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2001 Supreme(Cal) 314
High Court Of Calcutta
Kalyan Jyoti Sengupta
KUMAR TRADING CO.LLC - Appellant
Versus
UNION OF INDIA (UOI) - Respondent
W. P. 2606 Of 2000
Decided On : 05/25/2001
BANERJI, ROYCHOWDHURY
Customs authorities are liable for damages caused by their ultra vires actions and failure to comply with statutory directions.
Headnote:
CUSTOMS ACT, 1962 - SECTION 110, 124, 155 - WRITS - MANDAMUS - DETENTION CHARGES - PORT CHARGES - LIABILITY - WRITS - MANDAMUS - ALTERNATIVE REMEDY - DAMAGES - TORTIOUS ACTION - MALICE - PROTECTION OF OFFICERS - ADMINISTRATIVE LAW - ACCOUNTABILITY - PUBLIC AUTHORITIES - LIABILITY FOR TORTS - MISFEASANCE - VICARIOUS LIABILITY - CROWN IMMUNITY - SOVEREIGN FUNCTIONS - ACT OF STATE - TORTIOUS LIABILITY - ULTRA VIRES ACTION - IMMUNITY FROM SUIT - WRIT JURISDICTION - ADEQUATE COMPENSATION - DAMAGES - TORTIOUS ACTION - MAINTAINABILITY - COSTS.
Fact of the Case:
The petitioner, a business engaged in import and export, shipped two consignments of ball bearings for Nepal via Calcutta Port. The Customs authorities seized the consignments under Section 110 of the Customs Act, 1962. The importer expressed inability to clear the consignment, and the petitioner approached the Customs authorities for permission to re-export the goods. However, the Customs authorities did not take any action, resulting in a refusal to grant permission for re-export. The petitioner filed a writ petition challenging the show cause notice issued by the Customs authorities under Section 124 of the Customs Act, 1962. The writ petition was allowed, and the show cause notice was quashed. The Customs authorities unsuccessfully appealed the decision. Subsequently, the petitioner received a requisition memo demanding payment of Rs. 90,00,000/- towards container detention charges, port rent, export wharfage charges, terminal charges, transportation charges, loading and unloading charges, clearing and forwarding charges.
Finding of the Court:
The Court found that the Customs authorities' actions in seizing the goods and refusing to grant permission for re-export were ultra vires and beyond the provisions of the law. The Court also found that the Customs authorities failed to comply with the Board Circulars, which directed them to remove the goods to a customs warehouse. The Court held that the Customs authorities were liable for the detention and demurrage charges of the containers and port charges up to the period of 4th September, 2000, the date on which the Customs authorities allowed the re-export of the goods. However, the Court held that the petitioner was liable for the detention and demurrage charges for the subsequent period, as the petitioner could have avoided the charges by making payment.
Issues: 1. Whether the Customs authorities were liable for the detention and demurrage charges of the containers and port charges incurred by the petitioner due to the wrongful seizure and refusal to grant permission for re-export? 2. Whether the petitioner was entitled to seek compensation for the damages suffered as a result of the Customs authorities' actions through a writ petition? 3. Whether the Customs authorities were protected from liability under Section 155 of the Customs Act, 1962?
Ratio Decidendi: 1. The Court held that the Customs authorities were liable for the detention and demurrage charges of the containers and port charges incurred by the petitioner up to the period of 4th September, 2000, the date on which the Customs authorities allowed the re-export of the goods. The Court found that the Customs authorities' actions in seizing the goods and refusing to grant permission for re-export were ultra vires and beyond the provisions of the law. The Court also found that the Customs authorities failed to comply with the Board Circulars, which directed them to remove the goods to a customs warehouse. The Court held that the Customs authorities' actions amounted to misfeasance and that they were liable for the damages suffered by the petitioner as a result of their actions. 2. The Court held that the petitioner was entitled to seek compensation for the damages suffered as a result of the Customs authorities' actions through a writ petition. The Court relied on several Supreme Court decisions, which held that writ courts have the power to grant relief of monetary claims not only in respect of statutory and non-statutory contractual rights and obligations but also in case of tortious action. 3. The Court held that the Customs authorities were not protected from liability under Section 155 of the Customs Act, 1962. The Court found that the Customs authorities' actions were ultra vires the provisions of the Act and that they were not acting in good faith. The Court held that the protection under Section 155 of the Act is not amenable when the action is not justified to have been taken under the provision of the Act or beyond the provision.
