1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO.441 OF 1987 Board of the Trustees of the Port of Bombay .. Plaintiffs Versus M/s.Exim Corporation of India & Anr. .. Defendants Mr.U.J.Makhija i/by Motiwala and Co.for plaintiffs. Defendant No.1 ex parte. Ms.Sumnani for defendant No.2. CORAM : S.C.DHARMADHIKARI, J. RESERVED ON: 17th September, 2007. Pronounced on: 8th December 2008 ORAL JUDGEMENT:- . This suit is filed by the Board of Trustees of the Port of Bombay for recovering sum of Rs.1,25,851/- from the defendants jointly and/or severally with further interest on the sum 2 of Rs.1,20,637.71 at 15% p.a. 2. The facts leading to the filing of the suit are briefly set out hereinbelow:- . Plaintiffs are statutory Corporation governed by the Major Port Trust Act 1963 as amended from time to time. The first defendants are the owners and consignees of the consignment. The second defendants carry on business as Agents for foreign and Indian Shipping companies. At all material times, the plaintiffs have been the owners of the Docks at Mumbai. Under the provisions of the said Act, the plaintiffs are required to take charge of the goods landed from the ships coming to Mumbai. Under 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 3 force under the provisions of the said Act and to realise the charges by sale of the consignment in respect of which the charges accrued. 3. In or about 3rd week of July 1982, the first defendants imported a consignment of 25 cartons Polyester Film (for short first Consignment) which was manifested at Item No.37, 38 of the Import General Manifest (for short IGM) No.953 dated 16th July 1982 of the vessel Asian Trader which was discharged by the said vessel into the Docks at Mumbai. The general landing date and the last free day of the cargo of the said vessel were 20th July 1982 and 24th July 1982 respectively. 4. In or about 3rd week of July 1982, the first defendants imported a consignment of 40 cartons Polyester Film (for short 2nd consignment) which was manifested at Item No.35, 36 of the IGM No.953 dated 16th July 1982 of the 4 vessel Asian Trader which was discharged by the said vessel into the Docks at Mumbai. The general landing date and the last free day of the cargo of the said vessel were 20th July 1982 and 24th July 1982 respectively. 5. In or about the 3rd week of July 1982, the 1st defendants imported a consignment of 35 cartons Polyester Film (for short 3rd consignment) which was manifested at Item No.39, 40 of the IGM No.953 dated 16th July 1982 of the vessel Asian Trader which was discharged by the said vessel into the Docks at Mumbai. The general landing day and the last free day of the cargo of the said vessel were 20th July 1982. 6. The first defendant were the importers/consignees/owners of the aforesaid 3 consignments within the meaning of the said Act and the 2nd defendants were the agents of the said vessel and also the bailors/owners of the 5 said consignments having discharged the same into the custody of the plaintiffs. As such importer/owner and bailors/owners respectively, the defendants were bound and liable to take delivery of and clear the said consignments within seven days from the date of landing thereof and to pay wharfage and demurrage and other charges which accrued due thereon and were payable to the plaintiffs for the period during which the said consignments remained with the plaintiffs according to the scale of rates duly prescribed, published and brought into force under the provisions of the said Act. The defendants however, failed and neglected to clear the said consignments and the said consignments remained in the custody of the plaintiffs at the risk and expense of the defendants. 7. As the said 1st, 2nd and 3rd consignments were not cleared for over two months from the date of landing thereof, by six letters dated 6 14th January 1983 addressed to the defendants No.1 and 2, the plaintiffs informed the defendant No.1 and 2 that the said 1st, 2nd and 3rd consignments were lying uncleared at "5" warehouse P.D. IInd floor for over two months from the date of landing thereof and that if the same were not cleared on payment of secured charges within ten days from the receipt thereof, it would be sold by public auction under sections 61 and 62 of the said Act at an auction to be held on 31st January 1983 or on any subsequent date without notice. The first defendants by their letter dated 29th January 1983 informed the plaintiffs that due to financial difficulties they could not clear the said consignments. They further assured the plaintiffs that first defendants financial difficulties