1999 (2) TMI 85 - HC - Customs

Summary

Issues Involved:
1. Ownership and Title Transfer of the Vessel
2. Compliance with Customs and Shipping Regulations
3. Legal Implications of Vessel Abandonment
4. Right to Resell and Clear the Vessel

Issue-wise Detailed Analysis:

1. Ownership and Title Transfer of the Vessel:
The petitioner purchased the vessel "M. J. Manuel Belgrano" under an agreement dated 20-7-1998 for breaking purposes. The vessel arrived at Alang Port and was granted beaching permission. However, due to high current, the ship drifted and was damaged. M/s. Kathiawar Steels, the original importer, relinquished their rights over the vessel, and the petitioner acquired it. The court noted that the agreement between M/s. Kathiawar Steels and the seller required safe anchorage at Alang Port and the release of a letter of credit for the title to pass. Since these conditions were not met, M/s. Kathiawar Steels never became the owner, and the petitioner rightfully claimed ownership after purchasing the vessel from subsequent parties.

2. Compliance with Customs and Shipping Regulations:
The court highlighted the importance of following the procedures under the Customs Act and the Merchant Shipping Act. The respondents argued that the vessel's resale within Indian territory violated customs provisions. However, the court found that the necessary conditions for title transfer were not fulfilled, and thus, M/s. Kathiawar Steels was not the owner. The court also noted the lack of compliance with the Merchant Shipping Act's requirements for reporting and handling shipping casualties, as no receiver of wreck was appointed.

3. Legal Implications of Vessel Abandonment:
The vessel was abandoned by the crew after it became uncontrollable and started sinking. The court examined the implications of this abandonment under the Merchant Shipping Act, which requires the appointment of a receiver of wreck to manage the wreck and protect the owner's rights. The court found no evidence that such procedures were followed, indicating a failure on the part of the authorities to comply with the Act's provisions.

4. Right to Resell and Clear the Vessel:
The petitioner sought permission to break the vessel on-site and remove the scrap under customs supervision. The court granted this permission, emphasizing that public interest would be adversely affected if the vessel sank. The court directed the customs authorities to accept the petitioner's Bill of Entry and permit clearance of the goods upon payment of customs duty. The court rejected the respondents' request to stay the order, noting the significant investment and potential prejudice to the petitioner.

Conclusion:
The court concluded that M/s. Kathiawar Steels never became the owner of the vessel due to unfulfilled conditions in the agreement. The petitioner, having purchased the vessel from subsequent parties, was entitled to clear the goods upon payment of customs duty. The court issued a writ of mandamus directing the customs authorities to accept the petitioner's Bill of Entry and permit clearance of the goods stored at Ghogha port. The petition was allowed, and no costs were ordered.