http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 31

PETITIONER:

INTERNATIONAL AIRPORTS AUTHORITY OF INDIA ETC. ETC.

Vs.

RESPONDENT:

M/S GRAND SLAM INTERNATIONAL & OM ETC. ETC.

DATE OF JUDGMENT21/02/1995

BENCH:

SAHAI, R.M. (J)

BENCH:

SAHAI, R.M. (J)

BHARUCHA S.P. (J)

VENKATACHALA N. (J)

CITATION:

1995 SCC (3) 151 JT 1995 (2) 452

1995 SCALE (1)859

ACT:

HEADNOTE:

JUDGMENT:

1. International Airports Authority of India (hereinafter

referred to as 'IAAI') and the Central Warehousing

Corporation, Container Freight Station, Patparganj (in brief

'CWC') obtained leave of this Court under Article 136 of the

Constitution of India against direction issued by the High

Court of Delhi for release of imported goods without payment

of any demurrage charges for the period for which detention

certificate had been issued by the Customs Authorities.

2. What persuaded the High Court to take this view in

favour of the respondents was founded on construction of

Section 45(2) of the Customs Act, 1962 ("Act" for short) and

issuance of detention certificate by the Customs

Authorities. What is the nature of the certificates?

Whether

460

they arc binding on the IAAI? Is there any conflict in the

Public Notice issued by the Customs Authorities and

Regulations framed by the IAAI, are some of the questions

which arise for consideration in these appeals. But before

adverting to these issues facts in brief may be mentioned.

3. In Appeal No.798 of 1992 the respondent filed with

the Customs Authorities bill of entry on cargo terminal

alongwith all documents to seek clearance of goods, namely,

printing papers etc. of CIF value of Rs.17,846.00. The

valuation given in the bill of entry was objected to by

Additional Collector of Customs, and he passed an order on

8th November 1989 enhancing the value of the goods and di-

recting confiscation of the same. In appeal the Customs,

Excise & Gold (Control) Appellate Tribunal, New Delhi

quashed the order of the Additional Collector of Customs on

3rd July 1990. Since the order enhancing the valuation and

directing confiscation was quashed the Collector of Customs

issued detention certificate from 7.8.1989 to 12.7.1990. It

was mentioned in the certificate that the detention was due

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 31

to case of the respondent pending before the Collector and,

in the appeal. The respondent. thereupon applied for waiver

of the demurrage charged for the relevant period. On 18th

December 1990 it presented an application showing as 'out of

charge' of the Customs. But on 9th January 1991 it was

informed by the appellant that the total liability of the

demurrage charges was Rs. 1,49, 100/- out of which

Rs.79,364/- was waived for the period of detention that is,

7.8.89 to 12.7.90. The appellant further condoned the period

from 18.12.90 to 9.1.91 as the application for waiver was

received and processed during this period. According to the

appellant the respondent was liable to pay Rs,69, 736/- as

on 9.1.91 and thereafter the liability was Rs.300/- per

package per week or part thereof The liability of the re-

spondent till 12.6.1991 was determined at Rs. 1,15,936/-.

4. In Appeal No.4227 of 1992 the respondent imported a

consignment of wool waste. It was seized by the Collector

of Customs under Section 1 10 of the Act as on sample

examination it appeared' to be synthetic waste which was

restricted item which could not be imported without a valid

import licence. The respondent was issued notice to show

cause why the goods of declared value of Rs. 1,93,237/-

should not be confiscated under Section 111(d) and III (in)

of the Act and action under Section 112 be taken. The

explanation of the respondent that test being based on

sample drawn on 10% examination was not correct nor did it

represent test of entire consignment, was not accepted. And

the respondent was given an option to clear the goods on

payment of Rs.50,000/as fine and in addition penalty of Rs.

1,00,000/-. In appeal on test of 7 1 % of consignment by

the chemical examiner it was held that consignment was wool

waste. Consequently the appeal was allowed. And in

:pursuance of the order of the Tribunal the Additional

Collector of Customs passed the order dated 17th December

1990 directing release of the On 24.1.1991 the Assistant

Collector sent a letter to the appellant that since the

goods of the respondent were seized by Customs Department on

29th April, 1986 and they have been directed to be released

by the Additional Collector of Customs on 17.12.1990 the,

'demurrage/ ground rent and other charges accrued on

consignment from 29.4.1986 to 29.12.1990 may be

461

waived'. The appellant replied this letter on 25.1.1991

informing the Assistant Collector of Customs that the matter

for waiver of ground rent for the period 31.1,1987 to

29.12.1990 has been referred to the Regional Office/Head

Office. But the Assistant Collector, Customs was requested

to inform the importer that they will have to bear entry

fee, handling and insurance charges and ground rent after

29.12.1990 in case the Head Office agrees for waiver.

5.In Appeal No. 3971 of 1992 the respondent had imported

multi-cable-transit/ cable sealing system. The clearance of

goods was claimed under Tariff Item No.85.47 on payment of

duty @ 135.75%. The department on the other hand directed it

to be cleared by paying duty @ 181.75% under Tariff Item

No.39. However, the claim of the respondent was ultimately

accepted. And provisional clearance was granted on payment

of demurrage charges. After the claim was accepted the

respondent wrote a letter to the appellant that since the

claim had been accepted by the Customs Authorities and IAAI

at the time of release had stated that this question of

refund shall be considered after final decision was taken by

the Customs Authorities the amount of Rs.3,26,645/- paid to-

wards demurrage may be refunded. But the respondent was

informed that the claim of refund was not admissible.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 31

6.In each of these cases the Customs Department had issued

Detention Certificate and informed IAAI and CWC that no

demurrage may be charged for the period during which the

goods were in custody of IAAI or the CWC due to pendency of

adjudication proceedings. But the IAAI or the CWC instead

of treating entire period as free period granted rebate and

calculated demurrage in accordance with Rate Schedule framed

by them. The amount of demurrage in each case came to be

two or three times more than the value of the goods,

therefore, the respondents approached the High Court by way

of writ petitions under Article 226 of the Constitution of

India. The petitions were allowed and it was held that the

IAAI or the CWC being custodian of the Customs Department

could not ignore the Detention Certificate, therefore, no

demurrage could be charged for the period the proceedings

were pending. The High Court relied on M/s Trishul Impex v.

Union of India [1991(2) Delhi Lawyer 1]. This decision in

its turn relied on an earlier decision given 'in Trans Asia

Carpets v. Union of India, CCP No. 97/87. The decision in

Trans Asia (supra) proceeded on the basis that Airports

Authority being an agent of the Collector of Customs was

bound by the Detention Certificate granted by the Collector

of Customs. In Trishul Impex (supra) it was held that the

container depot where the goods were deposited being the

custodian for Customs Authorities it was bound by the

certificate and was liable to release the goods without any

demurrage,

7. It is the correctness of this view that has been

assailed in these appeals. The learned counsel for the

appellants urged than the power to levy demurrage by the

IAAI is derived from the International Airports Authority

Act, 197 1. It could not be regulated or controlled by any

other Statute. It was submitted that the Customs

Authorities could neither levy demurrage nor waive it.

Therefore, the Detention Certificate could not compel the

appellants to treat the entire period during which the goods

remained in their custody to be free

462

period. According to learned counsel in any case the Rate

Schedule for demurrage having been made in exercise of

statutory power and the appellants having been granted

waiver to the extent of 80% under the Policy framed by the

IAAI the respondents were not entitled to any relief.

8.The word 'demurrage' defined in clause (g) of Regulation 2

of the Regulations framed by the IAAI is extracted below:-

"Demurrage means the rate or amount payable to

the airport by a shipper or consignee or

carrier for not removing the cargo within the

time allowed."

Similar word used in Port Trust of Madras Act, 1905 came up

for interpretation before this Court in Trustees of the Port

of Madras v. M/s Aminchand Pyarelal & Ors., (1976) 1 SCR

721. It was explained that the word was not used in the

strict mercantile sense, 'but merely to signify a charge

which may be levied on goods after expiration of 'Free

Days'. This ratio has been reiterated in The Board of

Trustee of the Port of Bombay v. Indian Goods Supplying Co.

(1977) 3 SCR 343 and Board of Trustees of the Port of Bombay

v. Jai Hind Oil Mills Company & Ors (1987) 1 SCR 932. The

dispute, thus is. whether the days or period during which

adjudication proceedings were pending before the Customs

Authorities could be considered to be free days on any

principle of law, statutory or otherwise, Or it can be held

to be so on construction of Regulations and policy framed by

the MM read with the Act and the Public Notice issued under

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 31

it. 'But before coming to it, it appears necessary to state

that the basic controversy that arose in Aminchand Pyarelal

(supra) and Indian Goods Supplying Co. (supra) centered

round whether a consignee could claim immunity from paying

any demurrage when the detention of the goods was not due to

any fault or negligence of the importer. It was answered in

the negative. In the latter decision that is Indian Goods

Supplying Co. (supra) the Court after referring to the

earlier decision in Aminchand Pyarelal (supra) and some

English decisions held:

"The position therefore is that even though

the delay in clearing the goods was not due to

the negligence of the importer for which he

could be held responsible yet he cannot avoid

the payment of demurrage as the rates imposed

are under the authority of law the validity of

which cannot be questioned.

But that is not the issue in these appeals. The respondents

did not claim any immunity from payment of demurrage because

their goods were detained for no fault on their part. What

was claimed and accepted was that the IAAI or CWC being a

custodian of Customs Department the intimation given by it

that no demurrage should be charged from the respondent for

the period mentioned in the detention certificate should

have been accepted and acted Pon by it. To examine the

correctness of this claim it is necessary to ascertain the

nature of relationship between the Customs Department and

IAAI and notice certain provisions in the Act, the Public

Notice issued under it, the Regulations by the MM and the

rate schedule framed by it. Section 45 of the Act is

reproduced below:

"45. Restrictions on custody and removal of imported goods.

-

(1) Save as Otherwise provided in any

law for the time being in force, all imported goods unloaded

in a customs area shall remain in the custody of such person

as may be approved by the Collector of Customs until they

are cleared for home consumption or are warehoused or are

transshipped in accordance with the provisions of Chapter

VIII.

(2) The person having custody of any imported goods in a

customs area, whether under the provisions of sub-section

(1) or under any law for the time being in force, -

(a) shall keep a record of such goods and

send a copy thereof to the proper officer;

(b) shall not permit such goods to be

removed from the customs area or otherwise

dealt with, except under and in accordance

with the permission in -writing of the proper

officer."

