:1: :1: :1: IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO. 1533 OF 1985 SUIT NO. 1533 OF 1985 SUIT NO. 1533 OF 1985 The Board of Trustees of the Port of Bombay ......Plffs. vs. Laldee P.Ltd and Ors. ......Defnds. --------- Mr. V.J. Makhija i/b. Motiwala and Co. for the plaintiffs. None appears for defendant no.1 though served. Mr. Navneet Shah with Salil Shah i/b. M/s. Bhaishankar Kurga i/b. Girdharlal for defendant no.2. Mr. Chirag Balsara i/b. Bhatt and Saldanah for defendant no.3. CORAM: S.U. KAMDAR, J. CORAM: S.U. KAMDAR, J. CORAM: S.U. KAMDAR, J. DATE : 4TH AUGUST, 2005. DATE : 4TH AUGUST, 2005. DATE : 4TH AUGUST, 2005. JUDGMENT : 1. The present suit has been filed by the plaintiff which is a statutory corporation under the provisions of the Major Port Trust Act, 1963. :2: :2: :2: Under the provisions of the Major Port Trust the plaintiff is the owner of the docks at Bombay and under the provisions of the said act the plaintiff is empowered to take charge of the goods landed from the ships coming to Bombay and also entitled to various charges inrespect of the wharfage, demurrage and other charges. The scales for the said charges are duly prescribed. 2. Sometime in or about 1974 the first and the second defendant imported 54 bundles containing steel strips which were manifested at Item No.500 of the Import General Manifest No.1791 dated 19.3.1974. The defendant no.2 was the canalising agent at the relevant time and by virtue of its status as canalising agent was the sole agency for importing the said goods. The said goods arrived at Bombay in a vesssel known as ‘S.S. STATE OF MEGHALAYA’. The goods were landed on 8.4.1974 and the last free day to release the goods by the plaintiff without levy of any charges was 15.4.1974. On 31.5.1975 an outturn was drawn inrespect of the said 54 bundles and it was shown :3: :3: :3: that the said goods were lying at Haji Bunder Dump. The consignment of the said steel strips was not cleared by the defendant no.1 and/or the defendant no.2. The third defendant in the suit is the owner of the vessel and has been sued in its capacity as a bailor because the said vessel has discharged the said cargo at the port into the custody of the plaintiff. According to the plaintiff the defendants were bound and liable to take delivery of the said goods and clear the same within a period of 7 days which were prescribed as ‘clear days’ from the date of the landing and subsequently the said consignment was liable to wharfage and demurrage charges and other charges of the plaintiff. It is the case of the plaintiff that the said consignment was landed on 8.4.1974 and period of 7 clear days were over on 15.4.1974 still the defendant did not clear the said goods for more than two months and accordingly in exercise of power conferred under s.61 and 62 of the Major Port Trust Act the plaintiff placed the said goods for public auction in Lot No.J/2233. The notice of sale was sent by the plaintiff to defendant no.1, 2 :4: :4: :4: and 3 and called upon them that the consignment if not cleared then the same will be sold and the amount received will be adjusted against the port trust dues. The first defendant thereafter through their advocate replied and inter-alia stated that the defendant no.1 has filed a suit in this court being Suit No.1370 of 1975 against Hindustan Steel Limited and the third defendant for damages for causing delay in clearing of the said consignment. The second defendant is not the importer of the said consignment since the second defendant has sold the said consignment on High Sea Sales basis and thus the second defendant is not liable to make payment of the said charges. 3. Since the said consignment was not cleared the plaintiff published a sale notice in Maharahstra Government Gazette (II) dated 5.6.1975 and also gave a newspaper notice in Free Press Journal on 5.6.1975; and ultimately the consignment was sold by the plaintiff sometime in or about 14.6.1982. The said consignment was sold under Lot No. J/2233 and the amount received by the plaintiff from the :5: :5: :5: sale proceeds was Rs.3,01,548.50/-. It is the case of the plaintiff that for a period of two years the port trust charges accrued on the said consignment amounted to Rs.22,70,109.40/- and custom duty paid by the port trust on them was Rs.1,30,526.56p and ITC fine was imposed of Rs.1,80,000/- and the expenses for conducting the sale was incurred by the plaintiff of Rs.34,993.75p. The plaintiff adjusted the sale proceeds under the various expenses, customs duty and according to the plaintiff after giving adjustment of the balance of the sale proceeds against the port trust charges there remained a deficit of Rs.22,15,534.30p. By letter dated 15.5.1985 the plaintiff informed all the three defendants of the aforesaid position and called upon them to make payment of Rs.22,15,534.30p towards the repayment of the port trust dues inrespect of the wharfage and demurrage incurred on the said consignment. It is the case of the plaintiff that neither the defendant replied to the said notice nor paid the said amount and thus the plaintiff filed the present suit for the recovery of amount of Rs.22,40,000/- which included :6: :6: :6: interest of principal amount of Rs.22,15,534.50/- as on the date of the suit and has claimed further interest at the rate of 15%p.a. from the date of the suit till payment and/or realisation. The defendant no.1 has not filed any written statement in the present suit nor he has appeared or contested the present suit. In so far as the second defendant is concerned the second defendant has filed the written statement and has contended that the second defendant