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TMI Blog2022 (4) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... .02.2022 and communicated to the Shipping Line and the CFS. Even much earlier by email dated 23.02.2022 and letter dated 25.02.2022, the Customs had called upon the Shipping Line to comply with the direction issued by this Court in its order dated 17.02.2022 at the earliest. The facts clearly disclose that the Shipping Line was communicated with the detention certificate, informed about the orders passed by this Court and they have submitted their reply/objection which would categorically show that they were not inclined to comply with the detention certificate and grant waiver. Thus, the order passed by this Court directing issuance of detention certificate to the Customs which direction was not complied with, though communicated to the Shipping Line - Therefore, the Shipping Line though would have been a third party to the proceedings when the writ petition was heard, on and after they have been issued with the detention certificate, they are precluded from raising a plea that they are third party to the proceedings and alien to the directions issued by this Court, resulting in issuance of the detention certificate. Thus, the Shipping Line is not only a necessary party to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Shipping Line had sought to exercise their alleged right under the proviso to Regulation 10(l) of the 2018 Regulation and it is for the first time before this Court such a plea is being canvassed - by conduct, the Shipping Line was fully aware of the effect of the statutory regulations and the present attempt to wriggle out of their obligations is impermissible. The Shipping Line appears to have been sitting on the fence and watching the proceedings and to see as to what extent this Court may exercise its jurisdiction under the provisions of the Contempt of Courts Act. Thus, it can be safely concluded that the attempt of the Shipping Line is to obstruct the implementation of the order and directions issued by this Court by seeking to make an attempt to challenge the detention certificate by appearing before this Court after they have been put on notice in the impleadment application. There is a statutory embargo on the Shipping Line, prohibiting them from charging any rent or demurrages during the period of detention and a certificate having been issued by the proper officer waiving the detention charges, there is no escape from the rigour of such a certificate issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and to draw fresh samples in the presence of the petitioner and send the same for retest to any accredited laboratory and one sealed sample be provided to the petitioner. As ordered by the Commissioner of Customs (Appeals) dated 11.08.2021 and to direct the first respondent to make an enquiry and investigation if on retest, samples of the goods are found to be swapped and take suitable steps against the delinquent officers and for a direction to the official respondent to reimburse the warehousing charges and container rent suffered on the goods. 4. The petitioner imported a consignment of mixed lot of 100 % polyester, knitted fabric and filed bill of entry dated 15.09.2020. The consignment was examined by the officials in the presence of the petitioner/importer and on visual examination, it was prima facie found that the goods were fresh and high-quality fabric. Representative samples were drawn and forwarded to the Central Revenue Control Laboratory, Calcutta for testing and to ascertain the actual nature and quality of the goods. The Central Laboratory opined that the samples may be treated as tufted fabric . The Joint Commissioner of Customs (Port) issued show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner is incurring heavy demurrages charges as well as rent payable for the container and therefore a direction was sought for to implement the order passed by the Appellate Authority. The writ petition was disposed of by the order dated 29.09.2021. The Learned Writ Court noted that during the pendency of the writ petition, one of the directions issued by the Appellate Authority was complied with and the goods have been permitted to be warehoused. However, the direction for retesting of the goods has not been complied with. The respondents resisted the prayer by contending that the order passed by the Appellate Authority dated 11.08.2021 is an appealable order and sought to distinguish the decision relied on by the petitioner in the case of Umbar Marketing Private Limited Versus Commissioner of Customs (Port) (2016) 338 ELT 362 (Calcutta), on the ground that it is not applicable to the facts of the case. The Learned Writ Court rejected such contention of the department and held that the department cannot take different stand for different parties. Accordingly, the writ petition stood disposed of by directing the concerned respondent to draw samples for the purpose of retesting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with the relevant procedure and send the samples for testing to the accredited laboratory in Kolkata and the charges be payable by the first respondent. It is made clear that drawl of the samples and sending the same for testing to the laboratory shall be without prejudice to the rights and contention of the appellant in appeal which was filed by the department before the Tribunal challenging the order passed by the Commissioner of Customs dated 11th August, 2021. 