This section 'permits removal of imported goods from the

'customs area' which under clause (II) of Section 2 of the

Act means

"2. (11) "customs area" means the area of a customs station

and includes any area in which imported goods or exported

goods arc ordinarily kept before clearance by Customs

Authorities;"

It is thus clear that the imported goods are kept at the

airport or the Warehousing Corporation in the customs area

over which it is the Customs Department which exercises

control. No goods can be removed from there either by the

importer or even the Custodian. The detention is to enable

the Customs Department to proceed in accordance with law and

determine if the valuation disclosed was correct or the

463

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 31

goods had been properly imported etc. A person importing

the goods is required to comply with rules and notification

issued by the Government permitting, prohibiting or

regulating import. Whether the importer is complying with

the rules or not and acting in accordance with law is

entrusted to the Customs Department. No goods can be

cleared except with permission of the Customs Department.

Therefore, it is by operation of the statutory provision

that an area specified as customs area is under control of

the Customs Department. In fact fictionally it is the

Customs Department which for purposes of imported goods, its

checking, storage, release etc. is in control of it.

9. The imported goods are detained in the customs area

either for assessment of duty under Section 17(3) and 17(4)

of the Act or for clearance under Sections 45 to 47 of the

Act. These appeals arc concerned with detention for

clearance. The levy of demurrage for detention at the in-

stance of Customs Department during adjudication proceedings

engaged attention of the p 161 Government even in past. In

Indian Goods Supplying Co.'s case (supra) the Central

Government issued a letter requesting the Port Trust

Authorities to modify its rates as it was unreasonable to

charge an importer any demurrage once it was accepted that

clearance was delayed on account of reasons beyond his

control. But since this was only a letter of request and

the Board in pursuance of it opted for graded scale the

court was of opinion that it could not be treated as a

direction binding on the Port Trust.

10. It appears the Collector of Customs, New Delhi in

order to overcome this difficulty and for maintaining and

regulating control over goods which arc unloaded at Indira

Gandhi International Airport, issued

464

Public Notice in 1986 in exercise of powers vested under

Sections 8, 33, 34 and 45 of the Act read with Rules 56, 57,

58 and 59 of the Aircraft Rules, 1920. Paragraph (a) of it

specifies the limits of customs area as whole of existing

area constituting the Indira Gandhi International Airport,

New Delhi including domestic arrival and departure area,

Cargo Terminal New International Terminal Complex ('CTNITC'

for short) and the entire premises of the Central

Warehousing Corporation located at Gurgaon Road, New Delhi

excluding M/s IAAI's Import Cargo Warehouse (Monkey torn).

Paragraph (b) approves all places where parking/halting of

aircraft is permitted by the Civil Aviation Depart. merit,

the International Airport Authority of India for

unloading/loading of imported/ export goods. Paragraph (c)

assigns functions under Sections 33 and 34 of the Act to the

officers of the Customs/Air Customs posted at IGI Airport.

Paragraph (d) approves M/s IAAI as custodian of the cargo

under Section 45 of the Act. The cargo is required to be

stored in IAAI's CTNITC subject to the conditions - (i) that

the cargo shall be subject to the control of customs; (ii)

that M/s IAAI shall maintain detailed account of all

imported and exports goods received by them as 'custodian'

and shall produce such account for inspection by a gazetted

officer of customs.

11. Sub-paragraph (vii) of paragraph (d) which is

material reads as under:

"(vii) In case of goods detained/seized etc.

by customs, the wirehousing/storage charges

shall be calculated by M/s. IAAI for the

period due minus the chances for the period of

detention at the instance of Customs as

certified by the Assistant Collector of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 31

Customs

The language of the sub-paragraph is clear and unambiguous,

Unlike the letter of request sent by Central Government in

Indian Goods Supplying Co.'s case (supra) it is a direction

by the Collector of Customs to the custodian of goods at the

airport or the warehouse not to charge any warehousing or

storage charges for the period the goods detained or seized

by the Customs Department are kept in custody subject to

the issuance of a certificate by the Assistant Collector of

Customs that the goods were detained at the instance of Cus-

toms Department. But what was urged by the learned counsel

for the appellants was that this Public Notice was not

binding on the appellants as they were independent statutory

bodies. To examine the merit of this submission, the

question that arises is whether the Notice was issued in

valid exercise of power. If it be so then what consequence

flow out of it? It will then have to be examined whether it

is binding on the appellants. And lastly even if it is not

binding the Public Notice issued by the Collector of Customs

and rate schedule framed by the appellants being parallel

legislation occupying the same field how should they be

construed? The validity of the Notice was not challenged by

the appellants. As a matter of fact it was not adverted to

either by the High Court nor any reliance was placed on it

by the respondents. But reference of it was found in one of

the decisions rendered by the High Court and thereafter on

our request, the learned counsel for the appellants sup

plied copies of it. Even when the appeals were listed for

further hearing the learned counsel for the appellants did

not urge and probably rightly that it was issued in vio-

lation of statutory power or the Collector of Customs

exceeded its jurisdiction yet it appears necessary to trace

the source of

465

power of this Notice as it shall have important bearing on

the legal effect of it. It purports to have been issued

under Sections 8, 33, 34 and,45 of the Act and Rules 56 to

59 of the Aircraft Rules, 1920. Each paragraph of the

Notice appears to have been issued to carry out the purpose

of the Sections mentioned in it. For instance, Section 8 of

the; Act empowers the Collector to approve proper places in

the airport for unloading of goods and clause (b) of it

empowers the Collector to specify the limits of customs

area. Paragraph (a) of the Notice achieves this purpose.

Paragraphs (b) and (c) of the Notice have been issued to

carry out the objective of Sections 33 and 34 of the Act and

Rules 57 to 59 of the Aircraft Rules which provide for un-

loading of goods at approved places with permission of the

proper officer of the Customs Department. Paragraph (d) and

its various sub-paragraphs achieve the objective, of Section

45 by spelling out details of restriction subject to which

the custodian may carry out its activities of warehousing

imported goods. It is thus obvious that the Notice was

issued to carry out purposes of the Act. Section 156

empowers the Central Government to frame rules and Section

157 empowers the Board to make regulations consistent with

the Act to carry out the purposes of the Act. Section 152

empowers the Central Government to issue notification that

any power exercisable by the Board under the Act may be

exercised by the Collector of Customs. It is not claimed

that no notification was issued by the Central Government

empowering the Collector to exercise the powers of the

Board. Therefore, the Collector could exercise the same

power as the Board. Consequently, the Notice issued by him

cannot be said to be invalid. It must be assumed to have

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 31

been issued in

exercise of powers under Section 157 to carry out the

purposes of the Act.

12.The next question is what is the consequence of it.

Clause (b) of sub-section (2) of Section 45 of the Act

extracted earlier provides that the persons having custody

of the imported goods in customs area, that is, IAAI or CWC

shall not permit such goods to be removed from the customs

area or otherwise deal, with except in accordance with the

permission in writing of the proper officer. : The word

'otherwise' is defined in Standard Dictionary to mean, 'in a

different manner, in another way'. In Webster dictionary it

is defined to mean, 'in a different manner, in other

respects'. The expression, 'otherwise dealt with',

therefore, widens the ambit of the restriction placed on the

custodian. It places complete embargo on the IAAI or CWC to

deal with the imported goods placed in its custody in any

manner. The two restrictions.that is prohibition to remove

goods and dealing with it in any manner otherwise completely

debar the custodian from exercising any right or control

except with the permission of the proper officer of Customs

Department. No discussion is needed to explain the ex-

pression that the custodian of the goods shall not be

entitled to remove the imported goods but it appears

necessary to explain the scope of expression 'otherwise

dealt with'. How it has to be understood in the context in

which it has been used? That would obviously depend on the

nature of functions of the custodian, in respect of imported

goods. Section 16 of the International Airports Authority

Act, 1971 is the only Section which lays down the functions

which are required to be performed by the IAAI. Clause (d)

of subsection (3) of Section 16 empowers the.

466

IAAI to establish warehouses at the airport for the storage

or processing of goods.This would include providing for levy

of charges for storing of goods, handling it, insurance etc.

And on failure to pay the charges to dispose of the goods.

The IAAI has in fact framed Regulations to carry out its

function of warehousing. It shall be adverted to later.

But in view of clause (b) of sub-section (2) of Section 45

of the Act it cannot deal with goods placed in its custody

in any manner except with the permission of the Customs

Department. The function of the appellants in respect of

warehousing of the goods would, thus, be covered in the

expression, 'otherwise dealt with' used by clause (b) of

sub-section (2) of Section 45 and, therefore, the appellants

could not deal with the imported goods or perform any

function without obtaining an order in writing by the proper

officer. This would obviously include the right of the

appellants to sell the goods for non-payment of demurrage.

That is the appellants even though independent statutory

bodies are precluded from dealing with the goods or selling

it without obtaining permission of the proper officer. This

restriction on the right and power of the appellants has

been statutorily regulated by issuing Public Notice. It

does not interfere with the right of the appellants to frame

their rate schedule and charge demurrage. Nor does it

interfere with right to charge dues for keeping the goods in

the warehouse. It only provides that where the goods have

been detained or seized at the instance of the Customs

Department the dues might be calculated minus this period.

This could have been done by the Central Government or the

Board or the Collector. Therefore, the issuance of Public

Notice directing the appellants not to charge any dues for

the period the goods

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 31

were detained would be covered in the expression, 'otherwise

dealt with'. It is further strengthened by Section 150 of

the Act which lays down precedence for sale of goods which

are not confiscated. The payments to the Custodian under

clause (d) of sub-section (2) of the Section is to be made

only after meeting the expenses of sale, freight and duty.

The appellants could not, therefore, ignore sub-paragraph

(vii) of paragraph (d) of the Notice. It is no more a

request by the Central Government but an exercise of power

by the appropriate authority under the Statute. It is not

inconsistent with any provision of the Act.

13.It would not be out of place to mention that Chapter IX

of the Act deals with warehousing. Section 63 of the Act

falls in it. It deals with payment of rent and warehousing

charges. Sub-section (1) of it requires the owner of any

warehoused goods to pay to the warehouse-keeper rent and

warehouse charges at the rates fixed under any law for the

time being in force or where no rates arc so fixed, at such

rates as may be fixed by the Collector of Customs. Sub-

section (2) of Section 63 empowers the warehouse-keeper to

sell the goods if the dues are not paid within ten days from

the date it becomes due. But the right can be exercised

only with permission of the proper officer. Therefore, it

cannot be legitimately urged that the Customs Department

could not issue a Notice which would affect the right of

appellants to fix charges etc. The Public Notice issued in

1986 does not interfere with rate schedule of the appellants

but it only fixes free period or period during which no rent

can be charged in exercise of statutory power. The

International Airports Authority Act, 1971 does not preclude

the Cus-

467

toms Department expressly or impliedly from framing any such

regulations.