were getting over and requested the plaintiffs to withdraw the said consignment from the auction sale fixed on 31st January 1983 and promised to clear the said three consignments within two months. Pursuant 7 to the said request, the said three consignments were withdrawn from auction sale fixed on 31st January 1983. As the said 1st, 2nd and 3rd consignments were not cleared inspite of the aforesaid notices, the plaintiffs by their six letters dated 14th March 1983 addressed to the defendants Nos. 1 and 2 again called upon the defendants to clear the said 1st, 2nd and 3rd consignments on payment of accrued charges within ten days of the receipt thereof failing which the said 1st, 2nd and 3rd consignments would be sold by public auction under sections 61 and 62 of the said Act at an auction proposed to be held on 28th March 1983 or on any subsequent date without notice. The first defendants by their letter dated 28th March 1983 addressed to the plaintiffs, requested the plaintiffs to withdraw the said three consignments from auction fixed on 28th March 1983 and agreed and undertook to pay the plaintiff’s charges towards wharfage and demurrage charges for withdrawing the said three 8 consignments from auction sale. Pursuant to the request of the first defendants, the plaintiffs withdrew the said three consignments from auction sale fixed on 28th March 1983. As the defendants did not clear the said three consignments inspite of the aforesaid two notices, the plaintiffs by their six letters dated 13th July 1983 addressed to the defendants to clear the said 1st, 2nd and 3rd consignments on payment of accrued charges within ten days of the receipt thereof failing which the said 1st, 2nd and 3rd consignments would be sold by public auction under sections 61 and 62 of the said Act at proposed auction to be held on 27th June 1983 or on any subsequent date without notice. The 1st defendants by their letter dated 16th June 1983 addressed to the plaintiffs again requested the plaintiffs for two months time to clear the said three consignments on the ground that their financial condition was critical and promised to clear the said three consignments shortly. Pursuant to the said 9 request, the said three consignments were again withdrawn from the auction sale fixed on 27th June 1983. As the defendants did not clear the said three consignments in spite of the aforesaid three notices, the plaintiffs by their six letters dated 13th September 1983 addressed to the defendants, called upon the defendants to clear the said 1st, 2nd and 3rd consignments on payment of accrued charges within ten days of the receipt thereof failing which the said 1st, 2nd and 3rd consignments would be sold by public auction under Sections 61 and 62 of the Act at an auction to be held on 26th September 1983 or on any subsequent date without notice. The 1st defendants by their letter dated 22nd September 1983 again requested the plaintiffs to withdraw the said three consignments from auction sale proposed to be held on 26th September 1983 and undertook to clear the said three consignments within three months. Pursuant to the said request the plaintiffs withdrew the said 3 10 consignments from auction sale proposed to be held on 26th September 1983. As the said three consignments were not cleared inspite of aforesaid four notices, plaintiffs by their six letters dated 14th December 1983 addressed to the defendants, once again called upon the defendants to clear the said three consignments on payment of accrued charges within ten days of the receipt thereof failing which the said three consignments would be sold by public auction under sections 61 and 62 of the said Act at an auction to be held on 26th December 1983 or on any subsequent date without notice. The plaintiffs by number of letters called upon the defendants to clear the said consignments. The first defendants have paid Rs.15,000/- vide receipt No.23/57 on 31st January 1983 and Rs.21,000/- vide receipt No.29/50 on 28th March 1983 as deposit for postponement of the auction sale. After withdrawing the said three consignments from auction sales on each of the four occasions, the 11 plaintiffs invariably called upon the defendants to clear the said three consignments expeditiously and informed the defendants that irrespective of the payment of the deposits, the plaintiffs would sell the said three consignments under the provisions of the said Act. In spite of the above notices and letters from the plaintiffs, defendants have failed and neglected to clear the said three consignments. 