M/s. Caravel Shipping Services (P) Ltdrep. By its Director Saju Chackohaving office v. Shamim Darya Arya for Liberty Amadeus House Floral Street Covent Gareon London

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 30-09-2011CORAM :THE HONOURABLE MRS. JUSTICE R. BANUMATHIandTHE HONOURABLE MR. JUSTICE B. RAJENDRANO.S.A. Nos. 306, 307 and 308 of 2008andM.P. Nos. 1 to 1 of 2008M/s. Caravel Shipping Services (P) Ltdrep. By its Director Saju Chackohaving office at No.484, Pantheon PlazaPantheon Road, Egmore.. Appellant in all theChennai – 600 008 three appealsVersus1. Shamim Darya Arya for Liberty Amadeus House Floral Street Covent Gareon London WCZE 9DP UK2. Indus Resources (P) Ltd 526-527, Vyapar Bhavan 49, P.D'Mello Road Carnac Bundar, Mumbai – 400 0093. Green Land Sea Multi Cargo Shipping Agencies 11 & 12, Morabia Commercial Centre Plot No.44, Sector 9-A, Ghandhidham Kutch 370 2014. Mundhra Container Freight Station (P) Ltd. Bharath C.F.S. Zone-I Gujarat Adani Port Limited.. Respondents in all the Mundra, Kutch – 370 421 three appeals Appeals filed under Order 36 Rule 11 of O.S. Rules read withClause 15 of Letters Patent against the common Order of this courtdated 30.06.2008 made in O.A. No. 320 of 2008, Application Nos. 1447and 1448 of 2008 on the file of this Court.For Appellant :Mr. T.V. Ramanujun, Senior Counsel for Mr. M. NarayanasamyFor Respondent :No appearance for RR1 to 3 Mr. P. Giridharan for R4 for M/s. V. Aravamudhan https://hcservices.ecourts.gov.in/hcservices/ COMMON JUDGMENTB. RAJENDRAN, J These Original Side appeals are filed challenging the commonorder dated 30.06.2008 passed by the learned single Judge dismissingthe O.A. No. 320 of 2008 as well as the Application Nos. 1447 and1448 of 2008 filed by the appellant herein.2.(i) According to the appellant, the first respondent isthe shipper. The second respondent is the importer of the goodsshipped by the first respondent. The third respondent is theclearing and forwarding agent. The fourth respondent namely MundharaContainer Freight Station is a garnishee, according to the appellant.According to the appellant, the second respondent approached them atChennai and requested to arrange 32 Nos. of 40 feet containers forloading coal into those containers from Bandar Abbas in Iran toMundra (Gujarat), India. The bill of lading were also raised even inthe year 2005. On 27.09.2005, consignments were also loaded in thevessel as per the Bill of lading from the Port of Bandar Abbas andthe cargos were unloaded at the Port of Mundra on 30.09.2005.According to the appellant, the consignment was not claimed by theconsignee in spite of reminders sent. Therefore, as per Section 48 ofthe Customs Act, 1962, the fourth respondent decided to sell thegoods after obtaining approval from the consignee, the firstrespondent. Subsequently, the goods were auctioned with thepermission of the customs department. According to the appellant,the actual amount received in the auction sale was not intimated ornot made known to the appellant, excepting the fact that the goodswere sold in public auction. (ii) According to the appellant, since they are the ownersof the 32 containers, retaining the containers is illegal especiallyafter the goods in the containers were auctioned by the fourthrespondent and the proceeds realised. The fourth respondent did notreturn the containers after de-stuffing the goods, on the other hand,intended to sell the containers itself under the pretext ofrecovering the amount due and payable to them towards demurragecharges, which is arbitrary and illegal. According to the appellant,the fourth respondent has violated Section 150 of the Customs Actinasmuch as, whenever there is a sale in respect of any goods, as perthe Customs Act, the amount should have been appropriatedproportionally by the fourth respondent and therefore the containerought to have been released to the appellant. In any event,detention of the containers by the fourth respondent is arbitrary anduncalled for.