BOARD OF TRUSTEE OF THE PORT OF BOMBAY versus INDIAN GOODS SUPPLYING CO.

Citation: [1977] 3 S.C.R. 343 · Decided: 21-03-1977 · Supreme Court of India · Bench: M. HAMEEDULLAH BEG · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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343 
BOARD OF TRUSTEE OF THE PORT OF BOMBAY 
A 
v. 
INDIAN GOODS SUPPL YING CO. 
March 21, 1977 
[M. H. BEG, C.J., A. C. GUPTA AND P. S. KAILASAM, JJ.J 
D<'murrage-Demurrage claimed as per the scale framed under 3. 43A of the 
Bombay Port Trust Act (Act 6 of 1879) and approved by the Central Govern-
1nel}t-Whether the claim of demurrage by the Port Trust for the period du.ring 
whzch the goods were detained with it in respect of Import Trade Control forma-
lities is maintainable-Whether the D.O. letter dated 7-9-1952 fro1n the Central 
Government to the Port Trust, a direction under s. 43B (lA) of the Act. 
B 
The appellant, a statutory body framed the scales of rates of demurrage of 
C 
goods under section 43 (a) of the Bombay Port Trust Act 1879 
which 
wa~ 
sanctioned by the Central Government. 
Later on the Central Government in 
its D.0. letter dated 7th September 1952 addressed to the appellant expressed 
its view that it seems unreasonable to charge an importer any demurrage once 
it is accepted that clearance was delayed on account of the reruions beyond hi!! 
control. It also expressed its hope that the appellant would reconsider its deci-
!;ion and fall in line with the practice of the Calcutta and Madras Ports. Th• 
Port considered this letter and after taking into consideration the several circum-
stances suggested that demurrage may be levied on a graded scale and the Central 
D 
(Jovernment did not take any further action. In fact, the appellant has pre~­
cribed reduced demurrage levy from the expiry of the free days. 
In respect of the three consignments of Chinese newsprint imported by the 
respondent for home consumption in India, the appellant claimed demurrag• 
for the period from March 25, 1957 and as the amount wa~ not paid the goods 
were sofd in public auction. The respondent thereafter filed a suit for recovery 
of a sum of Rs. 24,950 /- and interest thereon from the appellant being the 
aggregate loss sustained by it. The appellant denied that liability and pleaded 
that it was, in law, entitled to collect the .demurrage levied on the respondent and 
as it failed to pay the demurrage, the appellant was entitled to sell the good~ 
by auction. 
The City Civil Court, Bombay decreed the suit with interest at 
6 per cent per annum from the date of the suit till judgment and thereafter ai 
4 per cent per annum and costs of the suit. The appeal preferred by the appel-
lant to the High Court failed and the decree stood confirmed. 
The decretal 
amount deposited in the High Court during the pendency of the appeal was with-
drawn by the respondent. 
Allowing the appeal by special leave the Court, 
HELD : (I) The High Court was in error in holding that the importer of tho 
goods cannot be held responsible for any delay not attributable to 
his own 
default and that dernurrage under s. 43(a) could never be imposed as long <i~ 
rhe goods were detained for the purpose of the operation of the Import Trade 
Control regulations. [350 El 
(2) The D.O. letter addressed by the Government of India should not 1'1 
construed as a direction calling upon the Board to modify any portion of the 
scale framed by the Port Trust. The language of the D.0. wonlJ i~dicate that 
the Government wanted the .Port Trust to consider the Governments proposal 
nnd nothing further. 
The Port Trust considered 1-he proposal and 
made 
it~ 
report. 
Section 43B(1A) has no application to thi~ case. 
[346 F-HJ 
G 
(3) It is no doubt true that before clearance i111 given by the Import Trade 
Control Authorities and the Customs Authoritie", the good:'! cannot be cleare<l 
H 
by the importer. Neither can the Port Tn1st deliver the goods without the con~ 
~ent of the Import Trade Control Authorities. Tak_ing into a~cou~t the hardship 
caused to the importer because of the delay certa1~ conccs~ions 1n demurrac:e 
rates are permitted. 
A~ the scales of rates are permitted by virtue of the statutory 
A 
B 
c 
D 
E 
F 
G 
H 
344 
SUPREME COURT REPORTS 
(1977] 3 S.C.K. 
powers conferred on the Board under s. 43 and as the rates have been approvctl 
by the Central Governme~t u!'der s. 43B, the rates have the force of law and 
cannot ~ questioned. Taking into account the hardship to the importers certaiu 
conces~1on has beeJI given bu~ the legality of the rate which are being levied 
accordmg lo law cannot also be questioned. [347 C-D; J;-F] 
Trustees of the Port of Madra. v. Mis Aminclwnd Pyare/a/ & Ors. [1976] 
-..... 
SCR 721, followe

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