8. As the first consignment had not been cleared for over two months from the date of landing thereof, the same was put up for sale by public auction. The list of packages to be sold, including the said consignment was published in the Maharashtra Govt.Gazette dated 17th March 1983 and also in the newspaper Times of India in its issue dated 14th March 1983 as required under the provisions of the said Act. The said first consignment was thereafter sold on 8th February 1984/13th February 1984 under Lot No.F/8406 for 12 Rs.1,79,027.29. The sale of the said first consignment has resulted in a deficit of Rs.52,709.16. The Port Trust charges accrued on the said consignment amounted to Rs.45,169.40, customs duty amounted to Rs.1,19,834.92, expenses of sale amounted to Rs.25,032.13 and I.T.C. Fine amounted to Rs.41,700. The sale price of Rs.1,79,027.29 was adjusted by the plaintiffs against the Port Trust charges, expenses of sale, customs duty and I.T.C. fine, leaving a deficit of Rs.43,075.42 towards Port Trust charges and Rs.9,633.74 towards I.T.C. fine which the defendants are bound and liable to pay to the plaintiffs. The plaintiffs are not claiming I.T.C. fine. 9. By letters referred to in para 10 of the plaint, both defendants were informed by the plaintiffs that the first consignment has been sold on 8/13th February 1984 for Rs.1,79,027.29 and after deducting and adjusting the amounts 13 towards the charges, expenses of sale and customs duty etc. The provisional deficit figure of Rs.52,709 was also intimated. 10. With regard to the second consignment, identical details were given and it was pointed out that Rs.29,387.03 towards I.T.C. charges and Rs.61,349.79 towards port trust charges is the total deficit. It is in such circumstances that the sums taken together constituting the deficit of three consignments came to be intimated. The correspondence in that behalf is referred accordingly in paras 9 to 13 of the plaint. 11. Thereafter para 15 reads thus:- "15. In the circumstances, the plaintiffs state that the defendants are jointly and/or severally bound and liable to pay to the plaintiffs the sum of Rs.43,075.42 being the deficit in Port 14 Trust charges in respect of the first consignment together with the sum of Rs.1433.88 being the interest thereon at the rate of 15% p.a. from 17th November 1986 till filing of the suit aggregating to Rs.44,509.30. In the circumstances, the plaintiffs state that the defendants are jointly and/or severally bound and liable to pay to the plaintiffs the sum of Rs.61,349.79 being the deficit in Port Trust charges in respect of the second consignment together with the sum of Rs.2,042.19 being the interest thereon at the rate of 15% p.a. from 17th November 1986 till filing of the suit aggregating to Rs.63,391.98. In the circumstances, the plaintiffs state that the defendants are jointly and/or severally bound and liable to pay to the plaintiffs the sum of Rs.52,212.50 being the deficit in port trust charges in respect of the 3rd 15 consignment together with the sum of Rs.1,738.03 being the interest thereon at the rate of 15% p.a. from 18th November 1986 till filing of the suit aggregating to Rs.53,950.53. In the circumstances, the plaintiffs say that the defendants are jointly and/or severally bound and liable to pay to the plaintiffs the aggregate sum of Rs.1,25,851.81 (after giving credit for Rs.36,000/- paid by the defendant No.1 to the plaintiffs) towards Port Trust charges in respect of sale of 1st, 2nd and 3rd consignments with further interest on the principal sum of Rs.1,20,637.71 at 15% p.a. from the date of the suit till payment or realisation." 12. This is how particulars in Annexure G to the plaint have been computed. 13. Upon the writ of summons being served, 16 the defendants entered appearance. Written statement was filed by the first defendant on 20th November 1987 and by the second defendant on 30th September 1992. Insofar as stand of the first defendant is concerned, after denials, paras 5 and 6 of the plaint were dealt with in corresponding paras and their contents were admitted save and except to the extent of details of landing dates and the last free dates. Para 7 of the written statement of the first defendant reads thus:- "7. With reference to para 7 of the plaint, this defendant admit that they are the importers/consignees/owners of the aforesaid 3 consignment within the meaning of the said Act. This defendant deny that the 2nd defendants were their agents or the agents of the said vessel and put the plaintiff to strict proof thereof. This defendant deny that as 17 such importers/owners of the said consignments, the defendants were bound and liable to take