(iii) The appellant would further contend that they haveonly leased the containers to the second respondent for transportingthe goods of the first respondent, for which, the third respondentacted as clearing and forwarding agent. The moment the customsauthorities de-stuffed the goods from the containers, as owner of thecontainers, the appellant ought to have been given the custody of thecontainers. Further, if at all there is any dues to the customauthorities or the fourth respondent, they can have lien only over https://hcservices.ecourts.gov.in/hcservices/ the goods and not the containers used for transporting the goods. Asper the contract between the appellant, first respondent and secondrespondent, the matter has to be referred to an arbitrator andtherefore, before invoking the arbitration proceedings, as the verycontainers are sought to be auctioned by the fourth respondent, whichare being kept in the yards of the fourth respondent without any careand the containers also suffered huge damages, they have filed theapplications O.A. Nos. 320, Application Nos. 1447 and 1448 of 2008before the learned single Judge. O.A. No. 320 of 2008 was filedpraying for grant of an interim injunction restraining therespondents 1 and 2 or any one claiming under them or on their behalffrom in any way alienating or encumbering the above said 32 Nos. 40feet empty containers lying in the custody of the fourth respondentmorefully described in the Bill of lading dated 27.09.2005.Application No. 1447 of 2008 was filed praying to issue a prohibitoryorder, prohibiting the fourth respondent/garnishee from parting withthe 32 empty containers lying in their custody to any one elsepending the arbitration proceedings. O.A.No. 1448 of 2008 has beenfiled praying to appoint an advocate commissioner to go and take aninventory of the above said 32 Nos. 40 feet empty containers, whichare in the custody of the fourth respondent, morefully described inthe Bill of lading dated 27.09.2005 and note down its existingcondition and take custody of the same and hand over the same to theappellant. (iv) According to the appellant, on 11.04.2008, as per theorders passed by this Court, the advocate commissioner inspected thecontainers and submitted his report. As per the report, out of the32 containers, 30 containers are in a damaged condition. Inspite ofsuch report of the advocate commissioner, the learned single Judge,without any valid reasons, vacated the interim order originallygranted and dismissed all the aforesaid applications filed bytheappellant.3. Before the learned single Judge, the fourth respondentalone contested the applications and the other respondents did notparticipate in the proceedings. Even before us, the fourthrespondent alone filed counter in these three appeals on the samelines and contested the appeals. The respondents 1 to 3 are notrepresented by any one even though they were served. 4.(i) According to the fourth respondent, this Court has nojurisdiction to entertain the applications filed by the appellant asno part of the cause of action has arisen within the jurisdiction ofthis Court. According to the fourth respondent, there was a due ofmore than Rs.2 crores, which is payable by the appellant as well asthe respondents 1 to 3 towards container storage incidental charges.The goods were in the container freight station of the fourthrespondent for more than two years for which the appellant and therespondents 1 to 3 are liable to pay demurrage charges. As far asinvocation of the clause for arbitration contained in the agreementbetween the parties, the fourth respondent would contend that theyare neither a signatory to the agreement nor party to the agreementbetween the appellant and the respondents 1 to 3 and therefore, theprovisions of the Arbitration and Conciliation Act cannot be pressedinto service as against the fourth respondent. The fourth respondent https://hcservices.ecourts.gov.in/hcservices/ would mainly contend that they are not garnishee, as alleged by theappellant and they are only an extended arm of the Port Trust andthey enjoy all the liens as enjoyed by the Port Trust under Section 2and Section 59 of the Major Port Trusts Act. The fourth respondent isonly the custodian of the goods and as per the provisions of theMajor Port Trust Act, in respect of the dues payable to the PortTrust, the authorities have lien over the containers and the cargo,subject to other obligations under the Customs Act. The cargo itselfwas brought for auction only after obtaining permission from thecustoms authorities and the proceeds were paid to the customsauthorities towards duty under the provisions of the Customs Act.Further, the expression 'goods' defined under Section 2 (2) of theCustoms Act, will also include the containers inasmuch as the goodsincludes all movable properties. The fourth respondent has got lienand right to retain and sell the property namely the containers underSection 51 of the Major Port Trusts Act and such lien cannot becalled in question by the appellant.