 5 i.e. the Union of India and Custom to pay to the petitioners an amount of Rs.Rs.1,91,14,798/- along with interest @18% p.a. thereon. The said relief was waived during the pendency of the petition by amending the petition. He, thus, submits that this is nothing but a change in the stand of the petitioners during the pendency of the petition. 28. Mr.Makhija, further submits that the petitioners did not have a statutory right of remission under Section 53 of the MPT Act but remission is granted on ex-gratia basis, that too, by exercising discretion on the basis of guidelines issued by the Union of India and adopted by resolution passed by respondent No.1 along with Custom Department. According to him, the petitioner’s case does not fall within the said guidelines as such, no further remission could be granted to the petitioners. 29. Mr.Makhija submits that the remission has already been granted to the petitioners to a limited extent i.e. to the extent permissible under :12: guidelines but no full remission of demurrage charges could be granted as sought in the petition. He sought to place reliance on the Government Guidelines which are issued on 24th January, 1992. In his submission, the Trustees of the Port Trust have passed a resolution to grant remission in respect of the cargoes issued with detention certificates. 30. Mr.Makhija submits that, the petitioners’ case was considered on its own merits and remission was granted to the extent of Rs.91,15,050/- on the basis of the said guidelines and the resolution referred to hereinabove. He, further submits that the claim sought to be made is misconceived and not maintainable. 31. Mr.Makhija further urged that the detention certificates were never issued in favour of the petitioners and their name was substituted and those detention certificates were in the name of the BPT. He submits that the period during which the petitioners did not have right, title and interest in the goods purchased by them, the petitioners could not be allowed to claim remission. He further submits that the Review preferred by the petitioners was considered on its own merits and it did not find favour with the first respondent. He further submits that the power of judicial review in the present case has been exercised to see that the safeguards are being complied within the decision making process. He, thus, submits that this Court, not being a Court of Appeal is not expected to interfere with the decision of the BPT unless it finds the same to be arbitrary, perverse or contrary to the guidelines. 32. Mr.Makhija, while taking this Court through the sequence of events, right from the date of arrival of the goods in the Custom Area, urged that 78 consignments remained in the Port during the period from November, 1991 to January, 1992. According to him, the BPT was :13: not concerned with the dispute between the petitioners and the Custom Authorities. According to him, the petitioners were allowed to file 41 Bills of Entry in the month of May,1992 after amendment to the IGM. Thus, the Custom Authorities had accepted the petitioners’ title to the goods in respect of 9 consignments only on 1st May, 1992 and on 9th June,1992 in respect of 31 consignments. He, thus, submits that pursuant to the order dated 1st October, 1992 passed in Writ Petition No.2132 of 1992, the petitioners had cleared the goods covered by 70 consignments and made payment of Rs.2,81,67,333/- against which respondents have granted remission of an aggregate amount of Rs. 90,52,535/-. Now, the petitioners are claiming refund of Rs.1.92 crores paid by the petitioners towards demurrage charges, which according to Mr.Makhija, claim made in this behalf is untenable. 33. Mr.Makhija, at the cost of repetition, submits that during November, 1991 to January, 1992 onwards, the said consignments continued to remain in the Docks on account of the disputes between the petitioners and the Custom Authorities. He, thus submits that whatever grievance petitioners had, the said grievances were against the Custom Authorities and not against the present respondents (BPT). Right to proceed against Custom has been waived by the petitioners for the reasons best known to them. 34. Mr.Makhija further submits that in terms of provisions of Section 53 of the MPT, it was entirely discretionary on the part of the respondents to grant remission of wharfage and demurrage charges. In his submission, respondents have exercised discretion judiciously, bearing in mind the guidelines issued by the Central Government as far back as on 24th January, 1992. In his submission, none of the acts and/or decision of the BPT can be termed as arbitrary, capricious or erroneous. :14: 35. So far as the charge of discrimination strongly leveled by the petitioners against the BPT is concerned, Mr.Makhija submits that facts of the Gilt Pack are quite different from facts of the petitioners’ case. According to him, in the case of Gilt Pack, the goods were initially imported by Gilt Pack and sold on high-seas. Accordingly, the Bills of Entry were noted by respective high-seas purchasers. Subsequently, it was found by SIIB of Custom that advance licenses submitted by high- seas purchasers were bogus and fictitious. After investigation by SIIB of Custom, the goods were seized by the Custom. Subsequently, the original importer represented to the Custom that it had not received consideration for sale from the high-seas purchasers and as such, Gilt Pack, continued to be owners of goods and that the goods should be released in their favour. Upon reference made by respondent No.1 Collector of Custom had advised that though Bills of Entry were noted by Gilt Pack, on 18th July, 1994, their entry in IGM was made on 13th December, 1993. Thus, detention certificate was issued for the period from 13th December, 1993 to 19th July, 1994. The BPT, thus decided to honour detention certificate for ITC formalities. Accepting the case pleaded by Gilt Pack, consignment was released in favour of original importer, Gilt Pack, without levy of fine or penalty, after SIIB’s investigation of these aspects. Accordingly, in the case of Gilt Pack, 80% remission in demurrage fees for first 150 days of certified detention and 50% remission in demurrage fees for remaining period of certified detention was granted by respondent No.1. Thus, in the case of Gilt Pack, the original importer and party who originally cleared the goods were one and the same. As at the time of import, Gilt Pack alone had title to the goods and it continued till the date of lifting the goods. 36. Mr.Makhija urged that the facts of the case of the petitioners is altogether different than that of Gilt Pack. In the case in hand, the :15: goods were imported by different parties by noting Bills of Entry. In view of the failure of original importer to clear the goods, the goods were resold by foreign supplier to the petitioners. Since, the petitioners did not have title to the goods at the time of import, remission was granted by respondent No.1 from the date of noting as per advice of Collector of Custom to whom