is a designated canalising agency in terms of the import and export policy published by the government of India from time to time and the said defendant no.2 never effected import of any consignment and before the said consignment is imported into India the said consignment is sold by the defendant no.2 on high sea-sales basis. It is the second defendants case that in the present case also by invoice dated 5.3.1974 the defendant no.2 sold the goods to defendant no.1 on high-sea-sales basis and once the said sale is effected the defendant no.2 is not liable to make payment of wharfarage and demurrage charges which is incurred subsequent to the :7: :7: :7: effecting of the sale by the defendant no.2 in favour of the defendant no.1. Thereafter the defendant no.2 has denied the various averments and statements made in the plaint and denied the quantum of liability payable by the defendant no.2 to the plaintiff on an assumption that the defendant no.2 is at all liable for the aforesaid amount. The defendant no.2 has also contended that there is an unreasonable delay in effecting the sale in as much as the sale was advertised as far back as on 5.6.1975 still the sale of the said goods was effected only on 14.6.1982. Thus there was a delay of almost seven years in effecting the sale of the said goods. According to the written statement the claim if any as against the second defendant has become barred by the law of limitation as the cause of action arose in 1975 and still the plaintiff has taken no action either for the recovery of the same by sale of the said goods or by claiming the amount by filing a suit in this court. It has been thus contended in the written statement that the delay is most fraudulent and dishonest. Thus the delay has resulted in the :8: :8: :8: non-availaibility of the best of the price available at the relevant time and in any event the said goods were lying for seven years in the dock which has resulted in deteriorating of the quality of the said goods. It is thus denied that the plaintiff is entitled to any amount whatsoever as claimed in the suit. It has been thus contended that the suit should be dismissed. 4. The defendant no.3 has also filed the written statement. The defendant no.3 has denied the liability and has contended that the defendant no.3 is not the owner of the goods or importer of the goods. It has been contended that the defendant no.3 is merely the shipper of the said goods and once the bill of lading is endorsed in favour of the defendant no.1 or the defendant no.2 then in that event the liability of the defendant no.3 inrespect of the import of the said goods cease to exist and thus the defendant no.3 cannot be held liable for non payment of the wharfage and or demurrage charges by defendant no.1 and/or defendant no.2. The defendant no.3 has also denied :9: :9: :9: various allegations in the suit made by the plaintiff against the defendant no.3. 5. On the aforesaid pleadings the issued were framed by the learned single judge of this court on 8.11.2003. The said issues are as under : 1. Does the plaintiff prove that the plaintiff is entitled to recover charges from all the defendants jointly and severally as commission ? 2. Does the defendant no.2 prove that it is a only a canalising agent and is not at all liable to pay anything to the plaintiff / 3. Does the defendant no.3 prove that they are the owners of the vessel and their duty was only to hand over the goods to the carrier of the good and that they are not liable to pay anything to the plaintiffs / 4. Do the defendants prove that the suit is barred by limitation ? 5. Whether the plaintiffs prove that the port trust charges were amount to Rs.22,70,109.40/- paise ? 6. What decree and order ? 6. On the aforesaid pleadings and issues the :10: :10: :10: matter went on trial and the plaintiff has examined two witness one Mr. Sanjiv Kumar and Mr. Shailesh Chavan who have deposed and have produced certain documents from the record. The second witness of the plaintiffs has produced certain additional documents which were not produced by P.W.1. Neither of the witness have any personal knowledge but both the witness have deposed to the facts on the basis of documents on record. The documents which have been produced by both the witness and marked as exhibits in the present proceedings inter-alia includes the extract of the Import General Manifest No.1791. The notices which are given by the plaintiffs to the defendants for the sale of the said goods and correspondence between the parties, the notice of sale published in the Maharashtra Government Gazette as well as in the newspaper have also been produced. The P.W.no.2 has in addition thereto produced a copy of the worksheet, relevant page of the outturn book and the document indicating the sale of the said goods. A summary account of the sale has also been produced by P.W. no.2. P.W.NO.1 as well as :11: :11: :11: P.W.No.2 has been extensively cross-examined. In the course of the cross-examination of P.W.no.1 by the second defendant, the P.W. no.1 has admitted that he is not personally aware of the facts of the case. He has also stated that the various documents such as the Import General Manifest, Tallysheet, outturn report has not been available and therefore cannot be produced. He also admitted in his cross-examination that the bill of entry, packing list and invoices are also not produced from the record which has been filed for the purpose of clearing of the said goods. However he has deposed that every bundle which is imported and landed at the port are always imported with the identification mark for the purpose of identification of the