(ii) According to the fourth respondent, they are thebailee for rward and has a right of general lien over the goodsbailed. Therefore, the fourth respondent has a right even underSection 151, 152 and 161 and 171 of the Indian Contract Act. Thefailure on the part of the importer to clear the goods and re-exportthe container cannot defeat the rights of the Port Trust or itsextended arm, being the fourth respondent, for recovering the rentalcharges due to them. Therefore, the fourth respondent would contendthat the learned single is justified in dismissing the applicationsand prayed for dismissal of the appeals.5. We have heard the learned Senior counsel for the appellantas well as the learned counsel for the fourth respondent. 6. The contention of the appellant is that they are the ownersof the containers, gave the containers on hire to the secondrespondent for shipment of the goods of the shipper namely the firstrespondent. Therefore, the moment the goods de-stuffed into thecontainers were sold and the proceeds appropriated by the customsauthorities towards non-payment ofcustoms duty, the appellant isautomatically entitled to get back the containers. As per theagreement between the appellant and the respondents 1 to 3, it is theduty of the shipper to re-ship the empty containers after de-stuffingthe goods. In the process, if the parties have not cleared the goodsor not paid the dues, definitely the customs authorities have got alien over the goods, but that lien would be only in respect of thegoods, which were sent through the containers and such lien cannot beextended or stretched to retain the containers. The containers werelying in the private ware house of the fourth respondent, a bondedware house authorised by the customs authorities. The fourthrespondent, being an extended arm of the Port Trust for keeping thecontainers, cannot have any special right to detainthe containerswhen the containers cannot be called or termed as 'goods' within themeaning of section 2 (2) of the Customs Act. Therefore, the fourthrespondent cannot have any lien over the containers to realise oradjust the customs duty payable by the importers or exporters,especially when the goods in the containers were de-stuffed, sold inpublic auction and the proceeds were realised. According to the https://hcservices.ecourts.gov.in/hcservices/ learned Senior Counsel for the appellant, the detention of thecontainers for over a period of two years by the fourth respondent,after sale of the goods is improper. Furthermore, as there is aclause for arbitration in the agreement entered into between theappellant and the respondents 1 to 3, the fourth respondent, eventhough is not a party to the agreement, inasmuch as the containersare in their custody, which is the subject matter of the arbitrationproceedings, the relief sought for in the applications, pending adecision in the application under Section 9 of the Arbitration andConciliation Act, ought to have been granted by the learned singleJudge. Though the learned single Judge originally appointed anadvocate commissioner and a report was also filed by the advocatecommissioner stating that the containers are in a very bad conditionand not maintained properly by the fourth respondent, the dismissalof the applications by the learned single Judge has highly prejudicedthe appellants. The learned single Judge failed to consider theirreparable hardship and injury that may be sustained by theappellant due to non-release of the containers. The learned seniorcounsel for the appellant also brought to the notice of this Courtthat already the appellant has invoked the clause contained in theagreement for appointment of an arbitrator by filing O.P. No. 83 of2009 and the matter is still pending for appointment of anarbitrator. Section 171 of the Contract Act will not be applicableto the facts of the case in hand since the fourth respondent cannotbe construed as a bailor. In this context, the learned Seniorcounsel for the appellant relied on the decision of the HonourableSupreme Court reported in (Sun Export Corporation and another vs.Board of Trustees of the Port of Bombay) AIR 1998 SC 92 as well asthe decision of the Division Bench of the Calcutta High Courtreported in (Imsa Shipping Agency Private Limited vs. Commissioner ofCustoms) (2002 (84) ECC 581. The learned Senior counsel for theappellant relied on the decision of the Supreme Court referred toabove for the proposition that the goods are not available to thePort