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TMI Blog2009 (3) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... werable for the loss. - in so far the importer is concerned, the moment imported goods lands in customs area, since statutorily it has to remain in the custody of the Customs Authorities till it is released either for home consumption or for warehousing, there will be a statutory creation of bailment and the Customs Authorities become the bailee vis-à-vis the importer. Therefore, in my considered opinion, the customs authorities are principally liable for the proper return of the imported goods to the importer concerned on its clearance. - 126/2005 and others - - - Dated:- 9-3-2009 - K.N. Keshavanarayan, J. C.R.P. Nos. 126/2005, C/W/CRP/294/2005, 587-589, 591, 590, 592-607, 609, 614-621, 623-637/2007 and CRP/586/2007 Smt. Yovini Rajesh Rohra and S/Shri Rajesh Chandra Kumar for Chander Kumar A/S and R. Veerendra Sharma, A.C.G.S.C., for the Petitioner. S/Shri B.C. Seetharama Rao, Advocate and Aravind Kumar, A.S.G., for the Respondent. [Order]. - As common questions of fact and law arise for consideration in all these revision petitions, they were heard together and are being disposed of by this common judgment. 2. All these revision petitions are filed under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liable, its liability is limited only to that extent. It also contended that though it was appointed as the custodian under Sec. 45(l) of the Act, the Customs Authority had the complete control over the goods as such it is not liable for payment of any damages to the importer. Upon receipt of the reply from the MSIL, the Insurer as well as Importer filed suits in S.C. Nos. 1087/03, 2326-2327/03, 1080-1086, 1088-1089/03, 226/04, 280/04, 359-365/04, 417/04, 459 and 460/04, initially only against MSIL seeking decree for recovery of the value of the goods with interest. The MSIL, upon service of suit summons in all those cases appeared before the respective courts and contested the matter reiterating its stand which it had taken in its reply notice. It also contended that the suits are bad for non-joinder of necessary parties viz., the customs authority. In the light of the said defence, the plaintiffs by complying with requirement of Sec. 155(2) of the Act, by issuing notice to the customs authority, filed applications to implead customs authority. The applications were allowed and the Commissioner for Customs as well as Addl. Commissioner for Customs were impleaded as defendants 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the plaintiffs and as the goods were in possession and control of the custodian viz., MSIL as on the date of its destruction, the MSIL alone is answerable to the claim of the plaintiffs. In that view of the matter, the learned Judge decreed the suit of the plaintiffs in part, only against defendant-1 viz., MSIL and dismissed the suits against Customs Authority, defendants 2 and 3. Against that part of the decree passed against MSIL in each of these cases, MSIL has preferred 23 revision petitions in CRP 614 to 621/07 and 623/07 to 637/2007. As against the dismissal of the suits against defendants 2 and 3, the insurer as well as importer have jointly filed 23 revision petitions CRP 586 to 609/2007. In the light of the above facts and since all these revision petitions involve the same questions of fact and law, they are being disposed of by this common judgment. 7. I have heard Sri B.C. Seetharama Rao, learned counsel appearing for the plaintiffs, namely, Importer and the Insurer, Smt. Yovini Rajesh, learned counsel appearing for MSIL and Sri Aravind Kumar, learned Asst. Solicitor General appearing for Customs Authority, defendants 2 and 3. 8. Sri. B.C. Seetharama Rao, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the event of any loss or damage to the imported goods during the custody of such goods with the custodian, the Customs Authorities are answerable and by virtue of the public notice dated 10-10-1984, the liability of the custodian is limited to 20 U.S. Dollars per Kg. or to the extent of the value of imported goods, whichever is less. She would submit that such public notice has been Gezetted and therefore, it has the binding force against all including the plaintiffs and the Customs Authorities, as such, the decree passed by the Court below fastening the entire liability on the custodian is illegal and contrary to the law. She would further submit that since as per the provisions of the Customs Act, the imported goods from the moment it lands in the customs area, would land in the hands of the Customs Authorities, who in turn by virtue of an arrangement made, deliver the same to the custodian, for storage till cleared for home consumption or warehousing, as such, there is no privity of contract between the importer and the custodian. Therefore, the custodian is not liable to answer the claim of the importer or its insurer. Therefore, she sought for setting aside the decree passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar provisions are not available with regard to the possession of the imported goods with the custodian appointed under Section 45(1) of the Act and therefore, the Customs Authorities are not liable to answer the claim of the plaintiffs in these cases, as such, the Court below has rightly dismissed the suits against the Customs Authorities. With regard to decree passed in O.S. No. 1087 of 2003, he submitted that the said judgment is illegal and contrary to the provisions of the Customs Act, as such, it is liable to be set aside. 11. The undisputed facts are, the Defendant-MSIL at the relevant point of time was custodian appointed under Section 45(1) of the Act in respect of the imported goods landing at Bangalore Airport. The goods imported by HAL landed in the Bangalore Airport, which is a Customs Airport notified under Section 7 of the Act on 4-6-2000. The imported goods were given to the possession of the custodian on the very same day. On 5-6-2000 those imported goods kept in Air Cargo Complex managed by the Custodian were destroyed in a fire accident. 12. In the light of the aforesaid undisputed facts, and in the light of the submissions made by the learned counsel ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the aforesaid provisions, it is clear that the imported goods should land only in customs area of the notified customs Airport and such imported goods should be unloaded only in the customs area notified in the presence of the proper officer. 