The interpretation of Ex. A-26 established the relationship of principal and agent between the first defendant and the plaintiff, making the plaintiff liable for the penalty levied under Section 116 of the Customs Act, 1962.

JUDGMENT :- The first defendant (the State Trading Corporation of India, represented by Regional Manager of its Madras branch) is the appellant before me.

2. The appeal arises out of O. S. No. 6065 of 1968 on the file of the Second Assistant Judge, City Civil Court, Madras. The first respondent filed the suit for a mandatory injunction against the defendants for directing the appellant to pay the second defendant (Collector of Customs, Madras) the sum of Rupees 9854.91, being the penalty in respect of the alleged shortage of imported sulphur at Madras on 25-1-1966 or, in the alternative, for reimbursement in the event of the plaintiff being obliged to pay the amount.

3. The first defendant chartered a vessel for the import of sulphur in bulk from Vancover to Calcutta and Madras and appointed the plaintiff as its agent to clear the goods under Ex. A-26. The vessel arrived at Madras Port on 25-1-1966 and the cargo was discharged. The plaintiff represented the first defendant in the observance of the Port and Customs formalities for the purpose of clearing the cargo. Later it was found that there was a shortage of imported sulphur to the tune of 404-754 Megatonnes and the second defendant levied a penalty of Rs. 9854.91 under S. 116 of the Customs Act of 1962. In law, the plaintiff being the agent of the first defendant is not in any way personally liable to for this shortage. It is really the liability of the first defendant and hence the suit for mandatory injunction. If, however, the plaintiff is obliged to pay that penalty, the plaintiff would be reimbursed. These were the allegations in the plaint.

4. In defence, it was contended that the Chief Controller of Chartering, Union Ministry of Transport, Government of India, New Delhi was the real party who should have been impleaded and for whom alone the plaintiff acted as the agent. It is not correct to state that the first defendant is the principal and the plaintiff is the agent. In fact, the plaintiff is actually the charterer' s agent and the first defendant is not a charterer but only the importer and the holder of the Bill of Ladings. The first defendant merely instructed the plaintiff by a letter dated 25-1-1966, Ex. A-26, that the plaintiff will function as the charterer' s agent and sent a copy of the charter party agreement, which itself proves the contention of the first defendant. So long as the first defendant is not in charge of the conveyance, the liability relating to penalty could not be fastened on it under S. 116 of the Customs Act 1962. Further, even though the order of penalty is dated 26-6-1968, and was received by the plaintiff on 9-7-1968, the plaintiff did not inform the first defendant till 14-10-1968, as a result of which the appeal against the levy became time barred. This negligence is solely attributable to the plaintiff and on this score also the first defendant cannot be made liable. The second defendant filed a written statement stating that the plaintiff being the authorised agent was liable to pay the penalty for the manifested quantity brought by the vessel and that the second defendant acted within the power vested in him under S. 116 read with S. 148 (2) of the Customs Act of 1962. On these pleadings, the following eleven issues came to be framed-

1. Whether the plaintiff is entitled to the mandatory injunction prayed for as against the first defendant ?

2. Whether in the alternative, the plaintiff is entitled to recover a sum of Rs. 9854.91, from the 1st defendant?

3. Whether the suit is bad for nonjoinder of the Chief Controller of Chartering, Union Ministry of Transports, Government of India?

4. Whether the plaintiff was the agent of the first defendant?

5. Whether the plaintiff alone is liable to pay the penalty amount for the reasons stated in the written statement of the first defendant?

6. Whether the plaintiff as the authorised agent at Madras port for the vessel is primarily responsible and liable for accounting for the entire mani