2) We are informed that the department has agreed that the first respondent can warehouse the goods but the same could not be complied with because there is huge demand of detention charges. We find that there is no formal request made by the first respondent for waiver of these charges. Therefore, there will be a direction to the first respondent to submit the request of waiver of detention charges and issuance of detention certificate within three days from the date of the receipt of the copy of demand which shall be considered by the appropriate authority within ten days therefrom. 3) Subject to the orders that may be passed on the representation for issuance of detention certificate, the goods sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been passed on 19.02.2022. Further the Court noted that the department has issued detention certificate dated 18.02.2022 and forwarded the same to the CFS and the Shipping Line (proposed parties). The grievance of the petitioner was that in spite of the detention certificate having been communicated to the proposed parties they have not permitted the petitioner to clear the goods and are insisting upon the payment of demurrage and container charges. The department contended that the relationship between the petitioner and the CFS/Shipping Line is contractual and it is for the petitioner to work out the remedies in accordance with the law and the department cannot be hauled up for contempt. Certain decisions were relied on by the Senior Standing Counsel to support his contention. The Court took into the consideration regulations which have been issued under the Customs Act and noted that the regulation being a statutory regulation not only binds the department but also the person who has been granted licence under such regulation. After referring to Regulation 10 (l) of the 2018 regulation and Regulation 6 (1) (l) of the 2019 regulation, it was held that those regulations provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment the CFS has granted waiver certificate. 8. The Learned Senior Counsel appearing for the Shipping Line submitted that without hearing his client, the direction for grant of detention certificate has been issued and they have to be heard in the matter as legal issues have to be decided before issuing any direction on the Shipping Lines. 9. Considering the submissions made on either side, we granted liberty to the Shipping Line to file an affidavit to the application seeking impleadment pointing out all factual and legal issues and adjourned the matter. 10. On March 14, 2022, the case was adjourned to March 21, 2022 for the Shipping Line to file affidavit-in-opposition to the petition for impleadment. Accordingly, affidavit-in-opposition has been filed by the Shipping Line. 11. The learned Senior Counsel appearing for the Shipping Line raised a preliminary objection with regard to impleadment of his client as a respondent in contempt proceedings on the ground that the Shipping Line is neither a proper nor a necessary party to the adjudication of the contempt petition as no order has been passed against them in the writ appeal, nor they have acted in disobedience of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the department to direct waiver of the charges. The decision relied on by the petitioner in the case of Supreme Industries Ltd. Versus Central Board of Indirect Taxes Customs Others (2021) SCC Online Bombay 324 was distinguished by contending that the prayer sought for in the said case was to implement and enforce the waiver certificate and the Court has not rendered any finding on the proviso to Regulation 10(1)(l). Furthermore, the Shipping Line in the said case had not questioned the effectiveness of the certificate even collaterally which is not the case of the Shipping Line before this Court as they have not given up their challenge to the waiver certificate and therefore, this Court should either protect the interest of the Shipping Line or grant liberty to the Shipping Line to challenge the detention certificate issued by the department by way of separate proceedings. Further the Shipping Line cannot be made as a respondent in the contempt petition as there is no allegation that the Shipping Line has committed any contempt. Thus, it is the submission of the learned Senior Counsel that the detention certificate/ waiver certificate issued by the department is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prises Versus Joint Commissioner of Customs, Chennai 2018 (360) E.L.T. 962 (Mad), Giridhari Homes Pvt. Ltd. 2018 (361) E.L.T. 463 (Mad) also. 15. It is further submitted that if a third party knowingly assists in the breach of an order he will also be liable for contempt of Court and to support such contention, reliance was placed on the decision in Sita Ram Versus Balbir Alias Bali (2017) 2 SCC 456. 