20. Section 45 deals with clearance of imported goods and export goods. According to sub-section (1) of Section 45, all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter-VIII. Sub-section (2) of Section 45 deals with the duties of the person who would be given the custody of the imported goods unloaded in the customs area. According to Clause (a) of sub-section (2) of Section 45, the person having custody of any imported goods in a customs area, shall keep a record of such goods and send a copy thereof to the proper officer and according to Clause (b) of sub-section (2) of Section 45 of the Act, he shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether dutiable or not, entered for home consumption, if the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time, the goods may, pending clearance, be permitted to be stored in a public warehouse, or in a private warehouse if facilities for deposit in a public warehouse are not available. However, goods so transferred to warehouse shall not be deemed to be warehoused goods for the purpose of this Act and the provisions of Chapter IX will have no application to such goods. 25. Chapter IX comprised of Sections 57 to 73, deals with warehousing and we are not very much concerned with those provisions in these cases. 26. Thus, reading of the provisions contained in Chapters VII and VIII makes it clear that the moment imported goods lands in the customs area of a customs airport, the Proper Officer in-charge of that customs airport, would take charge of the goods. However, till such goods are cleared either for home consumption or for warehousing, the arrangement for its storage is made under Section 45(1) by entrusting the custody of such imported goods till it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms Authorities would retain the complete control over the goods so stored with the custodian. The custodian is not an independent authority to deal with the imported goods and he has to act in accordance with the directions of the Proper Officer. Even the power of sale of the goods not cleared, warehoused or transhipped within the specified period, can be effected by the custodian only with the permission of the Proper Officer. Therefore, from the above, it is clear that the Customs Authorities exercise complete control over the imported goods though in possession of the custodian till it is cleared either for home consumption or for warehousing or transhipped. No doubt, the custodian is under an obligation to store such goods in a proper manner and take all possible precautions to prevent any kind of accident or destruction or pilferage. 28. No doubt according to the provisions of Section 45(3), in case of pilferage of the imported goods in possession of the custodian, the custodian is liable to pay duty of such goods to the Department. This does not indicate that the Customs Authorities have no control over the goods nor it would indicate that the customs authorities are not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Act, there can be a little scope to dispute that until the goods are cleared for home consumption, the scheme of the Act requires the goods to remain in the hands of the customs authorities and obviously the statutory liability to account for the goods would be of the authorities under the Act charged with responsibility of keeping the goods." 33. In the case reported in AIR 1996 SC 2508 [Bharathi Knitting Co. v. DHL, Worldwide Express Courier Division of Airfreight Ltd.] relied on by Smt. Yovini Rajesh Rohra, though the principles of limited liability of the consignee is recognised, it was on account of the contract between the consignor and the consignee; it was a contractual obligation between the parties and there was a privity of contract between the parties and the parties had agreed to the terms restricting the liability of the consignor. However, in the case on hand, to the contract of limited liability on the part of the MSIL, neither the importer nor insurer of the importer is a party. It was an arrangement between the custodian and the Customs Department. Therefore, that clause regarding limited liability could be enforced only against the Customs Department an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment for proper storage of such imported goods, by appointing the custodian, would not absolve its liability to account for the toss, if any, of such imported goods even if such goods were in possession of the custodian. 35. In the light of the statutory creation of the custodian under Section 45(1), even custodian is answerable to the Customs Department for any loss or destruction of such goods. 36. According to Section 151 of the Indian Contract Act, in all cases of Bailment, the Bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would under similar circumstances take, of his own goods of the same bulk, quality and value of the goods bailed. Thus, the Bailee is under an obligation to take proper care in respect of the goods bailed with him. It is only if he establishes that he has taken all the care as is required by a man of ordinary prudence, he is absolved from liability. 37. As per Section 152 of the Indian Contract Act, the bailee in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it described in Section 151. 38. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Decrees passed by the III Additional Judge of the Court of Small Causes dismissing the suits against Defendants 2 and 3 is liable to be set aside and the said decrees are required to be modified directing all the three defendants to pay the decreetal amount jointly and severally together with interest as fixed by the Court below. In this view of the matter, the CRPs. filed by the Insurer and the importer deserve to be allowed while the CRPs. filed by MSIL are liable to be dismissed. 40. Accordingly, CRPs. 126 of 2005 and C.R.P. 294 of 2005 are dismissed. The judgment and decree passed in SC No. 1087 of 2003 by the I Additional Judge of the Court of Small Causes, Bangalore is affirmed, C.R.Ps. 586 of 2007 to 609 of 2007 are allowed. The judgment and decree passed in S.C. No. 2326-2327/2003, 1080-1086/2003, 1088-1089/2003, 226/04, 280/04, 359-365/2004, 417/2004, 459/2004 and 460/2004 dismissing the suits against Defendants - 2 and 3 are hereby set aside. In modification of the judgment and decree passed by the trial Court, these suits are decreed against all the three defendants and they are directed to pay the decreetal amount jointly and severally together with interest at 6% fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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