14.What is apparent from a study of these various Sections

of the Act is that the provisions in the International

Airports Authority Act, 1971 and Regulations framed

thereunder cannot be read in isolation so far as the custody

of imported goods placed under it by Customs Department is

concerned. If sub-paragraph (vii) of the Notice is

understood, as urged by the learned counsel for the

appellants, as having no effect on the appellants as they

are statutory bodies then it would result in rendering the

Notice as dead letter or waste paper or it would create

conflict between two parallel provisions in two different

statutes dealing with same subject, That would not be in

consonance either with principles of interpretation or

construction. Both the Act and International Airports

Authority Act are central enactments. In either, the

Central Government is empowered to make rules to carry out

the objective of the Act. Both the legislations are

directed towards promoting social welfare. The should be

interpreted so as to advance public good and social justice,

"Just as the different words, phrases and

provisions of a statute should not be isolated

and given an abstract meaning, so the statute

itself in its entirety should not be

interpreted solely by reference to its own

terms, but rather by reference to the other

laws of the state, and particularly to those

pertaining to the same subject". Crawford's,

Interpretation of Laws, 1989 p. 420.

15. Legislations, rules or regulations are enacted to

regulate the day to day activities. But they cannot be

exhaustive and the practical difficulties arising in working

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 31

467

out these have to be resolved by developing principles by

the court which are justice oriented, serve public purpose

and promote social interest, of course, without doing

violence to the language of the Section and the objective of

enactment and if the provision was enacted to remedy any

event then to construe it in a manner in which it may carry

out the objective of the enactment which was intended to

suppress the mischief. The Notice appears to have been

issued in the first instance to mitigate the hardship of the

importers and therefore it should be construed so as to

remedy the mischief which was intended to be remedied.

Apart from that the court's duty while construing two

provisions covering the same field is to harmonise the two

provisions in such a manner that none of them are rendered

otiose. But that would be the result if sub-paragraph (vii)

is ignored. The duty of the court is to effectuate the

social purpose by resorting to such construction as is

beneficial and does not cause harm to any one or is rendered

self-defeating. How such construction shall be self-

defeating shall be explained later.

16. Further, the intention and purport of the Notice is to

avoid any harassment and loss to a consignee. It attempts

to reconcile the necessity arising out of statutory

functions performed by it and yet protects an importer from

unintended and, may be in some cases, unjustified delay in

release of goods resulting in huge demur rage. For instance

in these very appeals the demurrage charges are three to

four times of value of the goods. And that too when it has

been found that delay was due to adjudication proceedings.

It is to overcome this practical difficulty yet statutory

necessity that the Customs Department is-

468

sued Public Notice in 1986. The IAAI or the CWC being only

custodian of the Customs Department could not ignore the de-

tention certificate issued in exercise of this power. No

such Public Notice issued in exercise of power under Section

45 of the Act arose for consideration in the earlier cases.

In Aminchand Pyarelal (supra) the decision turned on

validity of bye-laws framed by the Port Trust. , Clause

13(b) of it provided for graded,charges for the period goods

were detained on account of import Trade Control

Formalities. It was held by the High Court to be ultra

vires as charging demurrage,for period when consignee was

not at fault was unreasonable and unwarranted. It was this

view of the High Court which was reversed as the byelaws had

been framed by a Port Trust whose members were

representatives including a Customs Officer. The Court

found after examining Section 109 of the Act that levy of

graded demurrage was neither arbitrary nor unreasonable. In

the other decision that is Indian Goods Supplying Co.

(supra) the Court accepted the claim of the Port Trust that

it being entitled to claim demurrage under the contract

entered with the consignee the same could not be denied to

it unless it was found -that the delay in release of the

goods was due to conduct of the Port Trust. Therefore, the

ratio of these decisions is not helpful in deciding the

effect of detention certificate issued by the Assistant Col-

lector of Customs under the Public Notice issued under

Section 45 of the Act. When the goods were entrusted in the

custody of IAAI it was aware of the Public Notice. It

should be deemed to have accepted the custody subject to the

condition. In fact the statutory provisions leave no option

for the IAAI or CWC after 1986 except to act in accordance

with the provisions of the Act. The custody by the IAAI or

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 31

CWC is not as it is popularly understood in the commercial

sense. It is a statutory custody governed by the

provisions of law. Therefore, once rules were framed or

Public Notice was issued in exercise of statutory power the

IAAI or CWC cannot set up the claim that the intimation

issued by the Customs Department could not be taken into

account for determination of free days. Even on principle

of bailment the, IAAI or CWC cannot escape from the effect

of detention certificate., Clause (6) of Procedures and

Tariff of CWC provides that subject to above terms and

conditions, the rights and liabilities of the Corporation

shall be as that of a bailee. A bailment under Section 148

of the Indian Contract Act, 1872 means 'delivery of goods,

by one person to another for some purpose, upon a contract

that they shall, when the purpose is accomplished, be

returned or otherwise disposed of according to the direc-

tions of the persons delivering them'. Here the goods were

handed over to,, the IAAI or CWC for the statutory purpose

contemplated by Section 45 of the Act. The, goods were to

be returned after completion of proceedings as directed by,

the Customs Department. Section 160 of the Contract Act

specifically provides for the bailee to return or deliver

the goods according to the bailor's directive. The

direction not to charge any demurrage does not result in

making the IAAI as a gratuitous bailee as the IAAI is

entitled to charge insurance charges, handling charges and

demurrage except the dues mentioned for the period in the

detention certificate. Therefore, once the Customs

Department issued directive to release the goods, without

charging any ground rent in pursuance of Public Notice

issued under Section 45 the appellants as bailee could not

but to follow the direc-

469

tions which were in accordance with law. The relationship

of bailor and bailee arises out of the statutory provision

between the Customs Department and the IAAI or CWC and not

with the consignee. It does not make the IAAI or CWC a,

gratuitous bailee. In any case, even if any amount is

legally due, the IAAI may claim from Customs Department but

not from consignee.

17. The Regulations framed by the IAAI may now be examined.

The IAAI has framed International Airports Authority

(Storage & Processing of Goods) Regulations, 1980 in

exercise of the powers conferred by subsection (1) of

Section 37 of the International Airports Authority Act 1971

(43 of 1971). Clause (g) of Regulation 2 of the Regulations

defines 'demurrage' which has been extracted earlier.

Regulation 4 empowers the IAAI to levy charges/surcharges

which may include terminal charges, storage charges,

handling charges, demurrage, charges to cover insurance.

Regulation 5 empowers the authority to fix and revise from

time to time scale of charges referred to in the Regula-

tions. Regulation 6 empowers the Chairman to waive the

charges in. deserving cases for reasons to be recorded by

him. He is further empowered to delegate his powers to

Director of Cargo and Airport General Manager.

17A. Regulation 8 is extracted below:

"Charge of cargo - The cargo will be stored in

the International Air Cargo Complex under the

control and supervision of Customs

Authorities, While the Authority would be the

custodian of the import Cargo delivered to it

by the carriers the responsibility for export

cargo would be that of die shipper or his

agent before customs examination, of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 31

Customs in

469

respect of detained cargo during examination

and of the carriers after customs

examination."

Even according to these regulations the imported goods are

under the control of the Customs Department. It acts only

as custodian of the goods on behalf of the customs

Department. 'It is not the agent of the consignee. Once

the aircraft lands and the goods arc handed over to the con-

signee the agreement between the carrier and consignee comes

to an end and thereafter inspection by the Customs Depart-

ment, its detention and direction to store in the 'specified

area' till the adjudication proceedings we over arc

statutory powers exercised under the Act. The IAAI has no

option. It cannot refuse inspection nor can it refuse to

keep the imported goods. There is no material difference in

the rules framed by the Customs Department, the Public

Notice issued by it and the regulations framed by the MM.

The IAAI is custodian under either of the Customs Department

'Therefore it could not ignore the notice or the letter

issued by the Assistant Collector of Customs in pursuance,

of it. As regards CWC it has not only been appointed

custodian under Section 45(11) of the Act but the Public

Notice issued in November 1984 provides that it, 'would be

required to comply with the provisions of Section 45(2) of

the Act ibid as well as rules and regulations and

instructions issued from time to time on the subject men-

tioned above'.

18. In pursuance of Regulation 6 IAAI has framed a policy

of waiver of demurrage charges. It is framed on principle

of 'capacity to pay'. Paragraph 2 of the Policy

incorporates the general principles. It divides the cargo

imported for purpose of free period into three classes; (1)

commer-

470

cial, (2) unaccompanied baggage, and (3) non-commercial

cargo. It allows seven calendar days from the date of

landing as free period to commercial and non-commercial

cargo whereas the unaccompanied baggage is allowed 14 days.

Clause (d) provides that unscheduled holidays declared by

Central Government would be considered as free period. And

clause (e) allows as free period the period of processing

application for waiver, of demurrage.It further allows

threedays for postal communication as free period, But Para-

graph 3 provides that beyond the period mentioned in

Paragraph 2, the cargo may be entitled to remission of

demurrage in the circumstances mentioned therein. Paragraph

3.1 provides that wherever detention certificate is

submitted from the competent authority that the detention of

the goods was for no fault of consignee, then the consignee

shall be entitled to demurrage on the scale mentioned in

sub-paragraphs (a) to (g). Clause (a) deals with detention

of goods by the Customs in connection with I.T.C.

formalities. It provides for 80% waiver for first 90 days,

50% thereafter for six months and full charges thereafter.

Clause (b) permits 80% waiver for period under detention in

transfer, 'of residents appeal where the appellate authority

decides the case in favour of the consignee without imposing

any penalty'. And clause (c) allows 80% waiver for full

period of detention where the detention certificate shows

that detention was by, customs for analytical purposes, such

detention should be for specific Analytical Test by Customs

Control Laboratory or Central Drugs Control Laboratory.

This policy was framed by the IAAI in 1979 whereas the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 31

Public Notice was issued in 1986. For purposes of detention

of imported goods by the Customs. Department

at Indira Gandhi International Airport, therefore, Paragraph

3.1 has to be read that where detention certificate has been

issued by the Customs Authorities in accordance with sub-

paragraph (vii) of the Public Notice no demurrage shall be

charged for the period mentioned in it.

19. Same is the result even if the policy framed by the

IAAI is examined from another aspect. The definition of

'demur rage' has already been extracted. It mentions the

rate or amount payable by the consignee for not removing the

cargo within the time allowed. The regulation do not throw

any light on the expression 'within the time allowed.

