Dismissed

Nova Pack Pvt. Ltd. v. Commissioner of Customs and 2 Ors.

Bombay HC30 Sept 2005WP/259/1997

Case brief

AI extract

What is this about?

The High Court declined to adjudicate the petitioner's claim for compensation for pilfered goods in a writ petition. The court held that internal factual disputes, contractual liability, and requirements for evidence preclude exercise of writ jurisdiction, directing the petitioner to seek redress through a civil suit or arbitration.

What did the court decide?

None; the court declined to pass orders on the amended prayer for compensation and left other remedies open.

Nova Pack Pvt. Ltd. Vs Commissioner of… — Pension and Retirement Benefits | Bombay HC (2005)

¶1

 ((-1-))

¶2

 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 ORDINARY ORIGINAL CIVIL JURISDICTION

¶3

 WRIT PETITION NO.259 OF 1997

¶4

 Nova Pack Private Limited,
 F-28, MIDC area, Murbad,
 District Thane. Petitioner

¶5

 versus

¶6

 1. Commissioner of Customs,
 Mumbai.

¶7

 2. Union of India,
 through Ministry of Finance,
 Department of Revenue, Central
 Board of Excise and Customs,
 New Delhi.

¶8

 3. Central Warehousing Corpn.
 Baldota Bhavan, M.Karve Road,
 Mumbai 400 020. Respondents

¶9

 Mr.A.M.Sethana i/by H.R.Shetty & Co. for
 petitioner.

¶10

 Mrs.S.V.Bharucha for respondents 1 and 2.

¶11

 Ms.S.I.Shah for respondent no.3.

¶12

 CORAM : DR.S.RADHAKRISHNAN AND
 S.C.DHARMADHIKARI, JJ.

¶13

 DATE : 30th September 2005

¶14

ORAL JUDGEMENT (PER : S.C.DHARMADHIKARI, J.) :-

¶15

 1. By this Writ Petition under Article 226 of
 Constitution of India the petitioner seeks a Writ
 of Mandamus ordering and directing respondent
 no.3 to forthwith release and deliver to the
 petitioner two consignments of Synthetic Yarn

¶16

 ((-2-))

¶17

 Waste and ordering and directing respondents 1
 and 2 to forthwith pay to respondent no.3
 Warehouse charges in respect of the goods.

¶18

 2. This was the prayer when this writ petition
 was instituted on 5th February 1997 in this
 Court.

¶19

 3. After the petition was filed it was placed
 before a Division Bench for admission on 24th
 February 1997. This Court after hearing learned
 counsel appearing for petitioner as well as
 respondents, passed following order :-

¶20

 " Heard the learned Counsel for the
 parties.

¶21

 2. By order dated 23rd December, 1996
 issued by the Central Government to the
 General Manager, Central Warehousing
 Corporation, New Delhi, Respondent No.3
 is directed to release the goods and that
 the Commissioner of Customs, Mumbai, was
 directed to make payment of rental amount
 for the period from October, 1993 to
 March, 1995. Further, the Assistant
 Commissioner of Customs, Appraising Group
 III, has, by letter dated 10th January
 1997 (Exhibit "G" to the Petition),
 informed Respondent No.3 that the Customs
 will make payment of Rs.5,58,977/- to
 Central Warehousing Corporation. Hence,
 since the Customs is making payment for
 warehousing in terms of the order passed
 by the Government of India, Respondent
 No.3 is directed to release the
 Petitioner’s goods immediately on
 execution of bond by the Petitioner to
 pay any amount if Central Government so

¶22

 ((-3-))

¶23

 directs. Further, if Respondent No.e is
 having any other claim for the
 warehousing charges, it would be open to
 Respondent No.3 to claim it from
 Respondent Nos.1 and 2 and for that also
 the Petitioners would pay the demurrage
 charges if the Central Government so
 directs."

¶24

 4. A clarification was issued on 18th March 1997
 by the Division Bench to the effect that
 execution of bond by the petitioner would be
 subject to result of the petition. It appears
 that when the petition was adjourned for further
 hearing, subsequent events were permitted to be
 placed on record and the petition was thus
 amended.