Trust for appropriation towards their dues namely demurragecharges. It was further held that even in the case of confiscatedgoods, the sale price could be adjusted towards demurrage chargescannot be accepted as the goods once confiscated by the customsauthority, it was not available for the Port Trust for appropriationof their dues. 7. The learned Senior counsel for the appellant also broughtto the notice of this Court that in the judgment of the DivisionBench of the Calcutta High Court mentioned supra, it was held thatgoods, as defined under Section 2 (2) of the Customs Act is differentfrom 'containers' and the containers cannot be construed as goods.Further, the containers cannot be confiscated even if it containssmuggled goods. Therefore, according to the learned Senior counselfor the appellant, the non-release of the containers by the fourthrespondent for a longer period is unjustified, which was not properlyconsidered by the learned single Judge.8. On the contrary, the learned counsel appearing for thefourth respondent mainly contended that the words 'goods' mentionedin the Customs Act would not mean not only the goods imported, butalso include the containers as it is clearly stated therein that thegoods includes all movable property. Further, the conduct of the https://hcservices.ecourts.gov.in/hcservices/ appellant is not that of a owner of the containers because the goodsitself have come to India under the bond of the apellant. This waspointed out by the learned counsel for the fourth respondent byrelying on an e-mail sent by the appellant to the second respondent,a copy of which was also marked to the first respondent. The e-mailreads as follows:-"Please arrange to send your No Objectionmentioning reason to abandon the cargo at Mundraenable to proceed for further steps to de-stuff/auction the cargo as per the Indian CustomsLaws to atleast recover/minimise our losses.Please note that 32 X 40' FCL arrived underMr. Devariya's Bond and 08X40' CFL arrived underCaravel bond and you are requested to send NOC toboth the parties. Your co-operation is awaiting." 9. From the e-mail, it is very clear that the goods reachedIndia under the bond of Devariya and theappellant themselves. Ifreally the appellant's contention is that they have only rented outthe containers, it need not have reached India with the bond executedby the appellant. Therefore, the appellant acted more than as arental agent for the container. However, we are not expressing anyopinion in this application.10. Another e-mail sent by the appellant to the customsauthority is also pointed out by the learned counsel for the fourthrespondent. In that letter dated 27.11.2006, it is clearly statedthat the goods were brought to India through their agency M/s.Greenland Multi Cargo Shipping Agency namely the third respondentherein. It is further stated that after the goods landed, theconsignee refused the cargo and therefore, they wanted to de-stuffthe cargo to enable them to use the containers.11. These two letters sent through e-mail would clearlyindicate that the third respondent has also acted as an agent for theappellant, who is also the agent for the second respondent.Therefore, as rightly pointed out by the learned single Judge, therelationship between the appellant and the second respondent is onlythat of a persons hiring container cannot be accepted. 12. The learned counsel for the fourth respondent mainlycontended that the mainly contended that they are the extended arm ofthe Port Trust, which has its bonded ware house where goods are kept.They were maintaining and handling goods inspite of paucity of spaceand therefore, they are entitled for claiming demurrage charges formaintenance of the containers. In this case, admittedly, demurragecharges have not been paid. No doubt, it is true that the goods inthe containers were de-stuffed, sold in public auction and theproceeds were adjusted towards payment of customs duty. As far as thefourth respondent is concerned, they are entitled for the demurragecharges for the maintenance of the goods for a longer period. Thefourth respondent also filed a suit before the Civil Court at Bhuj, https://hcservices.ecourts.gov.in/hcservices/ Gujarat for recovery of the dues. Only to circumvent the suit, theappellant has filed the three applications before the learned singleJudge. 