Paragraph 3 of the Regulations provides the procedure to be

followed for the storage and processing of the goods in the

International Air Cargo Complex at the airport. Clause (b)

relates to imported goods. It provides that the goods shall

be received by-the officials of the Authority/Ground

Handling agency from the carrier in the presence of Customs

officials. The consignee will be responsible for getting

his consignment examined by Customs and obtaining 'out of

charge' endorsement. It further provides that the officials

of the Authority will deliver the consignment to the

consignee after collecting demurrage and obtaining a valid

receipt from him. The demurrage has to be calculated in

accordance with the policy framed by the IAAI. The free

days for which no demurrage shall be charged has already

been explained. The time to calculate demurrage commences,

according to paragraph 2 of the policy, from the date of

landing after excluding free days. When Public Notice

requires the IAAI and CWC not to charge any rent for the

period detention certificate is issued then by operation of

law the expres-

471

sion 'within the time allowed' in the policy has to be read

along with the detention certificate issued by the Customs

Department. The High Court appears to be right in taking

the view that if various clauses in the Public Notice issued

by the Customs Department are followed by the IAAI then

there appears no rationale for the view that sub-paragraph

(vii) is not binding on them as they have framed their own

rate schedule. Any other construction would result in

rendering sub-paragraph (vii) as meaningless. The learned

counsel for the appellants submitted that it acted on the

certificate and that is why it granted waiver of 80%. But

that is not what sub-paragraph (vii) requires. It

specifically provides for charging no demurrage for the

period mentioned in the detention certificate. Therefore,

the IAAI or CWC should not have levied any charge for the

period mentioned in the detention certificate. In fact in

clauses (b) and (c) of the Policy 80% waiver is allowed on

account of court cases where court has passed unconditional

order in favour of the consignee. The Policy further

provides that,all the waiver in terms of powers (a) above

shall be subject to condition that respective authority

certifying detention has not levied any fine penalty or

issued any warning to the consignee on this import'. On a

reasonable construction of the Policy, therefore,there,

would have been no difficulty in accepting the claim of the

respondents, for waiver of 80% during the entire period of

detention. An importer may be entitled to waiver in more

than one clause. In a case where appeal is allowed, in

entire and no penalty or fine is imposed the consignee might

be entitled to waiver both under. clauses (a) and (g),

therefore, the demurrage may not be chargeable more than 80%

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 31

in such cases for the entire period of

detention.,

20. The issue, however, is not whether 80% for' the entire

period of detention should have been waived but whether any

demurrage could have been charged for the period detention

certificate was issued by the Assistant Collector of

Customs. If the appellants' claim that IAAI being a

statutory body it was entitled to frame its regulations and

rate schedule is accepted then it results in conflict

between sub-paragraph (vii) of Public Notice and paragraph

(3) of the Policy framed by the IAAI. The legislative

intention in enacting Act being to check and control

economic offences such as smuggling, illegal import etc.,

the provisions have to be construed to advance the purpose

sought to be achieved without sacrificing the consignee's

interest. The provisions in the International Airports

Authority Act and the Policy framed thereunder cannot be

construed so as to be self defeating. But that would be the

result if the construction suggested by the appellants is

accepted. The adjudicatory process is time consuming. From

Assistant Collector of Customs to the Tribunal itself it may

take sufficiently long time. By the time the consignee is

able to extract himself from the cobweb of various stages he

may find himself landed in the soup of demurrage. If he is

to pay the charges which in many' cases due to passage of

time may be many times more than the value of goods, the

entire exercise may be waste. It would be anomalous that a

person who ultimately succeeds in vindicating his claim that

the goods arc properly valued or that the import was in

accordance with law is faced with demurrage of goods which

may be not only more than the value of goods but the value

plus duty and penalty even. For instance in Appeal

472

No.798 of 1992 the total value of the goods was Rs.17,846/-

Ahereas the demurrage after allowing rebate as provided in

the Rate Schedule of the IAAI comes to Rs.1,115,936/-. If

this amount is not paid the only remedy of the IAAI would be

to dispose of the imported goods and the total value it

might be able to realise could be somewhere near

Rs.17,000/-. Therefore, except for the satisfaction of

auctioning the goods the IAAI in some cases may not be able

to compensate itself fully. And yet the consignee stands

deprived of his goods. The construction as has been sug-

gested by the appellants would, therefore, be unjust to

small importers, and as observed self-defeating for the IAAI

or CWC. To remedy from such hardship sub-paragraph (vii)

was enacted by way of Public Notice. It recognises the

legal consequences which must follow the adjudication by

directing that no demurrage should be charged for that

period as in law the decision by the Tribunal dates back to

the date of detention. And by fiction of law it is assumed

that the Customs Department clears the goods as it should

have done when the goods had landed. Even otherwise if the

policy decision of capacity pay is read along with rate

prescribed then levy of demurrage may defeat the very pur-

pose and objective of the policy. Payment of three times or

four times of demurrage of value of goods because the goods

were detained at the instance of Customs Authorities does

not accord with the policy decision. It is not in common

interest. One of the settled principles of construction is

to read a provision in such manner that it may not be self-

defeating. The levy of demurrage at the prescribed rate by

ignoring the Public Notice issued by the Customs Department

in 1986 is apt to lead to such disastrous consequences.

21. But before parting it is necessary to observe that from

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 31

1976 to 1993 the entire Scenario of cargo traffic from air

has gone tremendous change. The busy traffic, the spate of

smuggling, manoeuvring of importing goods by camouflaging to

avoid payment of duty have multiplied putting immense

pressure on the IAAI and the Customs Department. At the

same time the honest and bona fide consignee should be

protected for sake of credibility. The Customs Department

on its part may consider the feasibility of framing a policy

by dividing the imported goods in different categories.

Where the import is not prohibited or it is against licence

or permit and the only dispute is about valuation or the

tariff item 1 under which it falls it may be released. on

furnishing of bank guarantee or security sufficient to

secure the interest of Department subject to final deci-

sion. This determination should be done at the airport. It

would obviate the necessity of storing goods, save the IAAI

or CWC from unnecessary botheration, protect the Department,

and serve the importer better. Till then the Public Notice

issued by Customs Department appears to be reasonable, and

practicable solution to the Problem. The IAAI or CWC may be

well advised to change its regulations and fall in line with

the policy decision and refrain from charging any demurrage

for the period Customs Department issues a certificate under

subparagraph (vii) of the Public Notice. It would avoid

litigation, harassment and would be, conducive to public

interest.

22. In the result, all the appeals fail and are dismissed.

BHARUCHA, J.:

C.A.Nos. 798/92 & 3971/92

473

23 These are appeals by special leave against the judgments

and orders of a Division Bench of the High Court of Delhi

allowing the writ petitions filed by: the first respondents

in each appeal and directing the appellant, the

International Airport Authority of India (the Authority), to

realise the goods imported by the' first respondents without

charging any demurrage thereon for the periods for which

detention certificates had been issued by the Collector of

Customs

24.The first respondents had imported goods by air and filed

bills of entry with the Customs authorities at the Delhi

Airport, which is the property of the Authority. The

Customs authorities detained the goods. Ultimately, they

were released and the Collector of Customs issued detention

certificates for the periods of the detentions. The first

respondents thereupon applied to the Authority for waiver of

demurrage charges for the periods covered by the detention

certificates. The first respondents calculated demurrage,

granting for these, periods waiver on a graded scale. The

first respondents preferred writ petitions before the Delhi

High Court, impleading the Union of India and the Authority,

challenging the requirement to pay demurrage for the periods

for' which the detention certificates had been issued. The

High Court took note of the decision of an earlier Division

Bench in the case of MI s. Trishullmpex v. Union of India

(1991(2) Delhi Lawyer 1 = 43Delhi Law Times 538). The, High

Court took the view that since the Authority was the

custodian on behalf of the Customs authorities, the

Authority was not entitled to recover any amount on account

of demurrage charges for the periods for which detention

certificates had been issued.

25. The judgments and orders under appeal, are contrary to

the judgment of: the Delhi, High :Court in the case of M/s.

Trishul Impex (ibid) as also the decisions of this Court in

the cases of Trustees of the Port of 'Madras v. M/s.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 31

Aminchand Pyarelal & Ors., (1976) :1 S.C.R. 721 Board of

Trustee of the Port of Bombay v. Indian Goody Supplying

Co.,, (1977) 3 S.C.R. 343, and Board of Trustees of the

Port of Bombay v. Jai Hind Oil Mills Company & Ors., (1987)

1 S.C.R. 932.

26.In the case of Trishul Impex (ibid) a writ petition

filled by an importer had been allowed and the Union of

India and the Container Corporation of India were directed

to issue a detention certificate from the date on which a

bill of entry was filed until the date of actual clearance

and to release the imported goods without payment of

demurrage charges. The Corporation, the 5th respondent,

filed and application -before the High Court in which a

declaration was sought that the liability for the demurrage

charges would have to be home by the importer. 'The

Division Bench that' heard the application came to the con-

clusion that the Corporation was the Custodian of the goods

under Section 45(2) of the Customs Act. As a detention

certificate had, been issued by the Customs authorities, the

Corporation was bound to release the goods to the importer

and it was the Customs authorities who were responsible to

the Corporation for the demurrage charges. The Corporation

was, therefore, directed to release the goods to the im-

porter upon payment by the Customs authorities of the

demurrage charges for the period covered by the detention

certificate.

27.In the case of M/s. Trishul Impex, therefore, it was

held that the authority in

474

whose premises the goods were held pending their clearance

by the Customs authorities was entitled to recover demurrage

charges for the period that they were so held, but that,

since such detention had been at the insistence of the

Customs authorities and such insistence had been ac-

knowledged to be wrongful, it was the Customs authorities

who should pay the demurrage charges for that period to the

authority holding the goods and upon such payment the

authority should release the goods to the importer. The

writ petitions filed by the first respondents before the

Delhi High Court impleaded the Union of India and the

Authority. The High Court did not direct the Union of India

to pay to the Authority demurrage charges for the periods

covered by the detention certificates, as had been done in

the case of M/s. Trishul Impex, but directed the Authority

to release the goods without payment of demurrage charges.

28. In Trustees of the port of Madras V. M/S. Aminchand

payarelal & Ors., (1976) 1 S.C.R. 721, a detention

certificate was issued by the Customs authorities stating

that the detention of imported goods for the period 24th

April, 1963, to 21st August, 1964, was due to no fault or

negligence on the part of the importer. Acting upon the

detention certificate, the appellants the Trustees of the

port of Madras (the Board), waived demurrage for the period

covered thereby and charged Rs. 1963/ instead of Rs.

3,20,951/-, by way of demurrage. The importer paid Rs.

1963/- and cleared the goods. In January, 1965, the Board

wrote to the Customs authorities stating that the% detention

certificate had been erroneously issued. The Customs au-

thorities owned the mistake. The Board then sued the

importer the Union of India and the Customs authorities to

recover the balance of the demurrage charges. The importer

disputed its liability to pay on the ground that it could

not be penalised either for the delay caused by the Customs

authorities in clearing the goods or by reason of a wrong

detention certificate. The High Court dismissed the suit.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 31

It held, inter alia, that, the Board could not charge

demurrage for the period during which the goods had been

detained for no fault or negligence of the importer or his

agent, demurrage being, in its view, a charge for wilful

failure to remove goods. The Board approached this Court in

appeal. This Court noted the provisions of the Madras Port

Trust Act and, particularly, the provisions of sections 42,

43 and 43A thereof Section 42 empowered the Board to frame a

scale of rates at which and a statement of the conditions

under which the services specified therein would be

performed by the Board. One of the clauses thereof referred

to building in the possession or occupation of the Board or

at any place within the limits of the Board. Another

referred to wharfage, storage or demurrage of goods at any

such place. By reason of section 44, every scale and every

statement of conditions framed by the Board under sections

42, 43 and 43-A had to be submitted to the Central

Government for sanction and, when so sanctioned and

published in the Official Gazette, had the force of law.

