1. The plaintiffs whose suit has been dismissed by Sadasivam, J. on the Original Side, are the appellants before us. They imported 100 cases of electric bulbs from abroad by a Steamer which arrived at the Madras Port on 15-1-1957. They did not file any 'import application' before the Port Trust as contemplated under Instruction 7 of the Madras Port Trust Manual, for clearing the goods. They filed a bill of entry (Ex. P-6) on 19-3-1957, before the Customs authorities. The bill of entry was returned for answering certain queries and it was represented on 31-7-1957. It was again returned but it was not represented.
2. In the meantime, since no one had taken any steps to clear the goods from the Port Trust within two months of the arrival, the Port Trust began to exercise its power of sale under Section 56 of the Madras Port Trust Act to realise the dues to the Port Trust, Section 56 says:--
'It shall be competent for the Board, at the expiry of two months from the time when any goods have passed into its custody, or in the case of perishable goods at the expiry of such shorter period not being less than 24 hours as the Board shall think fit, to sell by public auction so much as may be necessary of such goods, (a) if any rates payable to the Board in respect of such goods have not been paid.........'
The dues to the Port Trust amounted to Rs. 3475-25, and, in addition to this amount, the Port Trust had to pay customs duty on the goods, for, otherwise, under Section 88 of the Sea Customs Act, 1878, which was in force, the goods could not be removed from the Port Trust premises by the purchaser thereof at any auction which might be held by the Port Trust. This is the crucial question in the case and we shall deal with it in greater detail in due course.
3. Accordingly the Port Trust made an application to the Collector of Customs to determine the amount of customs duty payable. They were informed that the customs duty was Rs. 60,000. The sale was held by public auction on 26-10-1957 for realising not merely the sum of Rs. 3,476-25, but also the amount of Rs. 60,000. It was felt necessary to sell all the 100 cases for this purpose. Actually the sale fetched only a sum of Rs. 50,000. After appropriating the sums of Rs. 60,000 due to the Collector of Customs and Rs. 3,476-25 to the Port Trust, the balance or a substantial portion thereof was paid to the plaintiffs in due course.
4. The plaintiffs filed the suit claiming damages of Rs. 1,50,000, contending that the said sale was illegal and that they had been damnified, because the goods, if sold, in open market, would have fetched much more.
5. The learned Judge held that the sale was valid, that the plaintiffs were not entitled to any damages and that, if they were to be held entitled to any damages, the quantum could only be Rs. 20,000. Aggrieved by this judgment the plaintiffs have preferred this appeal.
6. The two main points which Mr. Trilokchand Chopde, the learned counsel for the appellants, has urged before us are these. The first is that the Port Trust could not sell the goods for paying off the customs duty. It had authority only to sell such portion of the goods as was necessary for recovering the dues of the Port Trust itself. That was only a sum of Rs. 3,467-25 and the sale of a few cases would have been sufficient for the purpose. Secondly, even assuming that the Port Trust could sell anything more for realising the sum of Rs. 3,476-25 and also the sum of Rupees 60,000 the notices prescribed under the Port Trust Act had not been issued and therefore the sale was vitiated.
7. A third minor point was advanced, namely, that it was only on 24-10-1957, that intimation was given to the Port Trust that the customs duty had been fixed at Rs. 60,000 and that, according to the learned counsel, a further notice should have been given to the plaintiff from that moment giving him ten days' time to pay the amount.
8. In our opinion, none of these contentions is valid. We shall deal with them seriatim. On the first point it is necessary to refer to the relevant provisions of the Madras Port Trust Act, and to some extent, to the provisions of the Sea Customs Act, 1878. Section 51 of the Madras Port Trust Act gives a lien to the Port Trust in respect of the amounts due to it under the Act, Section 52 is important and says--
'Such lien shall have priority over all other liens and claims, except for general average and for the ship-owner's lien upon the said goods of freight and other charges where such lien exists and has been preserved in the manner provided in Section 53, and for primage, and for money payable to the Government.'
It will be noted that the customs duty payable under the provisions of Sections 20 and 87 of the Sea Customs Act. 1878, is money payable to the Government and that will have priority over the lien of the Port Trust.
9. Then follows Section 56 the relevant portion of which we have already quoted. Then comes Section 59 which is very important and says:--
(1) The proceeds of every sale under Section 56 or Section 58-A shall be applied as follows:--
(a) in payment of the expenses of the sale;
(b) in payment, according to their respective priorities, of the liens and claims excepted in Section 52 from the priority of the lien of the Board;
(c) in 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;
(2) The surplus, if any, shall be paid to the importer, owner or consignee of the goods, or to his agents, on his applying for the same..........