¶25

 5. Thereafter, this Court considered the
 grievance of the petitioner for refund of Customs
 Duty on the goods which were not delivered to the
 petitioner pursuant to the orders of Central
 Government as well as of this Court. It appears
 that the delivery made on 16th April 1997 and
 19th April 1997 was not complete. It appears
 that the total quantity of the goods imported was
 68,915 kilograms. As against this, quantity
 delivered to the petitioner is 35,450 kilograms.
 The undelivered goods are 33,465 Kilograms. The
 contention of the petitioner was that insofar as
 these goods are concerned, the same being not

¶26

 ((-4-))

¶27

 delivered, the duty liability in that behalf is
 wholly illegal and without jurisdiction. Hence,
 to the extent of undelivered goods, the duty
 amount ought to be refunded to them. Taking
 cognizance of this grievance, directions were
 issued to consider the application for refund
 made by the petitioner.

¶28

 6. When this application was considered
 initially an order passed by the authorities was
 found to be totally unsustainable by this Court.
 Noting the rival contentions, this Court passed
 the following order on 18th August 1997 :-

¶29

 " Heard the learned Counsel for
 Respondent No.1.

¶30

 2. It appears that the stand taken by
 the Customs Department is thoroughly
 misconceived. The Petitioner’s
 application for refund of Customs Duty on
 the goods, of which there is pilferage at
 the Central Warehousing Corporation’s
 warehouse, is rejected on the ground that
 it was not maintainable under Section 27
 of the Customs Act. There is specific
 provision in Section 23 of the Customs
 Act for refund of Customs Duty in such an
 event. Instead of applying mind, the
 concerned officer has straightaway
 rejected the said application.
 Admittedly, in this case, at the time of
 clearance of the goods, the Petitioner
 found that there was shortage of goods at
 the warehouse. The pilferage was to the
 extent of about half of the goods.

¶31

 3. Therefore, the appropriate officer of
 the Customs Department is directed to

¶32

 ((-5-))

¶33

 decide afresh the application of the
 Petitioner under Section 23(1) of the
 Customs Act and pass appropriate order
 for refund or remission of the Custom
 Duty paid on such goods on or before 17th
 September, 1997.

¶34

 4. Stand over to 18th September 1997."

¶35

 7. After the refund application was considered,
 the respondents 1 and 2 passed an order on 12th
 September 1997 and the claim for refund was
 granted. Thereafter, this Court admitted this
 petition on 7th October 1997.

¶36

 8. Prior to the admission of this Writ Petition,
 on 13th May 1997, this writ petition was amended
 and the petitioner seeks following reliefs :-

¶37

 (aa) that this Hon’ble Court do issue a
 Writ of Mandamus under the said Article
 226 ordering and directing :

¶38

 (i) the Respondents jointly and
 severally to pay to the
 Petitioners the market value of
 the said 33,465 kgs. being
 Rs.6,85,613/- with interest at
 such rate as this Hon’ble Court
 may deem fit.

¶39

 (ii) Respondent No.1 to remit and
 pay back to the Petitioners the
 duty on the said 33,465 kgs. and

¶40

 (iii) Respondent No.3 to refrain
 and forbear from demanding and/or
 recovering warehousing charges
 from the Petitioners."

¶41

 ((-6-))

¶42

 It is this relief which is now surviving for
 consideration in this petition.

¶43

 9. For appreciating the rival contentions on
 this issue, a reference to some facts is
 necessary. The petitioner imported 68,915 kgs.
 of Yarn in India vide Bill of Entry dated 21st
 October 1993. On arrival of the goods, the
 Mumbai Customs wrongly held the import to be
 illegal, seized the goods and warehoused the same
 with the Central Warehousing Corporation
 (hereinafter referred to as "CWC" for short).
 After receipt of the Show Cause Notice, finally,
 the Customs passed adjudication order dated 8th
 March 1995 inter alia, dropping the Show Cause
 Notice and holding the said import to be legal
 and valid. Accordingly the petitioners prayed
 for release of the said goods. The CWC, however,
 refused to release them until they were paid
 their warehousing charges. Customs refused to
 pay the warehousing charges. As the petitioner’s
 goods were not released he had to prefer a Writ
 petition and finally the order of the Central
 Government directed Customs to pay the
 warehousing charges. Even this result took 3
 years of litigation for the petitioners.
 However, goods legally imported in 1993, were not

¶44

 ((-7-))

¶45

 released in 1996, despite the above order, as,
 now Customs refused to remit the duty in respect
 of the goods, short-delivered. Again the
 petitioner herein, was compelled to file a Writ
 petition and again by an order dated 18th August
 1997 of the Division Bench, the Customs were
 directed to remit the duty paid by the
 petitioners herein and refund that amount. The
 petitioner’s contention is that the goods
 illegally seized in 1993, have not yet been
 released as the respondents are now refusing to
 compensate the petitioner for the value of the
 goods short delivered to the petitioner.