Section 44 (1a) empowered the Central Government to cancel

any of the scales framed by the Board and to the call upon

the Board to modify and portion thereof. The Board was

bound to comply with such directions. Section 44(2)

conferred power upon the Board in special cases, for reasons

to be recorded in writing, to remit the whole or any portion

of the rates or of any charge leviable according to any

scale.

475

Acting in pursuance of the powers conferred by sections 42,

43 and 43A, the Board had framed a scale of rates payable at

the Port of Madras which had been duly sanctioned by the

Central Government. Chapter IV in Book 1 thereof dealt with

demurrage. Demurrage was defined as " chargeable on all

goods left in the Board's transit sheds or yards beyond the

expiry of the free days. After demurrage begins to accrue

no allowance is made for Sundays or Board's holidays. The

free days are fixed by the Board from time to time".

Scale'A' of ChapterIV prescribed conditions governing 'free

days', the normal rule being that three working days in the

case of foreign cargo, excluding Sundays and the Board's

holidays, were treated as free after complete discharge of a

vesseGl's cargo or the date when the last package was put

overside. Free periods also included periods during which

goods were detained by the Customs authorities for a

chemical test, which period was certified by them to be not

attributable to any fault or negligence on the part of

importers. Rule 13 (b) read thus:

"(b) where goods are detained by the Collector

of Customs, on account of Import Trade Control

formalities or for compliance of formalities

prescribed under the Drug's Act and certified

by the Collector of Customs to be not

attributable to any fault or negligence on the

part of Importers, demurrage shall be

recovered for this period at the rate of 30

per cent of the normal rate, i.e. the rate at

which the goods would incur demurrage had ther

e

been no detention by the Customs. This

concession in demurrage shall be limited to a

period of 30 days plus one working day and

demurrage shall be recovered at the full rate

(i.e. third slab) for detention beyond the

above said period."

This Court held that Port Trusts were bodies of a public

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 31

representatives character which were entrusted by the

legislature with authority to frame a scale of rates and

statement of conditions subject to which they would perform

certain services. Every scale and every statement of condi-

tions had to be submitted by the Board to the Central

Government for sanction and it was only when it was so

sanctioned that it had the force of law. The requirement of

such sanction was a restraint on unwise, excessive or

arbitrary fixation of rates. Section 44(2) conferred on the

Board the power, in special cases and for reasons to be

recorded in writing, to remit the whole or any portion of

rates or charges leviable according to any scale in force.

Port Trusts did not do the business of warehousing goods and

the rates which the Boards charged for storage of goods were

not levied as a means of collecting revenue. The Board was

under a statutory obligation to render services of various

kinds and those services had to be rendered not for the

personal benefit of this or that importer but in the larger

national interest. Congestion in the ports affected free

movement of ships and of essential goods. The scale of

rates had therefore to be framed in a manner which would act

both as an incentive and as a compulsion for the expeditious

removal of goods from the transit area. Ships, like wagons,

had to be kept moving and that could happen only if there

was pressure on importer to remove goods from the Board's

premises with the utmost expedition. Section 42 had not

authorised the Board to fix rates of "demurrage" but to

frame scales of rates and a statement of conditions under

which the services specified therein would be performed.

The ordinary meaning of "demurrage" did not, therefore,

fetter the

476

Board's powers under section 42. The High Court was,

therefore, found to be in error when it held that the

Board's power to charge demurrage was limited to cases where

goods were not removed from its premises due to some fault

or negligence on the part of the importer.

29. In Board of Trustees of the Port of Bombay v.Indian

Goods Supplying Co., (1977) 3 S.C.R. 343, the appellant

Board had framed scales of rates of demurrage of goods under

its statute, which was similar in its terms to the statute

that covered the Port of Madras. The Board claimed

demurrage and, as the amount there was not paid, the goods

in respect of which the claim was made were sold by public

auction. The importer filed a suit for the recovery of the

value of the goods; the Board denied the liability and

pleaded that it was entitled to collect demurrage and, since

the importer had failed to pay the demurrage, it was

entitled to sell the; goods by auction. The City Civil

Court at Bombay decreed the suit and the High Court in

appeal affirmed the decree. The Board appealed to this

Court. This Court said that under its statute it was the

duty of the Board to recover rates. It had a lien on the

goods and the right to seize and detail them until rates

were fully paid; also, to sell the goods to enable recovery.

The contention on behalf of the importer was that it was in

no way responsible for the delay in clearing the goods as

the goods had been detained under the Import Trade Control

Regulations. This Court said:

"It is no doubt true that before clearance is

given by the Import Trade Control authorities

and the Customs Department the goods cannot be

cleared by the respondents. Neither can the

Port Trust deliver the goods without the

consent of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 31

Import Trade Control authorities. Taking into

account the hardship caused to the importer

because of the delay certain concessions in

demurrage rates are permitted. The Port Trust

has prescribed the reduced demurrage levy

which is 1/ 6th of the normal rate from the

date of expiry of free days upto the 60the

day, 1/ 3rd of the normal rate after the

expiry of the 60th day, upto the 90th day,

half the normal rate after the expiry of 90th

day upto the 120th day, 2/3rd of the normal

rate after the expiry of the 120th day, rate

after the expiry of the 120 day, 2/3rd of the

normal rate after the expiry of the 120the day

upto the 150th day and at the full rate after

the expiry of the 150th day. As the scale of

rates are framed by virtue of the statutory

powers conferred on the Board under section 43

and as the rates have been approved by the

Central Government under section 43B the rates

have the force of law and cannot be

questioned. Taking into account the hardship

to the importers certain concession has been

given but the legality of the rates which are

being levied according to law cannot be

questioned."

This court then referred to the aforementioned judgment in

the case of M/s. Aminchand Pyarelal and said that it was on

all fours with the facts of the case before it and concluded

the question. It was held that the High Court was in error

in holding that the importer of the goods could not be held

responsible for any delay not attributable to his own

default and that demurrage under the statute could never be

imposed as long as the goods were detained for the purpose

of the operation of the Import Trade Control Regulations.

30. In Board of Trustees of the Port of Bombay v. Jai Hind

Oil Mills C. & Ors., (1987)1 S.C.R. 932, the provisions of

the Major Port Trusts Act, 1963, were, involved

477

and it was found that they were in para materia with the

provisions of the individual Port Trusts Acts that proceeded

it. Reliance was place upon the judgments in the case of

M/s. Aminchand Pyarelal and Indian Goods Supplying Co..,

and it was held:

"The power of a Port of Trust to fix rates of

demurrage and to recover the same from an

importer or exporter (although the question of

an exporter paying demurrage arises rarely)

under law and to show concession as regards

demurrage charges in certain specified cases

is recognised by the Court in the Trustees of

the Port of Madras v. M/S. Aminchand Pyarelal

& Others, (1976) 1 S.C.R. 721 and in the Board

of Trustees of the Port of Bombay v. Indian

Goods Supplying Co., (1977) 3 S.C.R. 343.

'Mew decisions arc no doubt based on the

relevant laws which were in force at the

material time. But the decisions are still

relevant insofar as cases arising under the

Act because the Act also contains provisions

more or less similar to the statutory

provisions considered in the said decisions.

Demurrage charges are levied in order to

ensure quick clearance of the cargo from the

harbour. They are always fixed in such a way

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 31

that they would make it unprofitable for

importers to use the port premises as a

warehouse. It is necessary to do so because

congestion in the ports affects the free

movement of ships and the loading and

unloading operations. As stated earlier, the

Port Trust shows concession to the party

concerned in certain types of cases.

xxx xxx xxx

It is, however, to be observed that before

compelling the Customs authorities to issue a

Detention Certificate, the High Court should

have issued notice to the Port Trust which was

vitally interested in securing its own

interests as regards the demurrage charges

recoverable by it under law. This %%,as

necessary because on the production of the

Detention Certificate issued by the Customs

authorities the Port Trust was under an

obligation to permit the clearance of the

goods without payment of full demurrage

charges. If ultimately the party concerned-is

found to be at fault and becomes liable to pay

the full demurrage charges the Port Trust may

not be in a position to recover such full

demurrage charges from the party concerned,

since it would have no longer any lien as

provided by section 59 of the Act. on the

goods which are already cleared. The Port

Trust being a body corporate constituted under

the Act is entitled to be heard by the Court

before any order which affects its interests

prejudically is passed. This case serves as

an illustration to what is stated above. The

Port Trust has been asked to permit the

clearance of goods in respect of which

demurrage charges of Rs.3,53,514.75 paise are

payable in the event of the 1st Respondent

being held liable in law to pay the full

demurrage charges. The orders passed by the

High Court in the proceedings to which the

Port Trust was not a party which had the ef-

fect or prejudicially affecting the interests

of the Port Trust would not be binding on it

in view of the violation of the principles of

natural justice."

31.this Court in the cases aforementioned, therefore, held

that the Board of Trustees of a Port was, under the statute

that created it, entitled to charge demurrage even in

respect of periods during which the importer was unable to

clear goods from its premises for no fault or negligence on

his part. It was held that the Boards were entitled to

charge demurrage even in respect of periods during which the

importer was unable to clear goods because of the detention

thereof by

478

the Customs authorities or the authorities under the Import

Trade Control Regulations, which detentions were thereafter

found to be unjustified. This Court also recognised that

the Boards were entities in their own right so that the

Courts could not direct the Customs authorities to issue a

detention certificate without hearing the Board concerned.

This was because the issuance of a detention certificate had

the effect of reducing the amount of demurrage that the

Board would otherwise have charged.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 31

32.The International Airports Authority Act, 1971,

constitutes,under the provisions of Section 3(1),the

International Airports Authority of India (the Authority).

By reason of section 3(2) the Authority is a body corporate

having perpetual succession and a common seal, with power to

acquire, hold and dispose of property, both movable and

immovable, and to contract and to sue and be sued by the

aforesaid name. It is, by reason of section 3(3), to

consist of a Chairman, the Director General of Civil

Aviation and not less than six and not more then thirteen

members to be appointed by the Central Government, whose

names are required to be notified in the Official Gazette.