16. Thus, it is submitted that the certificate issued by the Customs department waiving the detention charges binds the Shipping Line in terms of Regulation 10(l) of the 2018 Regulation read with Section 29(2)(c) and Section 141 of the Customs Act. 17. The learned Senior Standing Counsel appearing for the official respondent submitted that all the decisions which have been referred to with regard to the power under Section 45 of the Act have been rendered prior to the coming into force of the 2018 Regulations. Further it is submitted that no contempt has been committed by the department and as they have complied with the order and direction issued by this Court and this Court will not issue any direction supplemental to what has been already expressed in the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the principle of purposive construction can be applied. The Learned Senior Counsel referred to the facts in the case of Sita Ram and submitted that the same is clearly distinguishable as the Court, on facts, held medical professionals to be guilty of contempt as they extended medical asylum to the accused. However, in the case on hand there is no allegation of contempt against the Shipping Line. Further it is submitted that the decision in Richa Mishra cannot be applied to the facts of the case as in the said decision there were three sets of rules of which one of the rules provided for relaxation of upper age limit in respect of women candidates and while interpreting the three sets of rules, the principle of purposive construction was applied. However, in the case on hand, the 2009 Regulation is wholly inapplicable to the Shipping Line and applying the principle of purposive construction/ interpretation does not arise. Further it is reiterated that if the interpretation given by the petitioner is to be accepted while interpreting the 2018 Regulation, it would supersede Section 45 of the Act which is not permissible. With regard to the decision in Balaji Dekors, it is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction issued by the Customs and waived/agreeable to waive the demurrages. However, the Shipping Line has not obeyed the direction of the department which was directed by this Court to issue the detention certificate. On notice being served on the Shipping Line and the CFS, the CFS did not choose to appear before this Court. Presumably, because they have/will comply with the directions issued by this Court and accept the detention certificate and waive the demurrages. However, the Shipping Line has reservation to grant waiver and they appeared before us and at the request of the Learned Senior Counsel for the Shipping Line, they were permitted to file an affidavit-in-opposition as they objected to their impleadment and also sought leave to raise legal issues with regard to the effect of the detention certificate qua the private contract between the petitioner and the Shipping Line. The Court granted liberty and the Shipping Line has filed their affidavit-in-opposition and a reply has also been filed by the petitioner. Therefore, in the present proceedings, we will be deciding firstly as to whether the Shipping Line is a proper and necessary party to the proceedings and also consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht is to be overridden on account of the 2018 Regulation, it can at best be overridden for a period of 60 days and not more. (iii) Section 45(2)(b) of the Act does not empower the customs to set aside a contract in the private law field between the petitioner and the Shipping Line and after the decision of the Hon ble Supreme Court in Shipping Corporation of India Limited, no amendment has been made to Section 45 of the Act and the law as interpreted by the Hon ble Supreme Court is in favour of the Shipping Line. (iv) The principle of purposive construction cannot be applied to the case on hand as there is no conflict between two enactments or two Regulations as the 2009 Regulation is inapplicable to the Shipping Line as they are not a Customs Cargo Services Provider as defined under Regulation 2(b) of the 2009 Regulation. 25. The first issue is whether the Shipping Line is a proper and necessary party to the present proceedings as it is their contention that though the Act of contempt has been alleged against them, there was no direction issued by this Court to the Shipping Line and if any orders have to be passed by the department contrary to the Regulation 10(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o protect the defendants from harassment by SI Inc, a mandatory order would be made against the defendants that they should use all reasonable endeavour to supply the plaintiffs with the chain needed for the manufacture of the lo-tow equipment. 