13. As far as the fourth respondent is concerned, they are notin any way governed by the agreement entered into between theappellant, respondents 1 to 3, which contains a clause forarbitration. The fourth respondent is neither a signatory to theapplication nor a party to the same, therefore, Section 9 of theArbitration and Conciliation Act, 1996 would not apply as against thefourth respondent. Since the application filed under Section 11 ofthe Arbitration and Conciliation Act is pending, these issues canonly be decided in the said application under Section 11 of theArbitration and Conciliation Act. If the appellant intends to raisetheir grievance, it is open to them to contest the suit said to havebeen filed by the fourth respondent before the Civil Court at Bhuj,Gujarat.14. The learned counsel appearing for the fourth respondentrelied on the decision of the Honourable Supreme Court reported in(The Board of Trustees of the Port of Bombay and others vs. M/s.Sriyanesh Knitters) AIR 1999 SC 2947 wherein it was held by theHonourable Supreme Court that the nature of lien with the Board isfor the dues regarding the imports. The Honourable Supreme Courtalso considered the scope of Section 59 and 61 of Major Port TrustAct and Section 171 of the Contract Act. It was held that Section 59and 61 of the Major Port Trust Act do not provide for general lien,what is provided in Section 59 is only a specific lien on specficcase and not a generl lien. At the same time, the Honourable SupremeCourt also held that under Section 171 of the Contract Act, generallien is provided and it would apply to the provisinos of Major PortTrust Act also. Therefore, applying the ratio laid down by theHonourable Supreme Court in the above decision, if there is anyamount due and payable, the same would be recovered as generalbalance of amount in respect of which the Port Trust has got a lienover the goods bailed out. In fact, the learned single Judge alsorelied on this judgment and came to the conclusion that Section 171of the Contract Act would apply to the facts and circumstance of thecase.15. The learned Senior counsel for the appellant would contendthat Section 171 of the Contract Act would not apply to the case asthe 'goods' will not mean and include the 'container' and thecontainer stands in a different footing. We are unable to acceptthis submission of the learned Senior counsel for the appellant. Inthis case, application under Section 9 of the Arbitration andConciliation Act, 1996 was filed in which the fourth respondent isnot a party. The fourth respondent also filed a Civil Suit forrecovery of the dues before the Civil Court at Bhuj, Gujarat and ifat all the appellant is aggrieved, it is open to the appellant tocontest the suit filed by the fourth respondent. Therefore, we arerefraining from making any observation in this regard, however, wegive liberty to the appellant to raise all the contentions in thesuit. Suffice it to say, as far as the fourth respondent isconcerned, being an extended arm of the Port Trust, is entitled to https://hcservices.ecourts.gov.in/hcservices/ seek for demurrage for the period during which the containers werekept in their custody.16. The learned single Judge also relied on the decision of theHonourable Supreme Court reported in (M/S. S.S. & Ship Management PvtLtd., vs. Board of Trustees) AIR 1989 Calcutta 212 and held thatafter the decision of the Honourable Supreme Court, on the scope ofSection 59 of the Major Port Trust Act, it is no longer res integrathat the right of the Port Trust under that Section is limited onlyto the specific goods. Therefore, the Port Trust and the fourthrespondent, as an extended arm, could proceed as against the specificgoods. The learned single Judge also rightly pointed out that thetripartite agreement between the appellant, respondents 1 to 3 cannotbind the statutory authorities, including the fourth respondent, whoextended the services on behalf of the Port Trust. Therefore, we donot find any reason to interfere with the reasoned order passed bythe learned single Judge. However, liberty is given to the appellantto raise all their contentions in the suit, said to have been filedby the fourth respondent before the Civil Court at Bhuj, GujaratState in which the appellant is also a party. 17. With the above observation, the Original Side Appeals aredismissed. No costs. Consequently, connected miscellaneouspetitions are closed. Sd/Deputy Registrar/true copy/Sub Asst.Registrar rshToThe Sub Assistant RegistrarOriginal Side, High Court, Madras.+ 1 cc to Mr.V. Aravamudhan, Advocate Sr.61420+ 1 cc to M.Narayanasamy, Sr.61222OSA Nos. 306 to 308 of 2008RAY(CO)EU 11.10.11