By reason of section 12 the Central Government is empowered

to-vest in the Authority, by notification in the Official

Gazette, all properties and other assets vested in it for

the purposes of airports. Section 14 empowers the Authority

to enter into and perform any contract necessary for the

discharge of its functions. Section 16(1) states that it

shall be the function of the Authority to manage airports

efficiently. Section 16(2) makes it the duty of the

Authority to provide at the airports such services and fa-

cilities as are necessary or desirable for

the efficient operation of air transport services thereat.

Specifically, the Authority is empowered by section 16(3)(d)

to establish warehouses at the airports for the storage or

processing of goods. Section 17 gives power to the

Authority to charge, with the previous approval of the

Central Government, fees or rent, inter alia, for the use

and enjoyment by persons of its facilities and other

services at any airport. Section 35 directs that the

Authority shall, in the discharge of its functions and du-

ties, be found by such directions on questions of policy as

the Central Government may give it in writing from time to

time. Section 37 gives the Authority the power to make

regulations to provide for all matters for which provision

is necessary for the purpose of giving effect to the provi-

sions of the Act. The Authority is specifically empowered

by section 37(2)d to make regulations for the storage or

processing of goods in any warehouse established by it under

section 16(3)(d) and the charging of fees for such storage

or processing.

33.By virtue of the power vested in the Authority under

section 37, the Authority has framed regulations called the

IAA (Storage and Processing of Goods) Regulations, 1980.

Under Regulation 4 the Authority is empowered to levy

charges, including storage charges and demurrage.

Regulation 5 empowers the Authority to fix and revise from

time to time the scales of charges. By reason of Regulation

6 the Chairman may in his discretion, for reasons to be

recorded, waive charges in de serving cases. The Authority

has framed a policy in regard to the waiver of demurrage

charges. It provides, in the case of imports, for a free

period of seven calendar days from the date of landing of

com-

479

mercial cargo. In regard to detention certificates the

policy provides for waiver of demurrage on a 'graded basis.

The waiver is of 80% for the first 90 days, 50% for the

period beyond 90 days and upto 6 months, and full demurrage

is required to be paid thereafter if the detention is in

connection with Import Trade Control formalities. If the

detention is by the Customs authorities for analytical

purposes, a waiver of 80% is available for the full period

of the detention.

34.The provisions of the International Airports Authority

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 31

Act, 1971 are, therefore, similar to the provisions of the

Major Port Trusts Act, 1963, and the Port Trusts Acts that

preceded it. The regulations framed by the Authority in

regard to the storage or processing of imported goods and

the policy in regard to the waiver of demurrage are also

similar to those of the Boards of Trustees of the ports.

The ratio of the judgments of this Court in the cases of MI

s. Aminchand Pyarelal, Indian Goods Supplying Co. and Jai

Hind Oil Mills Co. applies as much to the Authority as it

does to the Boards of Trustees of the ports.

35.It was submitted by learned counsel for the first

respondents that the judgments in the cases of M/s.

Aminchand Pyarelal, Indian Goods Supplying Co. and Jai Hind

Oil Mills Company. decided only that an importer had to pay

demurrage though the delay in clearing his goods was not due

to his default or negligence. It was submitted that the

contention in these appeals was different, namely, that the

Authority was the custodian of the Customs authorities and

was obliged, by reason of the detention certificates issued

by the Customs authorities, not to charge demurrage 'for the

periods covered by the detention

certificates. The judgments aforementioned do not only hold

that an importer is liable to pay demurrage though he is not

responsible for the delay in clearing his goods. The

judgments deal 'With detention certificates issued by the

Customs authorities and hold that the importer is liable. to

pay demurrage at the reduced rate prescribed by the policy

framed in that behalf by the Boards even for the period for

which a detention certificate has been issued. The

judgments recognise that the Boards are entities in their

own right and that even the courts cannot compel the Customs

authorities to issue detention certificates without first

hearing the Board concerned, because detention certificates

have the effect of reducing the revenues of the Boards. The

Boards and the Authority being similarly placed, the

judgments determine the questions raised in these appeals.

36.During the course of the hearing reliance was placed upon

a Customs Public Notice dated 30th April 1986 and numbered

30/86. It is issued on the subject of "Unloading/loading -

custody of Import/ export cargo at Indira Gandhi

International Airport, New Delhi." It notifies, for the

information of airlines, importers, exporters and clearing

agents, that the Collector of Customs, New Delhi, in

exercise of powers vested in him under sections 8, 33,34 and

45 of the Customs Act, 1962, has specified "limits of

Customs Area as whole of existing area constituting the

Indira Gandhi International Airport, New Delhi including

domestic arrival and departure area, Cargo Terminal New

International Terminal Complex (CTNTTC for short) and the

entire premises of Central Warehousing Corporation Ltd. (CWC

for short), located at Gurgaon Road, New Delhi, excluding

M/s. IAA's Import Cargo

480

Warehouse (monkey farm). " The said Customs public notice

approves the Authority as custodian of cargo under section

45 of the Customs Act. The cargo, it is stated, would be

stored in the Authority's C.T.N.I.T.C. on the condition that

it would be subject to the control of the Customs

authorities. Clause (vii), which is another condition,

reads thus:

"In case of goods detained/seized etc. by

customs, the warehousing/storage charges shall

be calculated by M/s. IAAI for the period due

minus the charge for the period of detention

at the instance of Customs as certified by the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 31

Assistant Collector of Customs."

The said Customs public notice states that public notices

and instructions issued earlier would be deemed to have been

modified to the extent mentioned in it.

37. The said Customs public notice has not been referred to

in the pleadings before the High Court or this Court. It

was not brought to the notice of the High Court.

38. As would appear from what has been stated above, the

Authority's policy for the waiver of demurrage still covers

Customs detention certificates and the Authority has levied

demurrage for periods covered by Customs detention

certificates even after the issuance of the said Custom's

public notice. In the case of M/s. Trishul Impex referred

to above the issue was whether demurrage charges for the

period covered by a detention certificate should be borne by

the importer or by the Customs authorities and the Customs

authorities did not rely upon the said Custom's public

notice to contend that the Authority could not charge

demurrage for the period covered by a detention certificate

and were

ordered to make the payment. It appears, therefore, that

the said Customs public notice has not been acted upon by

the Authority and by the Customs authorities.

39. In any event, the provisions of the Customs Act under

which the said Customs public notice was issued may be ex-

amined. Section 8 empowers the Collector of Customs to

approve proper places in any Customs port of Customs airport

for the unloading and loading of goods and to specify the

limits of any Customs area. Section 33 debars the unloading

of imported goods at any place other than a place approved

under section 8. Section 34 states that imported goods shall

not be unloaded from any conveyance except under the

supervision of a proper officer. Section 45 reads thus:

"Restrictions on custody and removal of

imported goods -

(1) Save as otherwise provided in any law

for the time being in force, all imported goods

unloaded in a customs area shall remain in

the custody of such person as may be approved

by the Collector of Customs until they are

cleared for home consumption or are warehoused

or are transhipped in accordance with the

provisions of Chapter VIII.

(2) The person having custody of any

imported goods in a customs area whether under

the provisions of sub-section (1) or under

any law for the tam being in force-

(a) shall keeps a records of such goods and

send a copy thereof to the proper officer.

(b) shall not permit such goods to be re-

moved form the customs area or otherwise dealt

with except under and in accordance with the

permission in writing

481

of the proper officer.

40. None of these provisions entitles the Collector of

Customs to debar the collections of demurrage for the

storage of imported goods. They do not entitle him to

impose conditions upon the properties of ports or airports

before they can be approved as Customs ports or Customs air-

ports. Section 45 provides that all imported goods imported

in a Customs area must remain in the custody of the person

who has been approved by the Collector of Customs until they

are cleared and such person is obliged not to permit them to

be removed from the Customs area or otherwise dealt with

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 31

except under and in accordance with the permission of the

Customs Officer. Section 45 does not state that such person

not be entitled to recover charges from the importer for

such period as the Customs authorities direct.

41. The purpose of the Customs Act on the one hand and the

Major Port Trusts Act and the International Airports Author-

ity Act on the other hand are different. The former deals

with the collection of Customs duties on imported goods.

The latter deals with the maintenance of seaports and

airports, the facilities to be Provided thereat and the

charges to be recovered therefor. An importer must land the

imported goods at a sea-port or airport. He can clear them

only after completion of Customs formalities. For this

purpose, the sea-ports and airports are approved and provide

storage facilities and Customs officers are accommodated

therein to facilitate clearance. For the occupation by the

goods of space in the sea-port or airport, the Board or the

Authority which is its proprietor is entitled to charge the

importer. That until Customs clearance

the Board or the Authority may not permit the importer to

remove his goods from its premises does not imply that it

may not charge the importer for the space his goods have

occupied until their clearance.

42. What is stated in the quoted clause of the said customs

public notice would be effective against the Authority only

if it were shown that the Authority had, expressly or

impliedly, consented to such arrangement; that is not even

pleaded.

43. It can not be gain said that, by reason of unjustified

detention of his goods by the Customs authorities, the

importer is put to loss by having to pay demurrage charges

for the periods of such detention. The Central Government

is empowered by section 35 of the International Airports Au-

thority Act, 1971, and section III of the Major Port Trusts

Act, 1963, to issue to the Authority and the Boards of

Trustees, respectively, directions on questions of policy

after giving them an opportunity, as far as practicable, of

expressing their views. -Me Central Government can, if so

advised, after giving to the Authority and the Boards of

Trustees the opportunity of expressing their views, direct

them, under the aforementioned provisions, not to levy

demurrage charges for periods covered by detention

certificates.

C.A. No 4227/92

44. The goods of the first respondent in this appeal were

stored, pending their clearance by the Customs authorities,

at the Container Freight Station of the appellant, the

Central Warehousing Corporation at Patparganj, Delhi. The

Central Warehousing Corporation is established under the

provisions of the Warehousing Corporations Act, 1962. The

provisions of the

482

Warehousing Corporations Act are substantially similar to

those of the International Airports Authority Act, 1971, and

the Major Port Trusts Act, 1963. What has been said above

in regard to the International Airports Authority applies as

well to the Central Warehousing Corporation.

45. In the result, the appeals (C.A. Nos. 798/92, 3971/92

and 4227/92) are allowed. The judgments and orders under

appeal are set aside. The writ petitions filed. by the

first respondents in each of the appeals are dismissed.

46. There shall be no order as to costs.

ORDER

47. For reasons given by us in our separate judgments (R.M.

Sahai, J. for dismissal of the appeals whereas S.P. Bharucha

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 31

and N. Venkatachala, JJ. for allowing the appeals) the

appeals succeed and are allowed. The orders passed by the

High Court are set aside. And the Writ Petition shall stand

dismissed. But in the circumstances of the case, there

shall be no order as to costs.