said goods. He has stated that he cannot recollect what was the mark of identification inrespect of the 54 bundles being the subject matter of the present consignment. He also admitted that in 1975 though the said goods were put for auction the said auction was not conducted because on the request of the defendant no.1 the same was postponed. He has deposed in his :12: :12: :12: cross examination that he is unable to produce all the documents pertaining to the said consignment. He has also deposed that the plaintiff maintains a sale register in the office but he is not aware whether the same is available or not. He admitted in his cross examination that the goods were lying in Haji Bunder area before effecting sale of the said goods. In so far the calculation of the demurrage charges is concerned he was unable to give the details of the said calculation. He has also deposed that he has not produced the record to show that how the said claim of the plaintiff in the present suit has been computed and/or arrived at. In view of some lacuna in the evidence of P.W. no.1 the plaintiff put forward another witness P.W. no.2. He has produced additional documents and made himself availaible for cross examination. In his examination in chief he has produced large number of documents including the work sheet and the audited worksheet which inter-alia in detail sets out the sale price realised by the plaintiff, the expenses incurred by the plaintiff on the said sale of the goods, customs duty paid, ITC fine etc. :13: :13: :13: He has categorically deposed by relying upon the worksheet that the plaintiff has filed the suit inrespect of the wharfage and demurrage charges and other dues only for two months. Though the auction has taken place in 1982 the plaintiffs have not claimed the charges for the subsequent period but restricted to a period of two years from the date of the landing after excluding seven clear days. The P.W.No.2 was also cross examined in detail. He is cross examined on the procedure for sale of the goods and various documents produced by him. In the cross examination he has deposed that he is unable to produce the documentary evidence in the form of voucher or bills to show the amount actually paid by the plaintiffs to the various parties towards the sale expenses, custom duty etc. He has also deposed that he has produced the record whichever was available which inter-alia includes the audited work-sheet. He has identified the consignment in the present case by virtue of import General Manifest No. 1791 and has stated that the said goods are sold. When he is questioned about the identification mark of the consignment he has :14: :14: :14: stated that when the goods are landing there is identification mark but once the goods are noted in Import General Manifest the said goods are referred to by the said IGM number and Lot number therein. He has also deposed that the plaintiff issued various notices to the defendants threatening to sell the goods but the plaintiff could not sell the goods because of the request of the defendant no.1 for postponement of the sale and ultimately sale came to be effected only on 14.6.1982. He admitted that there has been a delay in effecting the sale of the said goods. 7. The defendant no.1 has not filed any written statement nor he has appeared. Therefore an ex-parte decree is required to be passed as against defendant no.1. 8. Mr. Shah learned counsel appearing for defendant no.2 has placed before me the following proposition for consideration. It is his contention that the suit must fail because the plaintiff has failed to establish that there was an :15: :15: :15: auction sale of the goods which were imported. The plaintiff has also failed to show that there was any valuation carried out inrespect of the said goods. Learned counsel for defendant no.2 contended that in the absence of any evidence to establish that there was any valuation carried out on the said goods and subsequently sold the court must hold that there was no auction sale at all by the defendant. The next contention advanced by the learned counsel is that the newspaper notice issued by the plaintiff and/or in the Maharashtra Government Gazzette publication did not identified t he said goods by markings thereon which were placed on the consignment at the time of the landing of the goods for identifying purpose. It is therefore his case that in absence of any markings stipulated in the public notice and Maharashtra Government Gazette the auction sale notice is defective and cannot be related to the suit consignment and therefore also the suit should be dismissed because there is no valid notice or valid publication thereof relating to these goods. Alternatively he has contended that the plaintiff :16: :16: :16: has in his evidence admitted that the wharfarage charges are levied only for a period of two years i.e. upto to 1976 because the goods are landed in 1974. Thus in that view of the matter the claim of the plaintiff which has been filed in 1985 is hopelessly barred by the law of limitation. Therefore the suit is required to be dismissed. Itis also contended by him that the 2nd defendant being only canalising agency but not the owner of the said goods is not liable for any claim of the plaintiff. It is further contended that in view of the fact that the 2nd defendant have sold the goods to the 1st defendant on ‘High-Sea’ Sales basis i.e. before the goods landed in the dock they cannot be termed as ‘owner’ or ‘importer’ as provided in the Major Port Trust Act and thus they are not liable to port trust charges. 