27. The legal principle that can be culled out from the above decision is that if one person, without just cause or excuse deliberately interfered with the trade or business of another, he was said to be acting unlawfully. In Eckman Others Versus Midland Bank Limited (1973) 1 All England Reporter 609, it was held that although a writ of sequestration (a writ of sequestration is a pre-judgment process which orders the seizure or attachment of property to be maintained in the custody of the Sheriff under Court order and supervision until the Court determines the proper owner) did not itself bind the third party, a third party was nonetheless under a duty to refrain from knowingly assisting in the breach of any order of the Court. In the decision of the Full Bench in Vidya Charan Shukla Versus Tamil Nadu Olympic Association and Another AIR 1991 (Mad) 323 (FB), it was held that the courts in India invariably accepted the law applie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order passed by this Court directing issuance of detention certificate to the Customs which direction was not complied with, though communicated to the Shipping Line. Therefore, the Shipping Line though would have been a third party to the proceedings when the writ petition was heard, on and after they have been issued with the detention certificate, they are precluded from raising a plea that they are third party to the proceedings and alien to the directions issued by this Court, resulting in issuance of the detention certificate. 30. Therefore, we are of the clear view that the Shipping Line is not only a necessary party to the proceedings but also a proper party to the proceedings. So far as the CFS is concerned, they also did not initially comply with the terms of the detention certificate and only during the pendency of this contempt application, it appears that they have complied with or agreeable to comply with the terms and conditions of the detention certificate. Therefore, in order to give a binding direction, the CFS is also held to be a proper and necessary party to the present proceedings. 31. For the above reasons in I.A No. G.A/01/2022 in CC No 08 of 2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not cover a Shipping Line is not feasible of acceptance. Therefore, we have to read the 2009 Regulation harmoniously with 2018 Regulations. If such course is adopted then Regulation 10 of the 2018 Regulations which is applicable to the Shipping Line has to be enforced. Regulation 6 of the 2009 Regulations deals with responsibilities of Customs Cargo Service Provider . We have held that the Shipping Line is a service provider and consequently the Regulation 6 will be applicable to them. In terms of clause (l) of the Regulation (6), the Shipping Line shall not charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraisal or Inspector of Customs or Preventive Officer or Examining Officer as the case may be. It is not in dispute that the goods were detained by the proper officer and if that be the case the Shipping Line is bound by Regulation 6(l) and is not entitled to charge any rent or demurrage during the period of detention. It was contended that the Regulation 10(1)(l) proviso provides that the authorised carrier may demand container detention charges for the period, commencing after expiry of 60 days. The proviso is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preserved and they can do so after expiry of 60 days. Admittedly, the Shipping Lines have registered themselves under the provisions of the statutory regulations. If that be the case, all conditions stipulated by the Customs under the provisions of the Act and the regulation binds the Shipping Line. The terms of the contract between the petitioner and the Shipping Line which is contended to be preserved and safeguarded under the provisions of the Contract Act would be subject to the conditions under the regulations to which the Shipping Line have consciously submitted themselves. Therefore, the right which according to the Shipping Line exists under the contract is subservient to the conditions under the regulations. This is more so because the regulations are statutory in character. The Shipping Lines by a conscious act have submitted themselves to the provisions of the Act and the Regulations and they have been issued a licence for such purpose. Therefore, it would be too late for the Shipping Line to contend that they will continue to exercise their rights by referring to the provisions of the Contract Act which is general law by ignoring the provisions of a Special Act namely t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such manner as may be prescribed. 36. Having held that the Shipping Line would fall within the definition of Customs Cargo Service Provider , the 2009 Regulation is held to be applicable and they are required to comply with the mandate under the said Regulation and in particular Regulation 6 (1) therein and they are not entitled to charge any rent or demurrage on the goods seized or detained or confiscated. One more fact which we note is that at no earlier point of time, the Shipping Line had sought to exercise their alleged right under the proviso to Regulation 10(l) of the 2018 Regulation and it is for the first time before this Court such a plea is being canvassed. In the preceding paragraphs, we have discussed about the effect of the proviso and held that it in no manner improves the case of the Shipping Line. Thus, by conduct, the Shipping Line was fully aware of the effect of the statutory regulations and the present attempt to wriggle out of their obligations is impermissible. 