TRUSTEES OF THE PORT OF MADRAS versus M/S. AMINCHAND PYARELAL & ORS .

Citation: [1976] 1 S.C.R. 721 · Decided: 09-09-1975 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
..- r 
.. 
• 
B 
> ; 
c 
• 
D 
E 
F 
• 
G 
• 
H 
721 
TRUSTEES OF THE PORT OF MADRAS 
v. 
MIS. AMINCHAND PYARELAL & ORS . 
September 9, 1975 
[A. N. RAY, C.J., K. K. MATHEW ANDY. V. CHANDRACHUD, JJ.] 
Madras Port Trust Act 1905-Sec. 42, 43, 43A-Port Trust 
Rules 13-
Bye-law-Nature of--:-De1nurrage-Unreasona]Jle-Cusio111s Act Secs. 
17(3) & 
17(4). 
On 10-4-1968, a steamer arrived at the Madras port and landed inter alia a 
consignment of 202 bundles of black plain sheets of various sizes. The appel-
lanls received the goods and stored them in the transit sheds. The goods were 
imported by- the, first respondent. under an authorisation issued by the State 
Trading Corporation of India which held a licence to import the goods from 
IIungary. The. clearing agents of the first respondent filed a bill of entry with 
the Collector of Customs. But, the Customs authorities detained the goods 
as the spe1;ifications in the import licence did not tally with the description of 
the imported goods. The 
Customs 
Authorities then issued a show cause 
notice ro 1he 1st respondent and afer considering his explanation passed an 
order confiscating the goods. 
The first respondent preferred an appeal against that order to the Board· 
which allowed the appeal. 
On; an application of respondent No. 1 the CustGms 
Autborities issued a certificate stating that the goods were detained by the 
Customs. Authorities from 24~4-1%3 to 21-8-1964 for examination under sections 
170) and 17(4) of the Customs Act, 1962 other than in the ordinary pro· 
cess. of appraisement and that the detention was due to no fault or negligence 
on the part of the respondent. Acting on this certificate, the appellants waived-
the demurrage for the period covered by the certificate. As a result of the 
said certificate, the appellant charged respondent No. 1, Rs. 1963/ - instead of 
Rs.. 3,20,951/- by way of demurrag_e. 
Thereafter, the respondent No. 1 clear-
ed the consignment. 
In January, 1965, the appellants wrote a letter to the Customs Authorities 
stating that the certificate was issued erroneously and that the C'ustorns Autho-
ritie~ should reconsider the· matter. -In April, 1965, the Customs Authorities 
owned the mistake that the certificate was incorrect as the goods were detained 
in order to ascertain whether the Import Trade Control formalities were cOm.1 
plied with and not for examination and assessment of duty under 
Sections 
17(3) and 17(4) of the Customs Act. 
The appellants brought thei present suit against respondent No. J, and the 
Union of India and Customs Authorities to recover the balance of demurrage 
amounting to1 about Rs. 3 La95. The· first respondent disputed its liability 
to, 
pay the demurrage on the ground that it could not be penalised either for the 
delay caused by the Customs Authorities in clearing the goods or in the issuance 
by them of a wrong certificate. 
The first respondent also contended that the 
~cale of charges in the Port Trust Regulati'ons under the heading Demurrage 
was void and ultra vires both for the reason that it was unreas-onab!e and be-
cause the scale· of charges was not within the authority of the appellants. 
The High Court dismissed the suit for the following reasons :-
( 1) The Scale of rates fixed by the Board is in the nature of bye-
laws. 
(2) v·iewed as a bye-law Rule 13(b) under which the Board can charge-
demurrage for the period during which the goods are detained for 
no fault or negligence or the importer or his agent, is unreasonable· 
and therefore void. 
(3) In princ.iple, there can be no distinction between cases falling under 
clause (a) and those falling under clause (b) of Rule 
13~ and if 
722 
SUPREME COURT REPORTS 
(1976] 1 S.C.R. 
no demurrage is leviable in respect of cases falling ·within clause 
(a) no den1urrage could be charged in respect of cases fallinrr within 
clause (b). The distinction made by the Board between fhe two 
kinds of cases was therefore arbitrary and unreasonable. 
( 4) 'Demurrage', being a charge for wilful f'ailure to remove the goods, 
can be levied only if the failure to remove the goods is due to the 
fault or negligence of the importer or his agent. 
(5) Having regard to this well accepted meaning of the worJ \iernur-
rage', the authority given to the Board by section 42. of the Act 
to fran1e the scale of rates can be exercised only for the purpojf· 
of lev,ying charges where the. importer was not prevented by any 
lawful authority from clearin

Excerpt shown. Read the full judgment & AI analysis in Lexace.