10. Section 20 of the Sea Customs Act enacts that customs duty shall be levied at the rates prescribed. Section 85 enables the Collector of Customs to permit the steamer agent to discharge the cargo at the Port Trust. Then there occurs this provision--
'A public body or company at whose landing place or wharf any goods are discharged under clause (b) of this section shall not permit the same to be removed without an order in writing from the Customs Collector.'
Section 86 requires the owner of the goods to file the bill of entry in order to enable the collector of Customs to determine the amount of duty payable. Section 87 speaks of the assessment of the duty by the Customs Collector and says--
'On the delivery of such bills the duty (if any) leviable on such goods shall be assessed, and the owner of such goods many then proceed to clear the same for home consumption, or warehouse them, subject to the provisions hereinafter contained.'
Section 88 enables the Collector of Customs to sell the goods if the goods are not entered and cleared for home consumption or warehoused within four months from the date of entry of the vessel.
11. It is clear from the provisions of the Sea Customs Act, which we have quoted above that, once the duty is ascertained, the owner of the goods has to pay it. In this case the duty was ascertained, the owner of the goods has to pay it. In this case the duty was ascertained to be Rs. 60,000 and that was intimated to the Port Trust on 24-10-1967 before the sale took place. But even before that, well in advance, the Port Trust had made an application to the Collector of Customs to make the assessment and intimation therefore was given to the plaintiff's clearing agent, A. V. Kanniah Naidu. We shall refer to the exhibits presently. Section 52 of the Port Trust Act gives priority to the Collector of Customs in respect of customs duty, even over the dues payable to the Port Trust for which it has got a lien. Section 56 permits the Port Trust to sell such portion of the goods as may be necessary. Section 59 says that the proceeds of such sale shall first be utilised for payment of the expenses of the sale, then for the payment of the customs duty and only thereafter the Port Trust can take its own dues. The purchaser of the goods at the public auction which might be held by the Port Trust surely be permitted to remove the goods. Otherwise nobody would be willing to purchase the goods. The last portion of Section 85 of the Sea Customs Act which we have quoted, shows that the goods cannot be removed without an order in writing from the Customs Collector, and the Customs Collector will permit the removal only if the customs duty has been paid. That this is the procedure in actual practice, apart from what appears from the statutory provisions quoted above, is clear from the evidence of D.W. 1, the Docks Manager in the Port Trust, as also from Ex. D-24, the Madras Port Trust Manual. Though there is no provision in the Madras Port Trust Act that the Port Trust can sell a portion necessary for realizing its dues as well as customs duty, it is necessarily implied in the provisions which we have quoted that the Port Trust has such a power. The provisions which we have quoted above clearly show that the Port Trust can sell the goods necessary to realize not merely the dues payable to the Port Trust but also the customs duty, and that out of the proceeds of such sale the customs duty has to be paid first and only thereafter the dues of the Port Trust can be realized. As we have already pointed out, it is only after the payment of the customs duty the goods will be released by the customs authorities and the purchaser can take delivery thereof. If it were not permissible to include the customs duty in estimating the goods to be sold under Section 56, there would be a stalemate and there would be no means at all of the Port Trust realizing its dues. The power of sale of the Port Trust will become illusory unless the Port Trust has power to do everything incidentally necessary for carrying out this power of sale under Section 56 of the Act, and the one thing incidentally necessary was the sale of the goods for the purpose of paying the customs dues as well without payment of which the purpose of the sale would be frustrated.
12. Thus, the provisions of the Madras Port Trust Act read with the last portion of Section 85 of the Sea Customs Act clearly show that the Port Trust has power to sell such goods as are necessary to realize the amount due to it and also the customs duty. We may add that this position is reinforced by the circumstances that there is no corresponding provision in Section 88 of the Sea Customs Act enabling the Port Trust to apply to the Customs Collector for payment of the amount due to the Port Trust in case the sale is to be held by the Collector of Customs under Section 88 for realisation of the customs duty.
13. The learned counsel for the appellant who argued the appeal with great ability and put forth all possible contentions, advanced a very ingenious argument that even assuming that the Port Trust had a power of sale, it did not have the power to sell all the 100 cases. The argument can be illustrated thus: There were 100 cases in this case. Assume for the present that the sum of Rs. 80,000 which the public auction sale fetched was a faire price; that is to say, one case would fetch Rs. 800. The Port Trust was entitled to realise only Rupees 3,476-25 for itself. It would have been sufficient to sell 20 cases to realise the said sum of Rs. 3,476-25 and also the proportionate duty of Rs. 12,000 on the 20 cases. The argument of the learned counsel is that it would have been sufficient for the Port Trust to sell 20 cases to realise its dues and the proportionate customs duty thereof and also enable the purchaser to clear the 20 cases. The substance of the argument is that it was not permissible to sell anything more than 20 cases.