37. In Supreme Industries Limited, the petitioner approached the Court under Article 226 of the Constitution for a direction upon the respondents to strictly implement and enforce the detentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evail. It was held that the terms of the standing order would prevail over the terms of the contract which conflicts with the standing over. 4) In Ganga Retreat and Towers Ltd. V. State of Rajasthan, (2003) 12 SCC 91 , Supreme Court held that every contract is subject to provisions of law. This position was reiterated by a Constitution Bench of the Supreme Court in PTC India Limited v. Central Electricity Regulatory Commission, (2010) 4 SCC 603, wherein it has been held that a regulation under Section 178 of the Electricity Act, 2003 can intervene and even override an existing contract between regulated entities inasmuch as it cast a statutory obligation on the regulated entities to align their existing and future contracts with the regulation. 5) Again in State of Rajasthan v. J.K. Synthetics Limited, (2011) 12 SCC 518 , Supreme Court has held that he lease-deed under consideration was governed by the Mineral Concession rules, 1960. Though the lease-deed provided that any royalty not paid within prescribed time should be paid with simple interest at the rate of 10 per annum, the same was subject to the Mineral Concessions Rules, 1960 which upon amendment increased th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court found that the respondent 4 therein has only collaterally questioned the effectiveness of such a certificate as being not bound by it and there has been no independent challenge made by it to the said certificate. Further it is submitted that the Court has not interpreted the effect of the proviso to Regulation 10(1)(l) of the 2018 Regulations. 39. With regard to the effect of the proviso, we have already given our interpretation which is against the Shipping Line. With regard to the submissions that the Shipping Line s interest either should be protected by this Court or they should be permitted to independently challenge the same has been dealt with by us in the preceding paragraphs and we have come to the conclusion that the effect, validity and enforceability of the detention certificate is called in question by the Shipping Line in the present proceedings both on facts as well as on law and extensive arguments have been advanced on both the aspects. Therefore, we have held that granting liberty to the Shipping Line to now independently challenge the detention certificate to be impermissible. Apart from that we note that the detention certificate was issued on 18.02.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41. During the course of argument before this Court, in the presence of the Shipping Line, the petitioner had offered to deposit the cost of the container which according to the petitioner was about ₹ 5,00,000/-. The Shipping Line was not inclined to accept such an offer. It should not be forgotten that the CFS was also alien but they have not raised any plea before us resisting the directions issued though initially, they were not very inclined to comply with the direction. Therefore, we do not intend to initiate action for the present against the Shipping Line for having obstructing the implementation of the order passed by this Court but are inclined to issue further directions as the jurisdiction of this Court under the Contempt of Courts Act is also curative. 42. The Constitution Bench of Hon ble Supreme Court in Supreme Court Bar Association versus Union of India (1998) 4 SCC 409 elaborately considered the jurisdiction of the Hon ble Supreme Court and the High Courts to exercise that power of contempt. It was pointed out that the expression Court of record has not been defined in the Constitution of India. Article 129 declares the Supreme Court to be a court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empt of Court in English law which have been followed and accepted by the Courts in this country incorporated in the Indian Law in so far as civil contempt is concerned are:- i) sequestration of assets ii) fine iii) committal to prison 44. Further the Hon ble Supreme Court held that the object of punishment being both curative and corrective, these coercions are meant to assist an individual complainant to enforce his remedy and there is also an element of public policy for punishing civil contempt, since the administration of justice would be undermined if the order of any Court of law is to be disregarded with impunity. Further it was pointed out that under some circumstances, compliance of the order may be secured without resort to coercion, through the contempt power. 45. Having held so, we would reiterate that there is a statutory embargo on the Shipping Line, prohibiting them from charging any rent or demurrages during the period of detention and a certificate having been issued by the proper officer waiving the detention charges, there is no escape from the rigour of such a certificate issued by the proper officer. The contractual rights which have been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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