delivery of and clear the said cosnignements within 7 days from the date of landing or on any other date as alleged by the plaintiff and put the plaintiff to strict proof thereof. This defendant deny that they had to pay and demurrage and other charges to the plaintiffs according to the alleged scale of rates duly prescribed, published and alleged to be brought into force under the provisions of the said Act. Without prejudice this defendant states that such alleged rates are not enforceable under the provisions of the said Act and they are illegal, unlawful and bad in law. Defendant No.1 denies that they failed and neglected to clear the said consignments and that the said consignments remained in the custody of 18 the plaintiffs at the risk and expense of the defendants". 14. It is pertinent to note that they admit in para 8 of the written statement that they paid a sum of Rs.15,000/- on 31st January 1983 and Rs.21,000/- on 28th March 1983 but it is their case that they paid these sums as security deposits only and not for postponement of the auction sale. Thereafter, they denied the pleas with regard to the sale and the deficit so also contended that the claims are illegal, unlawful and bad in law. They prayed that the suit be dismissed. 15. Insofar as the second defendant is concerned, their case is that the suit claim is barred by limitation. Without prejudice, they submit that portion of plaintiffs’ claim for demurrage that accrued on or after 2nd April 1982 is not maintainable. Reliance is placed upon 19 section 63 of the Major Port Trust Act. They denied that they are the consignees/importers/bailees of the consignment. They denied that they are owners of the consignment under the Major Port Trust Act or any other Act. However, they admit that the vessel discharged three consignments, consisting of 25, 40 and 35 cartons respectively at the port of Bombay. Paras 9 and 10 of the written statement read thus:- "9. With reference to paragraph 7 of the plaint, these defendants deny that they were the consignees or bailees or agents for the custody of the said consignment or were the owners within the meaning of the Major Port Trusts Act, 1963 as amended by the Major Port Trusts Amendment Act, 1974, as alleged or at all. These defendants say that the owners or charterers of vessel are 20 concerned with the cargo only as carriers from the load port to the Port of Discharge and to attribute to them the label of importers or consignees or bailees or owners of goods is grossly incorrect and misleading. These defendants say that after the said consignment was discharged from the vessel, the vessel’s connection with the said consignment ceased and there was no question of these defendants being liable, having discharged the said consignment into the custody of the plaintiffs. These defendants further say that they were merely, carrying out their contractual duty in taking charge of the said goods for carriage and that no relationship of bailor and bailee as between these defendants and the plaintiffs would arise from the performance of their obligations. These 21 defendants deny that they were bound to take delivery of or clear the said consignment within 7 days or from any time or to pay wharfage or demurrage or any other charges which accrued thereon and were payable to the Trustees for the period during which the goods remained with the plaintiffs or for any period according to the scale of rate or rates prescribed or published under the said Act as alleged or otherwise or at all. These defendants say that as it was not their duty to clear the said consignment, the question of their failure or neglect cannot and does not arise. These defendants deny that the goods remained with the plaintiffs at the sole risk or expense of these defendants as alleged and add that the goods remained with the plaintiffs at the sole risk and expense of the manifested consignees viz. the 22 defendant No.1 who had to the knowledge of the plaintiffs acquired title to the goods and were therefore liable under sub-section (2) of Section 60 of the said Act. 10. With further reference to the said paragraph 7 of the plaint, these defendants deny that the plaintiffs are entitled to charge or levy wharfage, demurrage and other charges for the reasons sought to be given against these defendants as alleged and/or sought to be suggested or at all. These defendants further submit that the plaintiffs are not entitled to recover any wharfage or demurrage or other charges from shipowners or their agents. Such charges, if at all, are recoverable only from the consignees and not from the shipowners