VENKATACHALA, J.:

48. The important question which is required to be

considered and answered in deciding the above civil appeals

is, whether the Collector of Customs empowered under sub-

section (1) of section 45 of the Customs Act, 1962 - "the

Act" to approve persons to be custodians of imported goods

in customs areas until they are cleared as provided for

therein, while approving the International Airports Author-

ity of India - "the MM" to be the custodian of such imported

goods in the customs area of Indira Gandhi International

Airport, New Delhi and Central Warehousing Corporation -

"the CWC" to be the custodians of such imported goods

received at the customs area - the Container Freight

Station, CWC Complex, Pragati Maidan, New Delhi, by issue of

public notice or otherwise in that regard, if by such notice

or otherwise directs such custodians not to collect custody

charges from the consignees of such goods - "the Cargo", be-

cause of detention certificates issued by him or his

delegates, will he be acting within the powers conferred

upon him under the Act, its Rules or its Regulations, and,

if not, can such direction be enforced against the

custodians ?

49. Divergent views are expressed on the said question by

my revered brethren R.M. Sahai and S.P.Bharucha, JJ. in

their separate judgments, the drafts of which I had the

advantage of going through. The said question being of

considerable importance I propose to consider it indepen-

dently, express my view thereon and decide the present

appeals accordingly.

50. Civil Appeal No. 798 of 1992 arises out of the Judgment

dated 24.9.1991 of the High Court of Delhi in Civil Writ No.

554 of 1991, by which the MM was directed to release the

goods to respondent here (petitioner in the Writ Petition)

with out collecting any demurrage charges for the period for

which the detention certificate had been issued by the

Assistant Collector of Customs. Such direction was issued

by the High Court because of its view that the MM when was

the custodian of the goods at the instance of the Collector

of Customs, the IAAI was not entitled to recover demurrage

charges from the petitioner in the Writ Petition

(respondent-1 in the appeal) the consignee, for the

483

period covered by the detention certificate issued by the

Collector of Customs or his delegates. Such view was taken

by the High Court, following its earlier Division Bench

judgment in M/s. Trishul Impex v. Union of India [1991 (2)

Delhi Lawyer 1].

51. Civil Appeal No. 3971 of 1992 arises out of the

Judgment dated 3.2.1992 of the High Court of Delhi in

Civil Writ Petition No. 3235 of 1989, whereby the IAAI - the

appellant herein, was directed to refund demurrage charges

which it had collected in respect of the goods of the

petitioner therein - respondents herein, despite the

detention certificate issued in respect of such goods by the

Asstt. Collector of Customs. Such direction, according to

the High Court, was issued following its earlier Division

Bench judgments in M/s. Trishul Impex (supra) and Grand

Slam International v. Union of India C.W. 554 of 1991

decided on 21st September, 1991.

52. Civil Appeal No. 4227 of 1992 arises out of Judgment

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 25 of 31

dated 22.1.1992 again of the High Court of Delhi in C.W. No.

1751 of 1991, by which it directed the CWC to release the

goods of the petitioner therein without collecting the

demurrage charges from the petitioner therein in respect of

the period covered by the detention certificate issued by

the Asstt. Collector of Customs. Such direction, it is

said in the judgment, was issued following its Division

Bench judgment in M/s. Trishul Impex (supra), wherein it

was held that the custodian of the goods under section 45 of

the Customs Act being the custodian on behalf of the Customs

authorities, it was bound to release the goods in favour of

the consignee when once a detention

certificate had been issued by the Customs authorities.

53. It would be convenient to consider and answer the

aforesaid question with reference to Civil Appeal No. 798 of

1992 and Civil Appeal No.3971 of 1992 in which the

appellant, "the IAAI" is common and dispose of the appeals

accordingly, in that, the answer to be given to the said

question,, would be sufficient to dispose of Civil Appeal

No. 4227 of 1992 as well.

54. M/S. Trishul Impex case (supra), has been relied upon

by the High Court in giving the directions to the IAAI, in

its judgments under appeals, not to collect demurrage

charges in respect of the periods covered by the detention

certificates issued by the Customs authorities. As has

already been pointed out, a Division Bench of the same Court

had, in the case, expressed its view that when the container

Corporation concerned there, was the custodian on behalf of

the Customs authorities under section 45(1) of the Act, it

was under an obigation to release the goods in its custody

without collecting demurrage charges in respect of the

period covered by the detention certificate issued by the

Customs authorities. In M/s. Grand Slam International

(supra), which is another decision of the Division Bench of

the same Court relied upon by it in its judgment in C.A. No.

3971 of 1992, the view taken is that the goods for which

demurrage charges were levied by the custodian, if was

solely on account of the fault of the Customs authorities

the liability for the same would be of those Customs

authorities and not of the consignee. But, when once the

Customs authorities issued the detention certificate in

respect of such pe-

484

riod of detention of goods, the custodian who had the

custody of goods on behalf of Customs authorities had no

option but to release the goods to the consignee.

Therefore, the directions given by the High Court in the

judgments under appeals to release the goods in its custody

to the con signees without collecting demurrage charges from

them in respect of the periods covered by the detention

certificates issued by the Customs authorities is based on

its view that when the goods of the consignee had been kept

by the custodian for and on behalf of the Customs authori-

ties, the consignee cannot be made liable to Make good such

demurrage charges in respect of the periods of such

detention for which detention certificates were issued by

the Customs authorities, which was taken following the view

already taken in similar matters by its Division Benches.

As the sustainability of the said view of the High Court is

under challenge in the present appeals, the question

adverted to at the outset is required to be considered and

answered for rendering a proper decision in them.

"(vii). In case of goods seized etc. by customs, the

warehousing/storage charges shall be calculated by M/s. MM

for the period due minus the charges for the period of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 26 of 31

detention at the instance of

55. The provision in sub-section (1) of section 45, which

bears on the question required to be considered, reads thus

"45. Restrictions on custody and removed of

imported goods. (1) Save as otherwise

provided in any law for the time being in

force, all imported goods unloaded in a

customs area shall remain in the custody of

such person as may be approved by the

Collector of Customs until they are cleared

for home consumption or are warehoused or are

transhipped in accordance with the provisions

of Chapter VII."

56. As becomes clear from the above

sub-section all imported goods unloaded in customs areas

shall remain in custody of such person as may be approved by

the Collector of Customs until they arc cleared for the

purposes indicated therein. Therefore, under the above

provision the Collector of Customs is the person who is

empowered to approve the persons that should be in custody

of goods unloaded in customs areas. The Collector of

Customs, New Delhi who has issued Notice No. 30/86, has by

clause (d) of that Notice approved the IAAI as the custodian

of cargo to be stored in Cargo Terminal, New International

Terminal Complex - "the CTNITC", obviously exercising the

powers conferred upon him by sub-section (1) of Section 45

of the Act. But, the Collector of Customs who has approved

the IAAI as custodian of the cargo to be stored in its

CTNITC by the said clause (d) requires IAAI to comply with

condition (vii) imposed against it thereunder, thus:

"(vii). In case of goods seized etc. by

customs, the warehousing/storage charges shall

be calculated by M/s. MM

for the period due minus the charges for the

period of detention at the instance of

No doubt, as to what obligations should the custodian-- the

IAAI approved by the Collector of Customs under sub-section

(1) of section 45 by clause (d) of the said public notice,

perform, are specified in sub-section (2) thereof which

reads:

"45. Restrictions on custody and removal of

imported goods.--

(1) ..............

(2) The person having custody of any

485

imported goods in a customs area, whether

under the provisions of sub-section (1) or

under any law for the time being in force, -

(a) shall keep a record of such goods and

send a copy thereof to the proper officer;

(b) shall not permit such goods to be

removed from the customs area or otherwise

dealt with, except under and in accordance

with the permission in writing of the proper

officer."

57.But, the said sub-section (2) of Section 45 as is seen

therefrom, does not in any way impose an obligation on the

custodian approved under sub-section (1) thereof not to

collect charges leviable on the consignee by it according to

Rules or Regulations made by the Statute creating it for

keeping the imported goods in its custody.

58.That is why, it is claimed on behalf of the IAAI, the

appellant in the appeals that condition (vii) of clause (d)

of the said public Notice has been imposed by the Collector

of Customs without any power or authority conferred upon him

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 27 of 31

in that regard under any provision of the Act or its Rules

or its Regulations and hence unenforceable.

59.Learned counsel appearing for respondents were not able

to invite Court's attention to any provision either in the

Actor the Rules or the Regulations made thereunder which

empowered the Collector of Customs to impose by issue of

public Notice the above condition (vii) in clause (d)

thereof denying the IAAI which is approved as the custodian

of imported goods in Customs area, the right to collect the

charges from the consignee for keeping his imported goods

detained or seized by the Customs authorities nor my effort

to find any provision in the Act or its Rules or its

Regulations enabled me to find any provision which conferred

such power of imposing such condition upon the IAAI merely

because it is approved as the custodian of imported goods on

behalf of Customs Department. However, as to whether the

Parliament in enacting the Act intended that custodians to

be approved thereunder to keep the goods coming into customs

areas should relieve the owners (consignees) of such goods

of their liability for payment. of charges for such keeping

or otherwise could be gathered from the provision in section

63 of the Act, it is excerpted

"63. Payment of rent and warehouse charges. -

(1) 'The owner of any warehoused goods shall

pay to the warehouse keeper rent and warehouse

charges at the rates fixed under any law fo

r

the time being in force -or where no rates arc

so fixed, at such rates as may be fixed by the

Collector of Customs.

(2). If any rent or warehouse charges are not

paid within ten days from the date when they

became due, the warehousekeeper may, after

notice to the owner of the warehoused goods

and with the permission of the proper officer

cause to be sold (any transfer of the

warehoused goods notwithstanding) such

sufficient portion of the goods as the

warehouse-keeper may select.

60.When sub-section (1) above, does not relieve the owner of

any warehoused goods to pay to the warehouse-keeper rent and

warehouse charges at the rates fixed under any law for the

time being in force or where no rates arc so fixed, at such

486

rates as may be fixed by the Collector of Customs, although

such goods were kept by the warehouse-keeper for and on be-

half of the Customs Department and again when subsection (2)

enables the warehouse-keeper even to sell the warehouse

goods with the permission of the proper officer for unpaid

rent or warehouse charges, it is difficult to think that

there could be any provision in the Act or the Rules or the

Regulations made thereunder which confers on the Collector

of Customs power to direct the release of the goods kept in

the custody, as custodian of the Customs Department without

demanding payment of keeping charges from the consignee of

goods because of detention certificates issued in that

regard by the Customs authorities, inasmuch as, the said

provision shows the legislative intendment to' be to the

contrary.