9. The defendant no.3 has supported the arguments of the defendant no.2 on the point of limitation. He has further contended that in any event the defendant no.3 is not liable because the bill of :17: :17: :17: lading was already endorsed in favour of the first defendant and once the bill of lading is endorsed the liability of the defendant no.3 who is the shipper cease to exist and cannot be enforced by filing the present suit. 10. Firstly let us consider the issue of limitation. Both the learned counsel have contended that the suit is hopelessly barred by the law of limitation and thus the same is required to be dismissed. On the other hand the learned counsel for the plaintiff has relied upon a division bench judgment of this court in the case of The Trustees of the Port of Bombay vs. M/s. The Trustees of the Port of Bombay vs. M/s. The Trustees of the Port of Bombay vs. M/s. Jayantilal L. Gandhi reported in AIR 1979 Bom.12 Jayantilal L. Gandhi reported in AIR 1979 Bom.12 Jayantilal L. Gandhi reported in AIR 1979 Bom.12 in which inter-alia it has been held as under : This is a suit to recover the balance of the wharfage and demurrage charges, after giving credit for the sale proceeds. Such amount of deficit could only be ascertained when the auction sale took place on February 6, 1964 and since the appellants have adopted the remedy permitted to them under s. 67-A of the Act, the cause of action for such a suit arose when such deficit was determined upon an auction sale having effectively taken :18: :18: :18: place. Thus under section-67-A of the Act the cause of action to recover the balance of the amount, after giving credit for the sale proceeds, accrues, for the first time, when the sale took place, and the deficit of the balance of the amount recoverable is ascertained. Thus, clearly under section -67-A of the Act to recover the amount, the cause of action accrues when such deficit or balance of the amount to be recovered is ascertained. That event took place in the present case on February 6, 1964. 11. Learned counsel hasalso relied upon an unreported judgment of the single judge of this court in suit No. 194 of 1976 in the case of The The The Board of Trustees of the Port of Bombay vs. Board of Trustees of the Port of Bombay vs. Board of Trustees of the Port of Bombay vs. Caravan Hosiery Factory and Ors decided on Caravan Hosiery Factory and Ors decided on Caravan Hosiery Factory and Ors decided on 20-21.7.1988 20-21.7.1988 20-21.7.1988 in which following the judgment of the division bench of this court the learned single judge has held as under : "As laid down by the Division Bench of our court in the case of the Trustees of the Port of Bombay vs. M/s. Jayantilal and Gandhi reported in AIR 1979 Bom. Pg.12, the cause of action in favour of the plaintiffs under Section 67A accrues when the balance of the amount to be recovered is :19: :19: :19: ascertained. In my view, in cases where goods are under a detention order the actual amount can only be ascertained after the adjudication proceedings by the Customs Authorities is completed. Thus in the present case the cause of action must be deemed to accrue when q the adjudication by the Customs Authorities is completed. This is so because had the customs authorities adjudicated in favour of the defendants and released the goods, the customs authorities would have been bound to issue a detention certificate for the period during which the goods were under detention. In such a case the plaintiffs would have been bound to grant a remission in the demurrage charges. The evidence of the plaintiffs witness in this behalf has not been questioned by the defendants. Had the plaintiffs before the date of the order of adjudication sought to claim the amount of demurrage charges, the defendants could have refused to pay and have validly taken up the contention that until there is an adjudication the exact amount payable by the defendants cannot be determined. In my view the exact amount chargeable could only be ascertained on the adjudication proceedings being completed. In this case that would be the order of confiscation passed on 28th August, 1973. In this case the suit having been filed within a period of three years from 28th August, 1973 it cannot be said that the suit is barred by the law of limitation. :20: :20: :20: An additional submission made by Mr. Thakkar must also be noted. Mr. Thakkar has submitted that on 17th January 1981 an order was passed in the Appeal preferred by the 1st Defendants against the order of confiscation. According to Mr. Thakkar the order of confiscation was set aside. Mr. Thakkar submits that under these circumstances, the plaintiffs right to sue must be deemed to have accrued from day to day. He submits without prejudice to the right to claim remission that in this case no remission has so far been claimed and therefore the right to sue must bee deemed to have accrued day to day. In my view Mr. Chinoy is quite right when he submits that no order of the Appellate authority bas been referred to an relied upon by the defendants nor brought on record in this suit and therefore Mr. Thakkar cannot be allowed to ever to refer to it. It must be noted that it is not argued that a detention certificate has been issued and/or that the defendants are now entitled to a remission. Further an event of this sort, subsequent to the filing of the suit can have no bearing on the question of limitation. The right to sue is not dependent on whether there is an order of release by the customs. The right to sue accrues on the amount due being finally ascertained after adjudication by the customs authorities." 12. On the other hand the learned counsel Mr. :21: :21: :21: Shah has relied upon the