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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 ..... n for adding the aforementioned two parties as a respondents in the contempt petition is as hereunder:- 3. The petitioner had filed WP NO. 870 of 2021 for issuance of a writ of mandamus to direct the respondents 1 to 3 who are official respondents, to dyestuff the container and permit warehousing of the goods under Section 49 of the Customs Act, 1962 (the Act) 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 g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by the petitioner under Section 49 of the Act. The petitioner approached this Court by filing the writ petition on the ground that the order passed by the Appellate Authority has not been complied with inspite of the request made by the petitioner, fresh samples have not been drawn, the goods are not being allowed to be warehoused and the petitioner 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), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Appellate Authority permitting warehousing. Therefore, the writ appeal filed by the department was allowed in part and the order and direction issued in the writ petition was modified on the following terms:- 1) The appellant department is directed to draw representative sample in the presence of the first respondent/importer and in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department to issue detention certificate for the entire period of detention, i.e. till the goods are released in terms of the earlier direction. Subsequently, the contempt application was heard on March 04, 2022, wherein it was noted that the department has complied with the directions issued and an order to release the goods 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y have not been made a party to the proceeding which has affected their subsisting rights. 7. The contempt petition was heard on 11.03.2022, on which day the Learned Counsel for the petitioner submitted that they have filed an application for impleading the CFS and the Shipping Line and after the direction issued by the department 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 prelimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 10(1)(l) of the 2018 Regulation provides that the authorized carrier may demand, container detention charges for the period, commencing after expiry of 60 days. By relying upon the said proviso it is submitted that upto 60 days should be considered as "free period" and beyond 60 days there is no power vested 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heory of purposive interpretation, reliance was placed on the decision in Richa Mishra Versus State of Chattisgarh & Others (2016) 4 SCC 179. Reliance was also placed on the decision in Balaji Dekors Versus Commr. of Customs, Commissionerate-III Chennai 2017 (356) E.L.T. 219 (Mad), Priyanka Enterprises 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court continues to hold the field. It is submitted that the Learned Advocate for the petitioner invoked the theory of purposive construction, which theory cannot be applied to the case on hand as there is no conflict between two laws and only if there is a conflict, 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 aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the petitioner filed an application for impleadment of the CFS and the Shipping Line. It is not in dispute that the detention certificate has been received by the Shipping Line as well as the CFS. We are informed that the CFS has complied with the direction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) The relief now claimed by the petitioner would materially affect the valuable contractual right of the Shipping Line protected under Section 171 of the Contract Act and it would amount to re-writing the contract and if at all the contractual right 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffs' business could be restrained by the court, and an injunction should issue restraining the defendants from obeying SI Inc's directions purporting to prohibit them from supplying chain to the plaintiffs. Further, to 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 Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders 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. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition of ""Customs Cargo Service Provider"" is so widely couched to bring under its umbrella all persons including the Shipping Line. Therefore, to state that the definition does 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shipping Line cannot take umbrage under the proviso to Regulation 10(1)(l) of the 2018 Regulation and contend that their right to claim container detention charges still stands 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 cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all not permit such goods to be removed from the Customs areas or otherwise deal with, except under and in accordance with the permission in writing of the proper officer or in 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 Indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onflict between the contract of service entered into between the employee and the company and the standing orders of the latter, the standing orders would prevail. 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 pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that in the said case the directions sought for was to implement and enforce the detention cum demurrage waiver certificate and the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eless would be well justified in issuing further directions so that the Shipping Line is given an opportunity to remedy the breach. 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 Rs. 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 " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out that the recognised and accepted punishments for civil or criminal contempt 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 is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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