or their agents. These 23 defendants were neither the owners of nor the importers of consignment in the suit and there was no obligation cast on them to take delivery of the consignment at anytime whatsoever. Assuming that the defendants can take deliver, having once issued the delivery order it is not possible for these defendants to clear the said consignment. In any event, these defendants say that they themselves cannot clear the consignment as shipowners or their agents have no authority and/or are not permitted to clear/remove any goods from the port area and if on account of the default of the consignees, the shipowners are to be made liable their business would become impossible, as on the one hand they are compelled to be idle spectators unable to issue delivery order without the consignees surrendering the remaining two 24 original Bills of Lading, also unable to themselves clear the goods and on the other hand by the utter inaction of the consignees and the Port Trust, their alleged liability would continue to increase. These defendants submit that the law has never contemplated such liability, and, if at all it has done so, it is unconstitutional and ultra-vires the conditions and rule making powers of the Port Trust and/or other Authorities concerned. 16. It is on the basis of the above pleas that the second defendants denied their liability to pay the sums as claimed in the suit. 17. On the basis of the rival contentions, the following issues were framed:- "(i) Whether the plaintiffs prove that 25 they have any cause of action against the 2nd defendant? (ii) Whether the plaintiffs prove that the 2nd defendant was liable to take delivery of and/or clear the suit consignment? (iii) Whether the 2nd defendant proves that the suit is barred by the law of limitation? (iv) Whether the plaintiffs prove that they are entitled to recover from the 2nd defendant a sum of Rs.1,25,851.81 or any other sum with further interest on the sum of Rs.1,20,637.71 at the rate of 15% p.a. from the date of filing of the suit till payment or realization? (v) What order? 26 Compilation of documents was tendered by both sides. Insofar as oral evidence is concerned, the plaintiffs tendered affidavit in lieu of examination in chief of Mr.Sanjay Sawant, Assistant Docks Manager. That affidavit was tendered and taken on record. Thereafter, the witness was available for cross examination. None appeared on behalf of first defendant when the suit was called out for cross examination. 18. However, learned Counsel for defendant No.2 appeared and cross examined this witness. In the cross examination it has been stated that defendant No.2 was the steamer agent and it has filed the IGM. However, it is admitted that IGM copy is not available in the records of plaintiffs. The witness has admitted that while preparing affidavit in lieu of examination in chief, he had not seen the IGM but the details of IGM are based on other records. The other 27 records are the sale notices and the sale notices include all details. The witness was asked about the details which are mentioned in the IGM and he has given an answer to that question in para 8 of the cross examination. 19. The witness has been put some general questions with regard to the procedure about discharge of cargo. He has stated that it is true that importers are owners of the cargo and entitled to receive the same. He has stated that the first defendant is the owner of cargo and that statement is based upon the sale notice. However, when his attention was invited to the fact that sale notices are addressed to second defendant, he stated that it is presumed that they are also the owners of the cargo. It is stated by him that notice was issued to the owners of the cargo but the goods were not cleared and that is how a notice was addressed to defendant No.2. The witness states that he is 28 aware of the provisions of sections 60 and 62 of the Major Port Trust Act. He states that it is true that the carrier or its agent is entitled to a lien and the cargo if the freight is unpaid by the shipper/owner. It is stated by the witness that the defendant No.1 has admitted that they are owners of the cargo/goods. He has stated that on the basis of a reply to the request made by defendant No.1 to withdraw the cargo from auction. The witness states that there is nothing on record which would show that defendant No.2 claimed to be the owner of the cargo. However, he states that it is true that delivery orders were issued by the steamer agent. It is stated that it would be given to a person producing delivery order, bill of entry, bill of lading as