1975 (9) TMI 170 - SC - Customs

Levy of demurrage - Whether the scale of fees under which the appellants charge demurrage is void as being unreasonable and as being beyond their powers? Whether the 1st respondent is liable to pay the demurrage claimed by the appellants? Held that - The High Court was therefore in error in holding the scale of rates fixed by the Board as ultra vires and void on the grounds that it is unreasonable and that it is in excess of the power conferred by section 42 of the Act. The 1st respondent had no title to or interest in the goods except to deliver them in accordance with the instructions of the Corporation. If the appellants were to enforce their statutory lien, the incidence of the demurrage would have fallen on the Corporation in whom the title to the goods was vested. The appellants permitted the goods to be cleared without then demanding the demurrage which they claimed later, thereby depriving the 1st respondent of an opportunity to reject the goods as against the supplier unless, of course, the Corporation was within to accept them and along with them the liability for the payment of demurrage. In the absence of any more facts we find it impossible on the record as it stands, to accept the appellants' claim against the 1st respondent. Therefore, hold that the claim against the 1st respondent must also fail. In the result, we confirm the decree of the High Court dismissing the appellants' suit, though for entirely different reasons.

Issues Involved:
1. Validity of the scale of fees for demurrage.
2. Liability of the first respondent to pay the demurrage.
3. Liability of the second and third respondents to pay the demurrage.

Detailed Analysis:

1. Validity of the Scale of Fees for Demurrage:
The primary issue was whether the scale of fees under which the appellants charged demurrage was void as being unreasonable and beyond their powers. The High Court held that the levy of demurrage in cases where the goods were detained by the Customs authorities for no fault or negligence on the part of the importer was unreasonable and beyond the powers of the appellants. The Supreme Court disagreed, stating that the "Scale of Rates and Statement of Conditions" framed by the appellants under sections 42, 43, and 43-A are not bye-laws. Instead, these scales and conditions represent an agreement between the parties, one offering its services at prescribed rates and the other accepting the services at those rates. The Court emphasized that the Board's power to frame the scale of rates and statement of conditions is not a regulatory power to order something to be done or not to be done. Therefore, the High Court's reasoning that the scale of rates was ultra vires because it was a bye-law was unsustainable.

2. Liability of the First Respondent to Pay the Demurrage:
The second issue was whether the first respondent was liable to pay the demurrage claimed by the appellants. The High Court had prepared to hold the first respondent liable except for the fact that the scale of rates was deemed unreasonable and beyond the power of the Board. However, the Supreme Court set aside the High Court's findings on those points. Unfortunately, the parties did not present sufficient facts in the High Court to establish the liability of the first respondent. The Court noted that documents alone could not prove the liability and that oral evidence was necessary. The import license was in the name of the State Trading Corporation of India, and the first respondent was authorized to deliver the consignment to the Corporation's nominees. The first respondent had no title to or interest in the goods except to deliver them according to the Corporation's instructions. Therefore, the Supreme Court found it impossible to accept the appellants' claim against the first respondent based on the scanty facts on record.

3. Liability of the Second and Third Respondents to Pay the Demurrage:
The third issue involved the liability of the second and third respondents. The appellants' counsel did not press the claim against these respondents. The Supreme Court agreed that the appellants' claim against respondents 2 and 3 had no foundation in law. The third respondent, the Collector of Customs, could not be made personally liable to pay the demurrage. The second respondent, the Union of India, also could not be held liable on the grounds of contract or quasi-contract. The issuance of an incorrect "Detention Certificate" by the third respondent could not fasten liability for demurrage on respondents 2 and 3 due to their negligence.

Conclusion:
The Supreme Court confirmed the decree of the High Court dismissing the appellants' suit, though for entirely different reasons. The Court held that the scale of rates fixed by the Board was not ultra vires and void. However, due to insufficient facts, the claim against the first respondent could not be upheld. The claim against the second and third respondents also failed as it had no legal foundation. Therefore, the appellants' suit was dismissed with no order as to costs.

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