2024 (6) TMI 789 - HC - Customs

Conditional leave to defend the suit to the Defendant - wrongful detention charges - whether the detention-cum-demurrage waiver Certificate dated 05.08.2019 issued by the Customs Authority will be applicable or binding on the Defendant? - HELD THAT - It is seen from the pleadings that Defendant claims to be an agent of the principal shipping line i.e. M/s. Vasco Maritime Pte. Ltd. Singapore and thus acting as a carrier executed the Bill of Lading. According to the Defendant s case the containers which were provided for the import of the goods were required to be returned latest by 30.06.2019 on the expiry of the free detention period of 14 days at the Port of discharge. However since the Plaintiff s cargo was put on hold by the Customs Authority for investigation the Plaintiff continued using the containers beyond the free detention period for upto 48 days. Thus admittedly the Plaintiff used and utilised the containers beyond the free detention period which is an admitted fact. In that view of the matter the Defendant sought detention charges from Plaintiff for that period. It is clearly seen that the Bill of Lading and the contract between the parties was only upto the end of free detention period i.e. 30.06.2019. In this view of the matter the Plaintiff in order to save its goods because they were perishable got them released and received a waiver Certificate thereafter from the Customs Authority. Thus requiring the Defendant to deposit the entire sum of Rs. 18 lakhs is unsustainable since an arguable case of defence has been made out by the Defendant - direction to deposit the amount of Rs. 18 lakhs in the impugned order is unsustainable and is therefore quashed and set aside only to that extent - petition allowed.

Summary

Issues:
1. Conditional leave to defend suit granted to Defendant on deposit of Rs. 18 lakhs.
2. Dispute over detention charges paid by Plaintiff to Defendant.
3. Applicability of detention-cum-demurrage waiver certificate issued by Customs Authority.
4. Defendant's role as a carrier and agent of the principal shipping line.
5. Legal obligation of Defendant to refund detention charges to Plaintiff.
6. Validity of Trial Court's order directing deposit of Rs. 18 lakhs by Defendant.

Analysis:
1. The Writ Petition challenges the Trial Court's order granting conditional leave to the Defendant to defend the suit upon depositing Rs. 18 lakhs. The Defendant filed the Writ Petition seeking a refund of detention charges paid to the Plaintiff. The Plaintiff, a partnership firm, approached the Defendant for logistics services for importing goods. Dispute arose over detention charges levied by Defendant beyond the free detention period, leading to a Summary Suit seeking refund.

2. The Plaintiff contended that the detention charges were wrongful due to a detention-cum-demurrage waiver certificate issued by Customs Authority. The Defendant argued that the charges were legitimate as per the contract terms. The Trial Court found triable issues and allowed the Defendant to file a Written Statement. The High Court observed the dichotomy between Customs' actions and contractual obligations, framing issues on the certificate's applicability and lawful collection of charges.

3. The Defendant, acting as a carrier and agent, provided containers for import, expecting their return by a specified date. However, due to Customs' hold on the cargo, the Plaintiff used the containers beyond the free detention period. The Plaintiff's actions were admitted, justifying the Defendant's claim for detention charges. The High Court noted that the contract only covered the free detention period, leading to the Plaintiff's payment to avoid goods' spoilage.

4. Considering the admitted facts and an arguable defense by the Defendant, the High Court set aside the Trial Court's order directing the deposit of Rs. 18 lakhs. The Defendant was granted unconditional leave to defend the suit, and the deposited amount was to be refunded with interest. The Court directed expedited hearing of the suit within six months.

5. The High Court's judgment focused on the contractual obligations, Customs' actions, and the legality of detention charges, providing clarity on the parties' rights and obligations. The decision balanced the interests of both parties while ensuring a fair resolution to the dispute over the detention charges.