Judgement

CHANDRACHUD, J:- The Trustees of the Port of Madras, appellants herein, filed Suit No, 158 of 1966 in the High Court of Madras for recovering a sum of Rs. 3,18,968.04 from the respondents by way of demurrage. The 1st respondent is a firm called M/s. Aminchand Pyarelal, the 2nd respondent is the Union of India and the 3rd respondent is the Collector of Customs, Madras. A learned single Judge referred the suit to a Division Bench which dismissed it by a judgment dated December 23, 1971. This is an appeal by certificate granted by the High Court under Article 133 (1) (a) of the Constitution.

2. On April 10, 1963, a Steamer "A. P. J. AKASH" arrived at the Madras Port and landed among other goods a consignment of 202 bundles of black plain sheets of various sizes. The appellants received the goods and stored them in transit sheds. The goods were imported by the 1st respondent under an authorisation issued by the State Trading Corporation of India which held a licence dated June 16, 1962, to import the goods from Hungary. The Clearing Agents of the 1st respondent filed a Bill of Entry with the 3rd respondent but the Customs authorities detained the goods as the specifications in the import licence did not tally with the description of the imported goods. The Customs authorities then issued a show cause notice to the 1st respondent and after considering its explanation the 3rd respondent passed an order on November 12,1963 confiscating the goods under Section 111 (a) of the Customs Act, 1962. The 1st respondent preferred an appeal against that order to the central Board of Excise and Customs, New Delhi which was allowed by the Board on July 27, 1954. On August 21, 1964, the Clearing Agents of the 1st respondent requested the Customs Authorities to issue a certificate for the remission of the transit dues for the period during which the goods were detained. A certificate was accordingly issued by the 3rd respondent stating that the goods were detained by the Customs Authorities from April 24, 1963, to August 21, 1964 for examination under Section 17 (3) and Section 17 (4) of the Customs Act 1962, other than in the ordinary process of appraisement and that the detention was due to no fault or negligence on the part of the 1st respondent. Acting on this certificate, appellants waived the demurrage for the period covered by the certificate, whereupon the 1st respondent cleared the consignment on August 25 and August 27, 1964, on payment of the Harbour dues, Carnage charges and Demurrage charges for the period not covered by the certificate.

3. Thinking that the certificate was issued erroneously appellants wrote a letter dated January 27 1965 to the 3rd respondent requesting him to reconsider the matter. By his letter of April 12, 1965, the 3rd respondent owned up the mistake and stated that the certificate was incorrect as the goods were detained in order to ascertain whether the Import Trade Control formalities were complied with and not for examination and assessment of duty under Section 17 (3) and (4) of the Customs Act.

4. The case of the appellants is that due to the negligent mistake committed by the 3rd respondent in issuing the certificate, they charged to the 1st respondent a sum of Rs. 1,963.60 only whereas it was liable to pay a sum of Rs, 3,20,951.64 by way of demurrage. The appellants called upon the 3rd respondent to pay up the balance but the latter, by his reply dated July 6, 1965, repudiated all liability, contending that the Union of India could not be held liable for the negligent or tortious acts of its officers done in good faith during the course of their official duties and that the appellants should seek their remedy against the 1st respondent.

5. Later, the appellants brought the present suit against the three respondents to recover the demurrage. The case of the appellants as made out in the plaint is that the liability of respondents 2 and 3 was in the region of contract or quesi-contract, that the appel