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State Trading Corporation of India Ltd. Vs. K.P.V. Shaik Mohammed Rowther and Co. and anr. - Court Judgment

LegalCrystal Citation
SubjectContract;Customs
CourtChennai High Court
Decided On
Case NumberAppeal No. 450 of 1972
Judge
Reported inAIR1978Mad224
ActsContract Act, 1872 - Sections 182; Code of Civil Procedure (CPC) , 1908 - Order 1, Rule 3
AppellantState Trading Corporation of India Ltd.
RespondentK.P.V. Shaik Mohammed Rowther and Co. and anr.
Appellant AdvocateG. Narayanan, Adv.
Respondent AdvocateThe Central Govt. Standing Counsel and ;Sampath Kumar, Adv.
DispositionAppeal dismissed
Excerpt:
- - 3. whether the suit is bad for nonjoinder of the chief controller of chartering, union ministry of transports, government of india? 8. whether the suit is bad for mis-joinder of parties? 9. whether the suit is bad for want of notice under section 80 c......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 apppinted 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.....
Judgment:

Mohan, J.

1. 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 apppinted 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 Mega-tonnes and the second defendant levied a penalty of Rs. 9854.91 under Section 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 charterparty 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 Section 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 Section 116 read with Section 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 manifested quantity brought by the vessel?

7. Whether the plaintiff under Section 148(2) of the Customs Act, is primarily and ultimately liable to account for the shortage to the satisfaction of the Customs authorities?

8. Whether the suit is bad for mis-joinder of parties?

9. Whether the suit is bad for want of notice under Section 80 C.P.C.?

10. Whether the suit is not maintainable in view of Section 155 of the Customs Act?

11. To what relief, if any, is the plaintiff entitled?

5. The learned trial Judge came to the conclusion that the levy of penalty was proper under Section 116 read with Section 148(2) of the Customs Act. There was no privity of contract between the plaintiff and the Ministry of Transport and therefore, the Ministry of Transports was not a necessary party. Having regard to the terms of Ex. A-26, the plaintiff was the agent and the principal was the first defendant. On these pleadings, a decree for mandatory injunction was passed. Hence the appeal.

6. Mr. G. Narayanan, learned counsel appearing for the appellant, strenuously urges before me that it is incorrect to hold that because of Ex. A-26 the relationship of principal and agent came to be established between the first defendant and the plaintiff. Inasmuch as a copy of the charter party agreement, viz., Exs. B-1 and B-3 had been sent along with Ex. A-26, it will be clear that there was no such relationship. On the contrary, the appellant was merely a consignee, while the Chief Controller of Chartering, Union Ministry of Transport, Government of India, New Delhi alone could be considered to be the principal. Learned counsel for the respondent would submit that whatever may be the nature of relationship in other cases, having regard to the terms of Ex. A-26, it cannot but be held that the relationship of a principal and agent existed between the first defendant and the plaintiff. In order to appreciate the contention, it will be useful to extract Ex. A-26, which runs as follows-

'The captioned vessel which is carrying forward 4883 M. tons of Canadian Sulphur to our account is consigned tous. We have pleasure in appointing you as the Charterers agent for this vessel during her voyage to Madras. The relative charter party is enclosed. The agency fee will be paid by the owners as is customary. As the vessel is due this afternoon, we request you to file all the papers immediately'.

Though there is force in the contention of the appellant that the appellant is actually the consignee, inasmuch as the charter party agreement viz., Ex. B-l was sent to the plaintiff, in this particular case, I cannot but hold that the relationship of principal and agent had come in, having regard to the terms of Ex. A-26, extracted above. The sentence which is important for our purpose is-

'We have pleasure in appointing you as the Charterer's agent for this vessel during her voyage to Madras.' This really spells out the case of the plaintiff that the relationship of principal and agent had sprung. Viewed in this light, I find absolutely no difficulty in upholding the judgment under appeal.

7. I am also in agreement with the finding of the court below that it is unnecessary to implead the Ministry of Transport since there is no privity of contract between the plaintiff and the Ministry of Transport. Consequently, I hold the appeal fails and is hereby dismissed. However, there will be no order as to costs.

8. Appeal dismissed.


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