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TMI Blog2016 (10) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner as a pledgee could at best be said to have stepped into the shoes of the owner and, therefore, in terms of Section 150 of the CA, the dues of the petitioner would have to await the settlement of the Customs duty and dues of respondent No. 2. The Court finds merit in the submission of Mr. Sibal that the sale of the goods can take place only in terms of Section 150 of the CA. The goods in question are imported and have not been cleared within a period of thirty days after such import. Sections 48 read with Sections 142A and 150 of the CA are straightway attracted. Therefore, the sale of the warehoused goods has to take place only in accordance with Section 150 of the CA and the proceeds thereof have to be applied in the manner provided therein. The dues of the Customs authorities and that of respondent No. 2 have a priority over those of the petitioner and the sale proceeds will have to be applied to settle the dues in that order. Consequently, the question of permitting the petitioner as a pledgee of the goods to bring the goods to sale by way of public auction does not arise. Without any unnecessary delay, respondent No. 2 should initiate the process, if it has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nker, the State Bank of Travancore, Parliament Street, New Delhi in favour of supplier for a sum of USD 21,00,000. It is stated that the import was made on 23rd May, 2014. Respondent No. 1 executed a Deed of Pledge dated 11th June, 2014, pledging the cargo of value of USD 2112140.57 under the said LC. 5. Respondent No. 1 and the petitioner entered into a High Seas Sale Contract on 11th June, 2014 whereby respondent No. 1 agreed to sell the cargo to the petitioner. 6. Respondent No. 2, the owner of the Kandla port, confirmed by a letter dated 14th June, 2014 that it had received the cargo of 2002.010 MT of Heavy Aromatics and that it had been stored at its bonded warehouse. It undertook that it would release the cargo to respondent No. 1 only after a No Objection Certificate ( NOC ) was given by the petitioner and that the charges for storing were to be borne by respondent No. 1 in terms of the Contract between respondent Nos. 1 and 2 entered into on 24th September, 2013. 7. At the request of respondent No. 1, the petitioner rolled over the LC on three occasions i.e., on 19th September, 2014, 17th November, 2014 and 13th February, 2015. On 11th February, 2015, respondent No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a further order was passed in the absence of the counsel for the respondents, permitting the petitioner to initiate the steps to auction the goods lying with respondent No. 2, and for respondent No. 2 to allow the petitioner to take the samples of the products for that purpose. A copy of the auction notice was directed to be given to respondent No. 1. The request of the petitioner was to be considered on the following date. 13. At this stage, it is required to be noticed that respondent No. 1 has despite service not been appearing in these proceedings. In fact, respondent No. 1 has been unresponsive even to the communication addressed to it by the petitioner as well as respondent No. 2. In effect, therefore, respondent No. 1 has disappeared from the scene. 14. Soon thereafter respondent No. 2 filed IA No. 11610/2016 seeking clarification/modification of the order dated 31st August, 2016. Respondent No. 2 sought a direction to the petitioner that it would not sell, alienate, transfer and create any third party interest in the goods without clearing the outstanding dues of respondent No. 2. The alternative prayer was that if the petitioner had to auction the goods by way of ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warehouse of respondent No. 2. He pointed out that the storage charges could be recovered even ahead of the Customs dues. The dues of the owner of the cargo were to be settled only thereafter. In support of this proposition, he placed reliance on the decision of the Division Bench of this Court in Associated Container Terminals Ltd. v. Union of India - 2008 (226) E.L.T. 169. It is, accordingly, submitted that this Court ought not to pass any order which would be contrary to the statutory scheme. 19. The above submissions have been considered. In the first place, it requires to be noticed that, ordinarily, a direction under Section 9 of the Act will not be issued to a party which is not a party to the arbitration agreement. However, this Court has in a series of judgments including Dorling Kindersley (India) Pvt. Ltd. (supra) held that Section 9 of the Act does not limit the jurisdiction of the Court to pass appropriate interim orders which might affect third parties deriving a title from the party to the agreement unlike the third party having an independent right. In the said decision, the Court referred to the decision of the Full Bench of the Bombay High Court in Girish Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m payable by an assessee or any other person under this Act, shall, save as otherwise provided in Section 529A of the Companies Act, 1956 (1 of 1956), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), and the Insolvency and Bankruptcy Code, 2016, be the first charge on the property of the assessee or the person, as the case may be. 150. Procedure for sale of goods and application of sale proceeds. - (1) Where any goods not being confiscated goods are to be sold under any provisions of this Act, they shall, after notice to the owner thereof, be sold by public auction or by tender or with the consent of the owner in any other manner. (2) The proceeds of any such sale shall be applied - (a) firstly to the payment of the expenses of the sale, (b) next to the payment of the freight and other charges, if any, payable in respect of the goods sold, to the carrier, if notice of such charges has been given to the person having custody of the goods, (c) next to the payment of the duty, if any, on the goods sold, (d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en that the owner of the goods is last in the sequence. The petitioner as a pledgee could at best be said to have stepped into the shoes of the owner and, therefore, in terms of Section 150 of the CA, the dues of the petitioner would have to await the settlement of the Customs duty and dues of respondent No. 2. 26. The Court is unable to agree with the submission of the learned counsel for the petitioner as a pledgee in terms of Sections 172, 176, 180 181 of the Contract Act, its dues deserve precedence over the dues of the Customs and respondent No. 2. 27. The decision in Bank of Bihar (supra) and the subsequent decision in Central Bank of India (supra) did not consider a situation where monies owed to the Customs as well as the port/warehousing entity. In both those cases, the simple question was regarding the rights of the pledgee over those of unsecured creditors and even the Government. In the present case, however, the statute i.e. the CA itself provides for the sequence for settling of the dues of the various parties from the proceeds of the auction sale. A harmonious reading of Sections 48, 142A and 150 of the CA makes it clear that subject to the compliance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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