SHIPPING CORPN. OF INDIA LTD. ETC. ETC. versus C.L. JAIN WOOLLEN MILLS AND ORS.

Citation: [2001] 2 S.C.R. 1080 · Decided: 10-04-2001 · Supreme Court of India · Bench: G.B. PATTANAIK
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Judgment (excerpt)

A 
SHIPPING CORPN. OF INDIA LTD. ETC. ETC. 
V. 
C.L. JAIN WOOLLEN MILLS AND ORS. 
APRIL 10, 2001 
B 
[G.B. PATIANAIK, S.N. PHUKAN AND B.N AGRAWAL, JJ.] 
c 
D 
E 
F 
G 
H 
Customs Act, 1962-Sections 45(2)(b) and 11l(d}-Confiscation of 
imported goods and issuance of detention onler by the Revenue-Liability of 
Demurrage charges to Carrier during the detention period-Dimction by 
High Court to Revenue to release the goods holding the detention illegal and 
payment of demurrage charges to Carrier-Onus of liability-Held, importer 
not liable for demurrage charges since the matter reached finality-Issuance 
of detention certificate by Revenue cannot nullify the right of lien by the 
Carrier over the goods for demurrage charges-Revenue liable to pay 
demurrage chmxes-Waiver of demurrage charges to be considered on filing 
an application before the Court-Indian Bill of Lading Act, 1956-Contract 
Act, 1872-Sections 170 and 171. 
The services of Shipping Corporation, was engaged by respondent to 
bring ployester filament yarn from Korea to India. The goods were "de-
ported at the port of Bombay and were later transhipped to Delhi, where it 
remained with Container Corporation of India. The Revenue directed 
confiscation of the goods under Section lll(d) of the Customs Act, 1962 on 
finding the import unauthorised. However, Revenue allowed the respond-
ent to redeem the goods on payment of Rs. 7 Iakhs together with penalty of 
Rs. 1 lakh under Section 112(a) of the Act. The respondent challenged the 
order of the Revenue before CEGAT, which was adjourned for amend-
ment of advance licence and DEEC Book, On a Writ Petition by the 
respondent, High Court quashed the orders of the Revenue and the CEGAT 
and directed the Revenue to release the goods forthwith. High Court held 
that the respondent is not liable to payment of demurrage charges on 
account of illegal action taken by the Revenue. An appeal by Revenue 
before this Court was dismissed. On failing to get the goods released, the 
respondent filed a contempt petition before the High Court, which was 
dismissed. On an application by the respondent, the High Court directed 
the appellant-Corporations to release the goods and held that the Revenue 
is liable to pay the demurrage charges to the Corporations and not the 
1080 
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SHIPPING CORPN OF INDIA LTD. I'. C.L. JAIN WOOLEN MILLS 
1081 
respondent. On failure to get the goods released, the respondent filed again 
A 
another contempt petition before the High Court. The High Court initi· 
ated contempt proceedings against the appellant-Corporations and the 
Revenue. Hence the appeals by the Corporations and the Revenue before 
the Court. The appeals were referred to larger Bench due to inconsistency 
between the decision of this Court in Union of India v. Sanjeev Woollen 
B 
Mills, [1998] 9 SCC 647 and International Airports Autho1ity of India & Ors. 
v. Grand Slam International & Ors., [1995] 3 SCC 151. The Court, by an 
interim order, directed the release of the goods subject to the ultimate 
decision in these appeals. 
Appellant-Corporations contended that a right of lien over the goods c 
is available for recovery of demurrage charges as per the provisions of the 
Bills of Lading Act, 1956 and the terms and conditions of the contract 
entered into with the respondent; that the right of lien is also available 
under the provisions of Contract Act, 1872 and such right cannot be taken 
away hy issuance of a detention certificate by the Revenue under the 
D 
Customs Act, 1962; and that the order of the High Court is not binding as 
they were nolmade parties to the proceedings. 
Revenue contended that it is not liable to pay the demurrage charges 
merely on the ground that the detention of goods by them was found to be 
illegal by the High Court; that on issuance of a detention certificate, the 
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Corporations are not entitled to demurrage charge irrespectiv~ of the 
terms and conditions of the Contract as per Section 45(2)(b) of the Act. 
Disposing of the appeals, the Court 
HELD : 1. In view of the specific directions of the High Court in 
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the Writ Petition filed by the respondent and which has subsequently 
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reached finality on the dismissal of special leave petition filed hy the 
i 
Revenue, the liability of the respondent to pay the demurrage/detention 
charges ceases. [1087-C·D] 
2.1. The relationship between the respondent and the appellant, in 
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whose favour the Bill of Lading has been consigned and w
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