61. In fact, when the IAAI in exercise of its powers

conferred by sub-section (1) of section 37 of the

International Airports Authority Act, 1971 - "the IAA Act",

and with the prior approval of the Central Government have

made regulations called the International Airport Authority

(Storage and Preservation of Goods) Regulations. 1980,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 28 of 31

regulating levy of charges or surcharges, scale of charges

and waiver of charges payable by the owner in case of

warehoused goods with the IAAI, those Regulations not only

do not come in conflict with the Act or its Regulations or

its Rules but conform to the requirement of the provision of

section 63 of the Act. When in pursuance of the said

Regulations policy directions are issued by the IAAI in

supersession of earlier instructions on the subject of

waiver of demurrage charges on production of detention

certificate issued by the Customs authorities

showing that detention of goods was for no fault of

consignee, it can be safely concluded that any directions

issued by customs Collector contrary to such Regulations and

the policy directions as those issued without authority in

law are ultra vires his powers. Therefore, I have no

hesitation in holding that the aforesaid condition (vii) in

clause (d) of the Customs Public Notice No. 30/86 directing

the IAAI not to collect the custody charges in respect of

the goods for which detention certificates may be issued by

the Collector of Customs or his delegatee, has to be

regarded as a condition imposed by the Collector of Customs

without being conferred any power in that regard either in

the Act or the Rules or the Regulations. If condition (vii)

of clause (d) of the Customs Public Notice No.30/86 is

regarded as that imposed by the Collector of Customs without

authority of law, it having been imposed ultra vires his

powers under the Act or Rules or Regulations no Court can

direct the IAAI to release the goods of the consignee

without collecting from him demurrage charges levied

according to its Regulations in respect of the goods, which

it had taken care of as the custodian merely because there

was a detention certificate of the Collector of Customs or

his delegates issued to the IAAI which had been approved as

the custodian of such goods by the Collector of Customs

under sub-section (1) of section 45 of the Act.

62.As the above view expressed by me on condition (vii)

under clause (d) of the Customs Public Notice No. 30/86

receives considerable support from the decisions of this

Court, where this Court while dealing with the liability of

consignees of imported goods or cargo to pay demurrage

charges levied in respect of them according to

487

scales of charges prescribed under Rules or Regulations made

under respective Ports Acts because of their non-clearance

from Customs areas in Ports, notwithstanding the fact that

concerned port Authority was the approved Custodian under

the Customs Act, 1962 and the fact that Customs Collector or

his delegate had issued detention certificates which made it

clear that the goods were detained for no fault of the

consignee and the goods shall be released without collection

of demurrage charges, they shall be adverted to presently.

63.Trustees of the Port of Madras v. M/s. Aminchand

Pyarelal & Ors. [(1976) 1 SCR 721] is the first of such

decisions of this Court. That was a case, where imported

goods of M/s. Aminchand Pyarelal 'the importer' were not

cleared from the customs area of the Port of Madras by the

Customs authorities before the expiry of free days. The

goods, therefore, continued to be in the custody of Trustees

of the Port of Madras - "the Board", as approved custodian

of such goods on behalf of the Customs authorities.

However, a detention certificate was issued to the importer

by the Customs authorities stating that the detention of the

imported goods beyond the free days was not due to fault or

negligence on the part of the importer. The Board, based on

the detention certificate waived demurrage charges payable

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 29 of 31

by the importer amounting to Rs.3,20,951/-, and released the

goods to the importer. Later, when the Customs authorities

owned their mistake of issuing the detention certificate

wrongly, the Board,filed a suit against the importer, the

Union of India and the Customs authorities for recovery of

the demurrage charges which had not been recovered on

account of the detention certificate. But, that suit was

resisted by the importer on the plea that the delay in

clearing the goods was due to fault on the part of the

Customs authorities and hence there was no legal obligation

on its part to pay the demurrage charges. The suit was

dismissed by the High Court accepting the plea of the im-

porter. When the Board brought up the matter before this

Court in appeal, the provisions of the Madras Port Trust Act

and the scale of rates fixed by the Board with the approval

of the Central Government pursuant to the provisions of the

Act having been thoroughly examined, it was held that the

High Court was in error in its conclusion that the Board had

no power to charge demurrage where goods were not removed

from its premises not due to the fault or negligence on the

part of the importer, but due to fault of the Customs

authorities.

64. Board of Trustees of the Port of Bombay v. Indian Goods

Supplying Co., [(1977) 3 SCR 343] is the second of such

decisions of this Court, where this Court examined the

sustainability of scales of rates of demurrage of goods

framed by the Board of Trustees of the Port of Bombay "the

Board", the provisions of which were in pari materia with

the Madras Port Trust Act. This Court held that the case it

was examining being in all force with the case of M/s.

Aminchand Pyare Lal (supra) it had to be concluded on the

basis of the decision rendered therein. Consequently, it

reversed the judgment of the High Court in appeal by holding

that the High Court was in error in its view that the

importer of the goods could not be held responsible for any

delay not attributable to his own fault and that the

demurrage under the statute could never be imposed as long

as goods were detained for the purpose of

488

Import Trade Control Regulations.

65. Board of Trustees of the Port of Bombay v. Jai Hind Oil

Mills Co. & Ors. [(1987) 1 SCR 932] is the third of such

decisions of this Court. There, the provisions of the Major

Port Trust Act, 1963, which were under examination of this

Court having been found to be in pari materia with the

provisions of the Ports Act considered by this Court in M/s.

Aminchand Pyare Lal (supra) and Indian Goods Supplying Co.

(supra), by following the decisions rendered therein, it was

held thus :

The power of a Port Trust to fix rates of

demurrage and to recover the same from an

importer or exporter (although the question of

an exporter paying demurrage arises rarely)

under law and to show concession as regards

demurrage charges in certain specified cases

is recognised by the Court in the Trustees of

the Port of Madras V. M/s. Aminchand Pyarelal

& Others, (1976) 1 S.C.R. 721 and in the Board

of Trustees of the Port of Bombay v. Indian

Goods Supplying Co., (1977) 3 S.C.R. 343.

These decisions arc no doubt based on the

relevant laws which were in force at the

material time. But the decisions are still

relevant insofar as cases arising under the

Act because the Act also contains provisions

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 30 of 31

more or less similar to the statutory

provisions considered in the said decisions.

Demurrage charges are levied in order to

ensure quick clearance of the cargo from the

harbour. They are always fixed in such a way

that they would make it unprofitable for

importers to use the port premises as a

warehouse. It is necessary to do so because

congestion in the ports affects the free move

-

ment of ships and the loading and unloading

operations. As stated earlier, the Port Trust

shows concession to the party concerned in

certain types of cases.

66. From the above decisions of this Court it becomes

clear that an authority created under a statute even if is

the custodian of the imported goods because of the

provisions of the Customs Act, 1961, would be entitled to

charge demurrages for the imported goods in its custody and

make the importer or consignee liable for the same even for

periods during which he/it was unable to clear the goods

from the Customs area, due to fault on the part of the

Customs authorities or of other authorities who might have

issued detention certificates owning such fault.

67. Thus, the above decisions of this Court which uphold

the power of Ports Trusts created under Ports Act to levy

and collect demurrage charges for goods they keep as

Custodians for Customs Department from the consignees

notwithstanding the detention certificates issued by the

Customs Department clearly support the view I have taken

that the IAAI, an authority constituted under the

International Airports Authority Act, 1971, when is entitled

to collect charges for keeping custody of the imported

goods by regulations made thereunder and according to its

policy, the Collector of Customs or his delegates could not

direct the IAAI by issuance of a detention certificate to

release the goods of the importer without collection of the

charges liable to be paid in respect thereof, inasmuch as

the Collector of Customs or his delegates has not been

empowered under the provisions of the Act or its Rules or

its Regulations to direct release of the imported goods

without collection of keeping charges, for the keeping of

which by the IAAI, charges are to be paid under the Rules

made under the International Airports Authority Act, 1971.

68.Since Central Warehousing Corporation created under

Warehousing Corpo-

489

ration Act, 1962 stands in the same footing as that of the

IAAI created under the International Airports Authority Act,

1971 in the matter of keeping of goods as custodians on

behalf of the Customs Department and the entitlement of both

of them under the respective Acts, Rules and Regulations to

levy and collect demurrage charges from the owners or

consignees of such goods, not being different, the view have

taken on the entitlement of IAAI to levy and collect charges

or demurrage charges for keeping goods by it as custodian on

behalf of the Customs Department, equally holds good for

Central Warehousing Corporation.

69. Therefore, my answer to the question considered by

me is in the negative i.e. the Collector of Customs

empowered under subsection (1) of section 45 of the Customs

Act, 1962 to approve persons to be custodians of imported

goods in customs areas until they are cleared as provided

for therein, while approving the International Airports

Authority of India to be the custodian of such imported

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 31 of 31

goods in the customs area of Indira Gandhi International

Airport, New Delhi and Central Warehousing Corporation to be

the custodians of such imported goods received at the

customs area the Container Freight Station, CWC Complex,

Pragati Maidan, New Delhi, by issue of public notice or

otherwise in that regard,if by such notice or otherwise

directs such custodians not to collect custody charges from

the consignees of such goods - "the Cargo", because of

detention certificates issued by him or his delegates, will

not be acting within the powers conferred upon him under the

Act, its Rules or its Regulations and hence directions given

by the Customs Collector or his delegatees to release the

goods of importers or consignees without collecting

demurrage charges from them cannot be enforced by Courts

either, against IAAI or CWC.

70. The view I have so taken makes the judgments of High

Court of Delhi under appeals unsustainable, for the view of

its earlier decisions in M/s. Trishul Impex case (supra)

and Grand Slam case (supra) which it has followed, also

cannot be sustained.

Civil Appeal No. 422 7 of 1992

71. The Central Warehousing Corporation established under

the provisions of the Warehousing Corporation Act, 1962 is a

creature of statute as is the IAAI under the International

Airports Authority Act, 1971. The entitlement of the CWC to

recover demurrages for the goods of which it becomes the

custodian under the provisions of the Act cannot be

different from that of the IAAI, as indicated in the earlier

judgment. If that be so, what I have said in the aforesaid

appeals of the IAAI would equally apply to the CWC also.

The High Court having directed the Customs authorities to

issue detention certificates in respect of the goods of

which the CWC was the owner has relieved the importer - re-

spondent-1 in the appeal from his liability to pay demurrage

charges. Because of the view I have taken in my judgment in

the earlier appeals it has to be held that the High Court's

direction relieving respondent-1 from his liability to pay

demurrage charges cannot be sustained.

72. In the result, Civil Appeal Nos. 798 of 1992, 3971 of

1992 and 4227 of 1992 are allowed. The judgments of the

High Court under appeals are set aside. The Writ

490

Petitions filed by respondents in each of the cases before

the High Court are dismissed. In the facts of the present

appeals, there shall be no order as to costs.

ORDER

73. For reasons given by us in our separate judgments (R.M.

Sahai, J. for dismissal of the appeals whereas S.P. Bharucha

and N. Venkatachala, JJ. for allowing the appeals) the

appeals succeed and are allowed. The orders passed by the

High Court are set aside. But in the circumstances of the

case, there shall be no order as to costs.