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The Secretary of State for India Vs. Great Indian Peninsula Railway - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 875 of 1923
Judge
Reported inAIR1923Bom423; (1923)25BOMLR470; 73Ind.Cas.468
AppellantThe Secretary of State for India
RespondentGreat Indian Peninsula Railway
Excerpt:
.....duly-goods dutiable-goods imported by great indian peninsula railway company for the use of the undertaking-property of the company vetted in government-goods not liable to duly. ;stores purchased abroad and imported into india by the great indian peninsula railway company for the use of the undertaking, after the railways, work, and divers other property of the company has been transferred to and vested in the secretary of state for india, are exempt from payment of duty under section 20 of the sea customs act 1878. - - 6. under clause 10 the company was to keep the undertaking in good repair, in good working condition and fully supplied with rolling stock, plant and machinery to the satisfaction of the plaintiff, and on their failure to comply with any requirements of the..........or otherwise as the plaintiff might determine.9. under clause 23 all monies received by the company in india in respect of the undertaking were to be paid without deduction into the treasury and all monies received elsewhere than in india were to be paid into the bank of england to the plaintiff's account.10. under clause 24 all monies required by the company for the undertaking were to be supplied by the plaintiff.11. under clause 25 all monies expended by the company on account of the undertaking were from time to time to be stated and submitted to the plaintiff for his sanction.12. clause 33 provided for accounts to be delivered of all stores in hand or in the course of delivery on july 1, 1900, and for the valuation thereof. thereafter half yearly accounts were to be furnished.....
Judgment:

Norman Macleod, Kt., C.J.

1. This is a case stated by the agreement of the parties for the opinion of the Court under Order XXXVI, Rule 1. The question is whether stores purchased and imported by the defendant company into India for the use of the undertaking are at the time of importation goods belonging to Government. If the answer is in the affirmative it has been agreed that the plaintiff shall refrain from levying or seeking customs duty upon such stores. The defendant company was incorporated by statute 11 & 12 Vic. Clause 83 intituled an Act for incorporating the Great Indian Peninsula Railway Company and for other purposes contained therein.

2. Statute 63 & 64 Vic. Clause 38 was passed to provide for the vesting of the railways and other property of the Great Indian Peninsula Railway Company in the Secretary of State for India in Council and by Section 4 it was provided that as and from June 30, 1900, the Railways, works and divers other property of the company should be transferred to and vested in the Secretary of State.

3. Section 72 enabled the defendant company to enter into and conclude with the Secretary of State any contract or contracts for the maintenance, management and working of the Great Indian Peninsula Railway Company. Accordingly, on December 21, 1900, the defendant company entered into an agreement with the plaintiff a copy of which is annexed to the case stated. I will refer to the pertinent clauses, omitting any mention of the Indian Midland Railway system as unnecessary.

4. Under Clause 5 the plaintiff was to hand over to the defendant company for the purposes of the contract the Great Indian Peninsula Railway system together with the rolling stock, plant and machinery belonging thereto.

5. Under Clause 6 the plaintiff was to deliver to the defendant company for the purposes of the undertaking all stores belonging to the Great Indian Peninsula Railway system excepting such as on the representation of the company the plaintiff might adjudge to be unserviceable and surplus stores.

6. Under Clause 10 the company was to keep the undertaking in good repair, in good working condition and fully supplied with rolling stock, plant and machinery to the satisfaction of the plaintiff, and on their failure to comply with any requirements of the plaintiff, the plaintiff might enter on the undertaking to execute such requirements.

7. Under Clause 22 all stores required by the undertaking were to be conveyed by the company at rates to be approved by the plaintiff, not being less than the actual cost of conveyance.

8. Under Clause 22A all capital monies required for the undertaking were at the option of the plaintiff to be provided by him or were to be raised by the company by the issue of debentures or debenture stock in such manner and on such terms as to interest or otherwise as the plaintiff might determine.

9. Under Clause 23 all monies received by the company in India in respect of the undertaking were to be paid without deduction into the Treasury and all monies received elsewhere than in India were to be paid into the Bank of England to the plaintiff's account.

10. Under Clause 24 all monies required by the company for the undertaking were to be supplied by the plaintiff.

11. Under Clause 25 all monies expended by the company on account of the undertaking were from time to time to be stated and submitted to the plaintiff for his sanction.

12. Clause 33 provided for accounts to be delivered of all stores in hand or in the course of delivery on July 1, 1900, and for the valuation thereof. Thereafter half yearly accounts were to be furnished of all stores in hand and of all stores used since the last accounts were made, the value of stores used to be charged to the general working expenses or to the capital account as the case might require in accordance with the provisions of the agreement in that behalf.

13. Clause 34 provided for the re-valuation from time to time of stores in hand.

14. By Clause 37 the company was prohibited during the continuance of the contract from acquiring any property in India without the sanction of the plaintiff.

14. Clause 39 provided for the application of the nett receipts of the undertaking.

15. By Clause 60 the company was to give possession to the plaintiff' on June 30, 1925, of the undertaking, together with the rolling stock, plant and machinery belonging thereto, and all stores in hand or in course of delivery on that day. The plaintiff was to pay to the company the amounts paid up or credited as paid up on all shares or stocks or stock then in existence in the company's new capital which the company might have issued for the purposes of the contract with the sanction of the plaintiff.

16. It is sufficient for this case to say that the surplus arising from the excess of receipts over payments in any year commencing on July 1 and ending on June 30 were to belong as to 19/20 to the plaintiff and as to 1/20 to the company.

17. Now it will be seen that the w hole of the undertaking became the property of the plaintiff on July 1, 1900, and was handed back to the defendant company only for the management and working thereof according to the terms of the contract. On the termination of the contract everything had to be returned to the plaintiff. All receipts had to be paid into the treasury in India, or into the plaintiff's account with the Bank of England. The company, therefore, possessed no property of its own. All the monies required for the purpose of the undertaking had to be supplied by the plaintiff and no expenditure could be made without the plaintiff's sanction. It is difficult, then to sea how stores purchased in England or abroad became the property of the company. There can be no distinction between stores, the cost of which could be debited to working expenses, and stores, the cost of which would be debited to capital account. If the plaintiff's contention were correct, new rolling stock imported is for the moment the property of the company, but it belongs to the plaintiff as soon as it is taken into use, or even as soon as the customs duty has been paid. In other words, stores imported are to be considered as belonging to the company for the purpose of paying custom duty and for that alone.

18. In my opinion such a contention cannot be sustained.

19. I would answer the question propounded in the concise statement in the affirmative.


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