Gujarat Cypromet Ltd. Vs. Union of India & Others  Insc 227 (7 April 2005)
R.C. Lahoti,G. P. Mathur & P. P. Naolekar
out of S.L.P.(Civil) No. 24541 of 2002) G. P. MATHUR, J.
This appeal, by special leave, is directed against the judgment and order dated
16.9.2002 of the Bombay High Court, by which the writ petition filed by the
appellant was disposed of with certain directions.
appellant imported certain consignments of copper cathodes from Germany in August, 1998. The consignments
were not cleared by the appellant from the Port Trust and accordingly they were
sold in a public auction on 13.1.2000 for Rs.52,50,000/-. The Jawaharlal Nehru
Port Trust, Mumbai deducted 50 per cent of the sale proceeds i.e. Rs.26,25,000/-
towards sale expenses. The appellant filed a writ petition in the Bombay High
Court challenging the deduction of 50 per cent of the sale proceeds as expenses
and prayed that the sale proceeds towards expenses of sale on actual basis only
should be deducted and the balance amount should be paid to the appellant. The
High Court took the view that the controversy raised by the appellant involved
adjudication of facts which was not possible in a writ petition filed under
Article 226 of the Constitution. The writ petition was accordingly disposed of
permitting the appellant to pursue ordinary civil remedy for redressal of its
response to the notice issued, the respondents have filed a counter affidavit.
It is averred therein that Jawaharlal Nehru Port Trust was incorporated under
the Major Port Trusts Act, 1963 and it renders services in accordance with the
aforesaid Act. The core function of the Port is to provide storage space for
bulk and containarised cargo, which is stored in the Board premises. Such
storage facilities are to facilitate international trade and to attract
international shipping lines to the Port for promoting trade in the national
interest. Any delay in clearing or removing the cargo attracts demurrage charges.
The importers/consignees are given 15 free days to take delivery of the cargo.
cargo is unclaimed for two months, it is put for sale under Sections 61 and 62
of the Major Port Trust Act, as the case may be. Congestion in Ports affects
the free movement of ships and all essential goods. The Port does not do any
business of warehousing and it performs statutory functions. The scheme of the
Major Port Trusts Act is to frame the scale of rates of penalties, rent,
charges, expenses in such a manner which will act as an incentive and
compulsion for the expeditious removal of the goods/cargo from the transit
area. Ships, wagons, containers, cargo have to be kept moving and that can
happen only if there is some kind of pressure on the importer to remove the
goods from the Board's premises with the utmost expedition. The rates and
charges which the Board is entitled to recover have been framed under the Major
Port Trusts Act so as to ensure that the Ports are congestion free, both for
purposes of movement of ships and movement of cargo.
is further averred that the Board of Trustees vide Item Nos.17 and 18 of the
Agenda of the 92nd Board Meeting held on 31.1.1992 approved the formula for
fixing of reserve price. The Board thereafter started disposal of the unclaimed
cargo as per the said procedure, but the rate of disposal was not commensurate
with the generation of longstanding containers, resulting in occupation of
valuable space in the container yard by such longstanding containers. In order
to find a solution to the problem, the matter was placed before the Board in
its meeting held on 25.7.1997 for reconsideration of the method for fixing the
reserve price. A revised formula was then adopted which also was not found to
be working satisfactorily. Certain suggestions were received from the
Commissioner of Customs and finally a resolution was passed in the meeting of
the Board held on 23.7.1999, which reads as under :
50% of sale proceeds as sale expenses which shall be first charge on the sale
proceeds and customs duty and other claims as per order laid down in MPT Act of
1963 and applying the formula as approved by the Board vide TR No.492/97 dated
25.7.1997 in all the previous cases where auction has already been held.
of reserve price as the sum of Custom duty plus 4 months' ground rent."
is further averred in the counter affidavit that as it is virtually impossible
to ascertain the exact sale expenses in respect of each lot and, therefore, a
decision has been taken to treat 50 per cent of the sale proceeds as sale
expenses. The sale expenses normally vary from lot to lot and are dependent
upon the amounts realized in each sale. For the purposes of auction, an auction
hall, godown of 7000 sq. meters meant for storage of uncleared goods to
container yards for keeping longstanding cargo of uncleared goods has to be
arranged. A notification is published in the Government Gazette and
advertisement is issued in all leading newspapers in English, Hindi, Marathi
and Gujarati. The Port Trust has also to make available services of its
officers and staff, such as Deputy Manager, Assistant Manager, Superintendent,
Junior Engineers, Checkers, Clerks and Peons, etc.
the counter affidavit details have also been given regarding the actual
expenses incurred by the Port Trust and the amount realized on the basis of the
current formula of charging 50 per cent of the sale proceeds towards sale
expenses, which show that the actual expenses exceeded the amount so recovered
and the Port Trust suffered a loss. It is further averred that in most cases,
the Port Trust is unable to recover its entire dues from the sale of cargo from
Though the principal prayer made in the writ petition was to quash the
Resolution No.624 dated 23.7.1999 of the Port Trust whereunder it was resolved
that 50 per cent of the sale proceeds in a consignment be appropriated towards
expenses of the sale, learned counsel for the appellant has not been able to
point out any ground as to how the said resolution is invalid. Section 63 of
the Major Port Trusts Act, 1963 reads as under :
Application of sale proceeds
The proceeds of every sale under Section 61 or Section 62 shall be applied in
the following order
payment of the expenses of the sale;
payment, according to their respective priorities, of the lines and claims
excepted in Sub-section (2) of Section 59 from the priority of the lien of the
payment of the rates and expenses of landing, removing, storing or warehousing
the same, and of all other charges due to the Board in respect thereof,
including demurrage (other than penal demurrage) payable in respect of such
goods for a period of four months from the date of landing;
payment of any penalty or fine due to the Central Government under any law for
the time being in force relating to customs;
payment of any other sum due to the Board.
The surplus, if any, shall be paid to the importer, owner or consignee of the
goods or to his agent, on an application made by him in this behalf within six
months from the date of the sale of the goods.
Where no application has been made under Sub-section (2), the surplus shall be
applied by the Board for the purposes of this Act."
Section 61 of the Act empowers the Board, after the expiry of two months from
the time when any goods have passed into its custody (other than animals,
perishable or hazardous goods) to sell by public auction, the goods so removed.
Section 62 of the Act also empowers the Board to sell the goods by public
auction which after landing thereof are not removed by the owner or other
person entitled thereto from the premises of the Board within one month from
the date on which such goods were placed in their custody. In view of these
statutory provisions, the Board was perfectly justified in selling the
unclaimed cargo by public auction.
explained in the counter affidavit filed by the respondents, it is not possible
to precisely determine the expenses of sale in each case on account of various
factors involved. Therefore, the Board has passed a resolution to deduct 50 per
cent of the sale proceeds as expenses of sale.
to be borne in mind that sometimes the expenses of sale, which is conducted
through public auction after a Gazette notification and wide publicity in
newspapers, far exceed the actual amount recovered. In fact, the figures
supplied in the counter affidavit show that in the year 2000- 2001 and
2001-2002 the total cost incurred in holding the public auction exceeded the
amount recovered on the basis of the impugned resolution i.e. 50 per cent of
the sale proceeds and thus the Board has suffered a loss.
overall consideration of the matter, we are of the opinion that the appellant
has failed to make out any case for interference by this Court in a Special
Leave Petition filed under Article 136 of the Constitution. The appeal is
accordingly dismissed with costs.