14. This argument is untenable. It assumes that the Collector of Customs should be prepared, and would be prepared, to release those 20 cases alone on payment of an assumed proportionate customs duty in respect thereof. There is, however, no provision in the Sea Customs Act, or in the Port Trust Act, entitling the importer to pay such proportionate customs duty on part of the goods and to insist that on payment of such proportionate customs duty he will be entitled to a release thereof. It may be conceded for the sake of argument that it would have been open to the plaintiffs to have approached the Collector of Customs to assess the proportionate duty on part of the goods and get his permission to release those particular goods on payment of the proportionate duty. But, so long as they did not approach the Collector of Customs and get any such permission, the only duty payable was the consolidated duty of Rs. 60,000 on the entire consignment of 100 cases, and, hence, the Port Trust was entitled to sell such goods as, in its opinion, was necessary to realise the sum of Rs. 3,476-25 and the sum of Rs. 60,000.
15. The next contention of the learned counsel for the appellants is that Section 56, Port trust Act, permits the Port Trust to sell to much of the goods as may be necessary, but not the entirety of the goods. The learned counsel says that the provisions of the Madras Port Trust Act are, in this respect, different from the provisions of Section 64 of the Bombay Port Trust Act, 1879 or Section 118 of the Calcutta Port Trust Act, 1880, which permit the Bombay Port Trust or the Calcutta Port Trust, as the case may be, to sell such goods or so much as would be necessary to satisfy the amount directed to be paid out of the proceeds of such sale. The learned counsel submits that the Bombay and Calcutta Acts permit sale of the goods whole or part of the goods and that the Madras Act permits only the sale of part of the goods, and not of the whole. This argument, again, cannot be accepted, because the words used in the Madras Port Trust Act (Section 56) 'to sell by public auction so much as may be necessary to such goods' are themselves sufficient to clothe the Port Trust with authority to sell the whole of the goods, if it thought it necessary for realising the sum of Rs. 3,476-25 and the amount of Rs. 60,000. It should be noted that no plea has been taken in the plaint, though it contains several grounds of attack of the sale that the Port Trust was guilty of sale mala fides in selling the 100 cases and that it bona fide knew that a sale of less was sufficient, for example, that it might have been sufficient to sell 80 of the 100 cases to realize the said sum of Rs. 3,476-25, and the sum of Rs. 60,000. When the Port Trust put up for sale the 100 cases, it was not likely to know what the amount they would fetch if sold and we have no doubt that the Port Trust bona fide thought that it would be necessary to sell all the 100 cases in one lot.
16. The first main contention of the learned counsel that the Port had no power to sell the 100 cases fails.
17. The second contention is that no valid notice, as contemplated by Sections 57 and 58 of the Port Trust Act, had been issued. Before dealing with this contention, reference may be made to few exhibits. In Ex. D-1, dated 16-3-1957, Binny and Co., the Steamer agents, informed the Port Trust that this particular consignment of 100 cases might be delivered to A. V. Kanniah Naidu. In Ex. D-4 dated 14-7-1957, the Port Trust addressed the following communication to the Steamer agent, Binny and Co.
'I have the honour to inform you the application is being made to the Collector of Customs for the clearance of the goods noted overleaf for sale under Section 56 of the Madras Port Trust Act, II of 1905.'
This mentioned 90 cases. Thereupon, Binny and Co., wrote Ex. D-5, dated 17-7-1957 to A.V. Kanniah Naidu, as follows and sent a copy thereof to the Port Trust.
'We have now been advised by the Traffic Manager, Madras Port Trust, that application is being made to the Collector of Customs for the clearance of the above cases for sale under Section 56 of the Madras Port Trust Act, II of 1905. We suggest that, if you intend clearing the cases you request the Traffic Manager, Madras Port Trust, to withhold them from sale. Kindly note that neither the carrier, nor ourselves as agent will accept any responsibility in the event of this cargo being sold in public auction by the Madras Port Trust.'
The Madras Port Trust in Ex. P-7, dated 9-8-1957, wrote to Kanniah Naidu as follows--
'I have the honour to inform you, as required under Section 58 of the Madras Port Trust Act II of 1905, that the goods shown on the reverse, will be sold by auction, if the Port Trust charges recoverable thereon have not been paid and the goods not cleared within 10 days from the date of this notice'
Thereupon A. V. Kanniah Naidu gave the following reply (Ex. P-8) dated 17-8-1957, to the Port Trust--
'The above consignment will be passed within one month. Duty and harbour dues etc. will be paid and the goods cleared. As such it is requested that the auction sale may kindly be cancelled.' It appears that the Port Trust was, however, anxious to proceed with the sale, if the Customs authorities would give clearance. The sale was originally fixed on 29-8-1957, but the Customs did not give clearance and so the sale was postponed to 24-10-1957. In Ex. P-9, dated 30-8-1957, the Port Trust wrote to the Steamer agent as follows-
'I have the honour to inform you that application is being made to the Collector of Customs for the clearance of the goods noted overleaf for sale under Section 56 of the Madras Port Trust Act, II of 1905.'