¶46

 10. These factual aspects are noted as above by
 the Division Bench. The claim now made is that
 the respondents must compensate the petitioner to
 the extent of the goods short delivered and such
 compensation ought to be the market rate of the
 same is the precise submission.

¶47

 11. Mr.Sethana - learned counsel for the
 petitioner submits that the petitioner at the
 time of importing the goods had paid import duty
 of Rs.6,48,461/- on the assessable value of the
 goods, which weighed 68,915 kilograms. These
 were placed in 353 cartons. However, now that it

¶48

 ((-8-))

¶49

 is not disputed that delivery was given to the
 extent of 35,450 kilograms, then the petitioner
 is entitled to be reimbursed with the market
 value of pilfered goods weighing 33,465
 kilograms. He submits that the petitioner is not
 in any manner responsible for the loss of goods.
 The respondents are not accusing the petitioner
 of playing any role in the pilferage of the
 goods. The same were lost during their custody
 with the CWC (respondent no.3.). He submits that
 the said Corporation is in possession as bailee
 of the said goods. The failure of CWC to return
 the entire quantity of the goods which were duly
 received and so acknowledged, is enough to fix
 the liability and responsibility of reimbursement
 on them.

¶50

 12. In support of these contentions, Mr.Sethana
 relies upon Sections 160 and 161 of the Contract
 Act. He also relies upon the decision of Supreme
 Court reported in 1999(113)-ELT-3 (SC) (Northern
 Plastics Ltd. Vs. Collector of Customs and
 Central Excise). He also places reliance upon a
 decision of Supreme Court reported in
 2002(140)-ELT-3 (SC) (Shilps Impex Vs. Union of
 India).

¶51

 ((-9-))

¶52

 13. He submits that in the light of the
 aforesaid decisions, petitioner is legally
 entitled to receive the goods or monetary
 equivalent in terms of price thereof from the
 respondents. The claim is restricted to the
 extent of pilfered goods. Mr.Sethna submits that
 although market value is claimed by the
 petitioner, the instructions from the petitioner
 are to restrict the claim to the C.I.F. value of
 the pilfered goods. Mr.Sethana submits that the
 petitioner is deprived of the goods/property
 since 1997. The action of the respondents is
 violative of mandate of Articles 14, 19(1)(g) and
 300A of the Constitution of India. He,
 therefore, submits that the amended prayer may
 also be granted.

¶53

 14. Mrs.Bharucha appearing for respondents 1 and
 2 and Ms.Shah appearing for the third respondent
 submit that the amended prayer cannot be granted
 in writ jurisdiction. They submit that there is
 a factual dispute which needs to be resolved and
 the same is not permissible in writ jurisdiction.
 They submit that respondents are not admitting
 their liability to pay the market value/CIF value
 of the pilfered goods. On the other hand, they
 submit that the goods were received on

¶54

 ((-10-))

¶55

 "said-to-contain" and "said to weigh" basis.
 They contend that number of cartons were counted,
 however, weight was not recorded at the time of
 deposit of the goods. It is contended that
 representative of the Clearing Agent,
 M/s.Shivkumar Gupta, has given a letter at the
 time of deposit of the cargo, that the cargo is
 in damaged and broken condition and could not be
 stacked properly. On the other hand, it is kept
 in haphazard manner and that clearing housing
 agent will be responsible for any shortage at the
 time of delivery. They place heavy reliance upon
 a letter dated 19th November 1993 issued by the
 representative of the Clearing Agent. They rely
 upon provisions of Customs Act and contend that
 warehouse charges on the goods have to be paid
 and the grievance by the petitioner in that
 behalf has not been accepted.