Final Decision: The Court allowed the writ petition to the extent that the Customs authorities were directed to pay the detention and demurrage charges of the containers and port charges up to the period of 4th September, 2000. The Court also awarded costs of Rs. 300 gms. to the petitioner.
( 1 ) BY this writ petition the petitioner have asked for a Writ of Mandamus directing and/or commanding the respondents to make payment of the containers detention charges in respect of the containers being Nos. CRXU 4638054 and POCU 1197581 and the Port charges in respect thereof for the period on and from 19th August, 1997 until re-export thereof. The fact of the case is not disputed much and is stated hereunder in short.
( 2 ) THE writ petitioners carry on business of import and export in United Arab Emirates. During June, 1997 the writ petitioners shipped two consignments of Ball Bearings for Nepal as its final destination, transiting through India via Calcutta Port. The said Ball Bearings, which were in containers, arrived at the port of Calcutta during the 1st week of July, 1997, and immediately after landing, the consignment was seized by the Customs authorities under Section 110 of the Customs Act, 1962.
( 3 ) THE importer namely M/s. Nitu Enterprises by a letter dated 3rd April, 1998 expressed inability to the Customs authorities to clear the said consignment. So the petitioners approached the Customs authorities, for permission to re-export and/or withdraw back to its origin at their own risk and costs. But the Customs authorities did not take any action, which resulted in substance in refusal to grant order of re-export to its country of origin.
( 4 ) UNDER the circumstances, the petitioners herein on earlier occasion filed a writ petition on or about 10th August, 1998 being W. P. No. 1650 of 1998. Meanwhile, the Customs authorities issued a show cause notice under Section 124 of the Customs Act, 1962 in respect of the said two consignments, making the writ petitioners a party to the said show cause notice, as one of the notices. The challenge of this show cause notice was the subject-matter of the aforesaid writ petition.
( 5 ) THE writ petition was finally heard and disposed of by His Lordship the Hon'ble Mr. Justice Y. R. Meena by judgment and order dated 1st February, 1999. His Lordship was, inter alia, pleased to quash the notice issued by the Customs authorities under Sections 110 and 124 of the Customs Act, 1962, in respect of the subject consignments.
( 6 ) THE respondents, however, unsuccessfully preferred an appeal against the aforesaid judgment and order and the same resulted in dismissal by the judgment and order of Division Bench dated 14th July, 2000.
( 7 ) AFTER the aforesaid order the writ petitioners received a requisition Memo dated 11th September, 2000 whereby they were asked to pay a sum of Rs. 90,00,000/- (Rs. 86,77,256/- being the charges payable to the Port Trust Authorities on account of container detention charges, Port Rent, Export Wharfage Charges and Terminal Charges; and Rs. 3,22,744/- towards transportation charges, loading and unloading charges, clearing and forwarding charges) and the same were to be paid to the Customs House Clearing Agent.
( 8 ) MR. Banerjee, learned Senior Advocate, appearing on behalf of the writ petitioners contends that the Appeal Court has held the aforesaid show cause notice was totally without jurisdiction. Because of arbitrary and illegal action purported to be under Customs Act, the petitioners have been saddled with the liability to pay to the Port Authorities a sum of Rs. 86,77,256/ -. This could have been avoided had the respondent authorities acted in terms of the Circular No. 84/94-Cus. , dated 25th July, 1995 issued by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Excise and Customs, New Delhi. It will appear from the aforesaid Circular that the respondent authorities could have removed the containers from the Port area to Customs Warehouse in terms of provision of Section 49 of the Customs Act, 1962.
( 9 ) HE further contends that from another Circular being No. 83/98-Cus. , dated 5th November, 1998 issued by the Government of India, Ministry of Finance (Department of Revenu