This was in respect of the one case.
17-A. Ex. D-15 is a communication dated 14-10-1957, by Binny and Co. to A. V. Kanniah Naidu. It is important and says--
'We have been advised by the Traffic Manager, Madras Port Trust, that the above cases will be sold in public auction to be held on 24-10-1957 at the Trust premises. We suggest that, if you intend clearing the cases, you request the Traffic Manager, Port Trust, Madras, to withhold them from sale. Kindly note that neither the carrier nor ourselves as agents will accept any responsibility in the event of this cargo being sold in public auction by the Madras Port Trust.' There was thus notice by Binny and Co., to A.V. Kanniah Naidu that the goods would be sold on 24-10-1957, at the premises of the Port Trust. Ex. P-7, also gives a clear notice saying that the auction would be held at 2 p.m. on 24-10-1957 at the Port Trust premises, and this item finds place as item 109 at page 14 of the Gazette Notification.
18. Ex. P-22 is a communication dated 25-10-1957, from the plaintiffs to the Madras Port Trust. It shows that the plaintiff was aware of the sale which took place on 24-10-1957 and requested the Port Trust to stop the delivery. The first plaintiff died and his brother gave evidence. His evidence shows that the first plaintiff told A. V. Kanniah Naidu that the Port Trust were going to auction the goods and asked him to write a letter to the harbour authorities stating that they would pay the money and take delivery of the goods and requesting them not to proceed with the sale. It is amply clear from the evidence, oral and documentary, that factually A. V. Kanniah Naidu and the first plaintiff had notice that the goods would be auctioned at 2 p.m. on 24-10-1957, A. V. Kanniah Naidu himself did not go into the witness box to deny the same.
19. This being the factual position, the question of notice in law recedes into the background. Actually, there is no substance in the contention that the notice Ex. D-4 dated 12-7-1957 was insufficient. The argument of the learned counsel is that Ex. D-4 did not specify the amount due to the Port Trust, but that is really immaterial. The plaintiffs or Kanniah Naidu could have easily ascertained the amount due to the Port Trust by asking them. Section 57 of the Port Trust Act says that before making such sale ten days notice of the same shall be given by publication thereof in the official gazette. Section 58 says--
'If the address of the owner of the goods has been stated on the manifest of the cargo or in any of the documents which have come into the hands of the Board, or is otherwise known, notice shall be given to the owner of the goods by letter delivered at such address or sent by post.'
Now it is clear that, apart from the name of A. V. Kanniah Naidu, the name of the first plaintiff was not made known to the Port Trust or stated in any of the documents which came into the hands of the Port Trust. So far as A.V. Kanniah Naidu was concerned, the Port Trust gave the notice, Ex. P-7 dated 9-8-1957. Further, the steamer agent gave the notice, Ex. D-15 to Kanniah Naidu. Kanniah Naidu himself wrote a letter, Ex. P-8 to the Port Trust, which clearly shows that he knew that the goods would be sold by public auction if the dues to the Port Trust were not paid, and he offered to pay the same within one month. However, he did not keep his promise. It is, therefore, clear that there was sufficient, and, in fact, legal compliance with the provisions of the statute and the sale cannot be held to be invalid at all. Though it is not necessary for our purpose to find out why the plaintiffs did not clear the goods by paying the harbour dues and the customs duty, it is not improbable that they did not have the money. The learned Judge has referred to this aspect and observed that no positive evidence was forthcoming on the said of the plaintiffs that they had the money ready to pay the customs duty of Rs. 60,000.
20. The last point that remains is that the intimation of the customs duty having been fixed at Rs. 60,000 was given to the Port Trust only on 24-10-1957 and that a further notice should have been given to the plaintiffs giving them ten days time. We do not agree, Ex. P-7 itself clearly put the plaintiffs and A.V. Kanniah Naidu on guard that, if they did not pay the Harbour dues and the customs duty, the goods would be brought to sale. It was upto the plaintiffs and A.V. Kanniah Naidu to thank themselves if they did not ascertain the customs duty from the Customs authorities and did not pay it within time.
21. The learned counsel for the appellant cited the decision of the Privy Council in Attorney General for Ceylon v. A. D. Silva, 1953 AC 461. We do not think that the case has any relevancy at all. In that case the Principal Collector of Customs sold some properties on the ground that he was empowered to collect the amount due to the Customs. Actually it was property belonging to the Crown and no amount was legally payable from the Crown to itself. That was the basis of the decision and it is not applicable to the facts of this case, where customs duty was payable by the plaintiffs to the customs.
22. In the result, the appeal is dismissed with half costs.
23. Appeal dismissed.