¶56

 15. Mrs.Bharucha contends that the Customs
 Department are not liable to pay the market value
 of the pilfered goods because they are not the
 custodian thereof. It is the Warehouse Keeper
 who is responsible to keep the goods.
 Mrs.Bharucha and Ms.Shah invite our attention to
 the affidavits placed on record and contend that
 there is a serious dispute insofar as this claim

¶57

 ((-11-))

¶58

 is concerned. They submit that the remedy of the
 petitioner to recover the market value is else
 where and not the present petition.

¶59

 16. With the assistance of the learned counsel
 appearing for the parties we have perused the
 writ petition and the annexures thereto. We have
 also perused the affidavits filed in reply and
 rejoinder. We have also perused the written
 submissions filed by the petitioner.

¶60

 17. The submission of Mr.Sethana is that the
 authorities are merely blaming each other and
 either of them should be directed by this Court
 to pay the CIF value of the goods, as claimed.
 The Customs Act insofar as the levy of and
 exemption from Customs Duty in Chapter-V thereof
 provides for duty on pilfered goods. It also
 takes care of the contingency of remission of
 duty on lost, destroyed or abandoned goods.
 Section 23 providing for the same reads thus :-

¶61

 "23. REMISSION OF DUTY ON LOST,
 DESTROYED OR ABANDONED GOODS :-

¶62

 (1) Without prejudice to the provisions
 of section 13, where it is shown to the
 satisfaction of the Assistant
 Commissioner of Customs or Deputy
 Commissioner of Customs that any imported
 goods have been lost otherwise than as a

¶63

 ((-12-))

¶64

 result of pilferage or destroyed, at any
 time before clearance for home
 consumption, the Assistant Commissioner
 of Customs or Deputy Commissioner of
 Customs shall remit the duty on such
 goods.

¶65

 (2) The owner of any imported goods may,
 at any time before an order for clearance
 of goods for home consumption under
 section 47 or an order for permitting the
 deposit of goods in a warehouse under
 section 60 has been made, relinquish his
 title to the goods and thereupon he shall
 not be liable to pay the duty thereon."

¶66

 18. Section 27 provides for claim for refund of
 duty. The claim for payment of compensation on
 the pilfered goods is not on the basis of
 provisions of the Customs Act, 1962 but under
 General Law and more particularly Law of
 Contract. The Department is accused of wrongful
 acts on account of which the petitioner has
 allegedly suffered loss. The claim for payment
 of market value or at least CIF value of the
 pilfered goods, cannot be entertained in writ
 jurisdiction as, in our view, several factual
 aspects need to be gone into before fixing the
 responsibility. These factual aspects arise from
 denial of liability by both respondents. This is
 not a case where the liability is admitted during
 the course of earlier hearing or while the
 petitioner’s application for refund of duty had
 been considered. Mr.Sethana is not right in

¶67

 ((-13-))

¶68

 submitting that earlier directions and orders of
 this Court amply demonstrate and prove the fact
 that the goods have been pilfered while in
 custody of CWC and, therefore, the CWC at least
 should be directed to make the payment.

¶69

 19. In our view, at the stage of admission of
 this writ petition the petitioner was being
 called upon to make payment of duty on goods
 which were not delivered to him. Although, the
 Bill of Entry referred to the cargo and the
 quantity, the entire lot was not delivered to the
 petitioner. In this view of the matter, this
 Court directed that the duty liability of the
 petitioner be ascertained and determined
 proportionately. In other words, petitioner must
 not be held liable to pay the duty on the
 pilfered goods, if the law does not allow any
 recovery nor contemplate such payment. It is in
 this light that the authorities examined the
 refund application and allowed it. The duty
 amount has already been refunded to the
 petitioner. From these acts, the relief now
 claimed cannot be granted. Two different aspects
 of the matter namely, liability to pay duty on
 pilfered goods and payment of compensation for
 loss thereof, cannot be clubbed and considered

¶70

 ((-14-))

¶71

 together.

¶72

 20. For loss on account of pilferage, in our
 view, writ petition is not the proper remedy.
 There is much substance in the contentions of
 Mrs.Bharucha and Ms.Shah. Several aspects of the
 matter need to be gone into and the claim will
 have to be proved by leading evidence. To give
 an illustration, as to whether the representative
 of the Custom House Agent of the petitioner was
 authorised to give any writing of the nature
 executed on 19th November 1993, is something
 which cannot be gone into in writ jurisdiction.
 The assertion of the petitioner that the
 representative had no authority to sign such
 letter and this aspect becomes clear if the
 communication from the Custom House Agent is
 perused, cannot be gone into and adjudicated upon
 in the limited jurisdiction conferred upon this
 Court under Article 226 of the Constitution of
 India. The claim will have to be proved in
 accordance with the law for which, if necessary,
 the Custom House Agent as well as his
 representative will have to be summoned by the
 petitioner. Similarly, documents and records
 from the custody of the Customs Department and
 CWC, will also need be summoned and produced and

¶73

 ((-15-))

¶74

 their contents proved in accordance with law.
 Such being the facts and circumstances, we cannot
 accept the contentions of Mr.Sethna. We decline
 to entertain this claim despite strenuous and
 persuasive pleas of Mr.Sethna.

¶75

 21. Reliance placed on the decision in Northern
 Plastics Ltd. by Mr.Sethna is not apposite.
 There, the Supreme Court was exercising
 jurisdiction under Article 142 of the

¶76

 Constitution of India R/W Order 47, Rule 6 of the
 Supreme Court Rules, 1966. There the claim arose
 on account of confiscation of the goods. The

¶77

 order of confiscation was held to be bad and
 declared illegal by the Supreme Court on the
 ground that there was no mis-declaration of the
 goods. It was held that the applicant was

¶78

 entitled to import the goods on the open general
 licence. The applicant could have claimed for

¶79

 the damage to the goods and the loss caused to
 them as a result of illegal retention of the
 same. In the light of these admitted facts and
 further the respondent before the Supreme Court

¶80

 in the counter affidavit not disputing the
 liability to return the money value of the goods
 and an order being passed in that behalf, that,
 ultimately, the Supreme Court directed payment of

¶81

 ((-16-))

¶82

 the value of the goods prevailing at the time of
 their clearance.

¶83

 22. The fact situation is not identical. We
 have no powers like Article 142 and therefore,
 this judgement cannot be of any assistance.

¶84

 23. The order in Shilps Impex of the Supreme
 Court does not lay down any principle of law
 which could be applied to a case of the present
 nature.

¶85

 24. On the other hand, it appears to us that the
 liability arising out of a contract of
 warehousing with the warehouse keeper, would have
 to be adjudicated and decided upon in the light

¶86

 of the contractual stipulations and the
 provisions of Contract Act. Similarly, the claim
 for loss of pilfered goods and reimbursement at
 market value, would have to be scrutinised and
 adjudicated upon in the light of the provisions
 contained in General Law. This is not a case of
 statutory liability and obligation which could be
 enforced in writ jurisdiction. The claim of loss
 and damages would have to be adjudicated by the
 normal remedy i.e. a Civil Suit or Arbitration.

¶87

 ((-17-))

¶88

 25. For the aforesaid reasons, we decline to
 pass any orders on the amended prayer clause (aa)
 of this writ petition. The unamended petition
 has already worked itself out in the light of the
 orders reproduced by us hereinabove and nothing
 further survives for adjudication in that behalf.
 Consequently, leaving other remedies open to the
 petitioner for claiming relief in terms of prayer
 clause (aa), we dispose of the present writ
 petition. However, there shall be no order as to
 costs.

¶89

 (DR.S.RADHAKRISHNAN, J.)

¶90

 (S.C.DHARMADHIKARI, J.)

Nova Pack Pvt. Ltd. v. Commissioner of Customs and 2 Ors.

Case brief

What is this about?

What did the court decide?

Nova Pack Pvt. Ltd. v. Commissioner of Customs and 2 Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Mr. Narayan Ramamoorthy and Anr. Vs Parvathi Devaraj Iyer and Ors.

P. H. Sanghrajka Vs M/S. Bharti Enterprises and Ors.

Dr. Chamanlal R. Oberoi Vs Dy.Registrar, Co.Op.Soc. Mumbai and Ors.

The State of Maharashtra and Ors. Vs M/S.India Travels and Ors.

M/S Neo-Pharma Pvt.Ltd. Vs Kamgar Utkarsha Sabha and Ors.

The Maharashtra Glass Works and Ors. Vs M/S Janata Gass Works and Ors.