Holding

The importer is not liable for demurrage, the carrier’s lien remains enforceable, and the customs authorities are not liable to pay demurrage charges.

Summary

The importer C.L. Jain Woolen Mills brought polyester filament yarn from Korea, which was seized by customs under Section 111(d) of the Customs Act, 1962. The High Court quashed the seizure and ordered release of the goods without demurrage, a decision that became final after the Revenue's special leave petition was dismissed. Shipping Corporation of India and Container Corporation of India, the carriers, claimed a lien over the goods under the Indian Bills of Lading Act, 1956 and the Contract Act, 1872, and sought demurrage charges. The Supreme Court held that the importer’s liability for demurrage ceased due to the final High Court order, but the carriers' lien remained and could be enforced against the importer, not the customs authorities. The Court found no provision in the Customs Act empowering the Revenue to bar the carriers from levying demurrage, and therefore the Revenue was not liable for those charges. The appeals by the carriers and the Revenue were dismissed, with the Court directing that demurrage may be waived only upon an application by the customs authorities.

Issues considered

The importer’s liability for demurrage charges after a High Court order declaring customs detention illegal.
Whether the carrier’s lien under the Bills of Lading Act and Contract Act can be enforced despite a customs detention certificate.
Whether the customs authorities (Revenue) are liable to pay demurrage charges to the carrier.
The interpretation of Section 45(2)(b) of the Customs Act, 1962 in relation to demurrage liability.

Legislation cited

Customs Act, 1962s. 111(d), s. 45(2)(b)
Indian Contract Act, 1872s. 170, s. 171

Subjects

demurragecarrier's liencustoms detentionCustoms ActBills of LadingContract Actimporter liabilityrevenue liability

Judgment

A SHIPPING CORPN. OF INDIA LTD. ETC. ETC.
V.

C.L. JAIN WOOLLEN MILLS AND ORS.

APRIL 10, 2001

B [G.B. PATIANAIK, S.N. PHUKAN AND B.N AGRAWAL, JJ.]

Customs Act, 1962-Sections 45(2)(b) and 11l(d}-Confiscation of
imported goods and issuance of detention onler by the Revenue-Liability of
Demurrage charges to Carrier during the detention period-Dimction by
c High Court to Revenue to release the goods holding the detention illegal and
payment of demurrage charges to Carrier-Onus of liability-Held, importer
not liable for demurrage charges since the matter reached finality-Issuance
of detention certificate by Revenue cannot nullify the right of lien by the
Carrier over the goods for demurrage charges-Revenue liable to pay -+
demurrage chmxes-Waiver of demurrage charges to be considered on filing
D an application before the Court-Indian Bill of Lading Act, 1956-Contract
Act, 1872-Sections 170 and 171.

The services of Shipping Corporation, was engaged by respondent to
bring ployester filament yarn from Korea to India. The goods were "de-
E ported at the port of Bombay and were later transhipped to Delhi, where it
remained with Container Corporation of India. The Revenue directed
confiscation of the goods under Section lll(d) of the Customs Act, 1962 on
finding the import unauthorised. However, Revenue allowed the respond-
ent to redeem the goods on payment of Rs. 7 Iakhs together with penalty of
Rs. 1 lakh under Section 112(a) of the Act. The respondent challenged the
F order of the Revenue before CEGAT, which was adjourned for amend-
ment of advance licence and DEEC Book, On a Writ Petition by the
respondent, High Court quashed the orders of the Revenue and the CEGAT
and directed the Revenue to release the goods forthwith. High Court held
that the respondent is not liable to payment of demurrage charges on
G account of illegal action taken by the Revenue. An appeal by Revenue
before this Court was dismissed. On failing to get the goods released, the
respondent filed a contempt petition before the High Court, which was
dismissed. On an application by the respondent, the High Court directed
the appellant-Corporations to release the goods and held that the Revenue
is liable to pay the demurrage charges to the Corporations and not the
H
1080
'-f

SHIPPING CORPN OF INDIA LTD. I'. C.L. JAIN WOOLEN MILLS 1081
respondent. On failure to get the goods released, the respondent filed again A
another contempt petition before the High Court. The High Court initi·
ated contempt proceedings against the appellant-Corporations and the
Revenue. Hence the appeals by the Corporations and the Revenue before
the Court. The appeals were referred to larger Bench due to inconsistency
between the decision of this Court in Union of India v. Sanjeev Woollen
B
Mills, [1998] 9 SCC 647 and International Airports Autho1ity of India & Ors.
v. Grand Slam International & Ors., [1995] 3 SCC 151. The Court, by an
interim order, directed the release of the goods subject to the ultimate
decision in these appeals.

Appellant-Corporations contended that a right of lien over the goods c
is available for recovery of demurrage charges as per the provisions of the
Bills of Lading Act, 1956 and the terms and conditions of the contract
entered into with the respondent; that the right of lien is also available
under the provisions of Contract Act, 1872 and such right cannot be taken
away hy issuance of a detention certificate by the Revenue under the
Customs Act, 1962; and that the order of the High Court is not binding as
D
they were nolmade parties to the proceedings.

Revenue contended that it is not liable to pay the demurrage charges
merely on the ground that the detention of goods by them was found to be
illegal by the High Court; that on issuance of a detention certificate, the E
+- Corporations are not entitled to demurrage charge irrespectiv~ of the
terms and conditions of the Contract as per Section 45(2)(b) of the Act.

Disposing of the appeals, the Court

HELD : 1. In view of the specific directions of the High Court in F
the Writ Petition filed by the respondent and which has subsequently
reached finality on the dismissal of special leave petition filed hy the
~ Revenue, the liability of the respondent to pay the demurrage/detention
i
charges ceases. [1087-C·D]

2.1. The relationship between the respondent and the appellant, in G
whose favour the Bill of Lading has been consigned and which stored the
goods in its custody, is governed by a contract between the parties. The
terms of the contract and the provisions of the Bills of Lading unequivocally

"'
conferred on the appellant to retain the goods until the dues are paid. Such
rights accruing in favour of the appellant cannot he nullified hy issuance of H
y

1082 SUPREME COURT REPORTS [2001] 2 S.C.R.
A a certificate of detention hy the Revenue unless for such issuance, any provi-
sions of the Customs Act authorises. The Revenue might have bona fide
initiated the proceedings for confiscation of the goods which was ultimately
turned out to he unsuccessful and held illegal by the High Court. But that
would not clothe the Revenue with the power to directthe appellant, who has
a right oflien, not to charge any demurrage charges. The issuance of deten-
B
tion certificate would not prohibit the appellant from raising any demand
towards demurrage charges for occupying the space to keep the imported
goods, which the appellant is entitled to charge from the respondent. The
respondent will not also he entitled to remove the goods from the premises
unless customs clearance is given. That would not mean that the demurrage
C charges could not he levied on importer for the occupied space, since the
contract between the importer and the appellant is in no way altered be-
cause of the orders issued by the Revenue. [1092-B-G]

3. The expression "othenvise dealt with" used in Section 45(2)(b) of
the Customs Act, 1962 cannot be construed to mean that it authorises the
D
customs officer to issue a detention certificate in respect of the imported
goods which would absolve the importer from paying the demurrage charges
and which would preventthe appellant from levying the demurrage charges.
There is no provision in the. Customs Act which confers power on the Rev-
enue to prevent the appellant from levying the demurrage charges and thereby
E absolving the importer of the goods from payment of the same. [1093-B-D] ...f

International Ai1ports Authority of India & Or.5. v. Grand Slam Interna-
tional & Ors., [1995] 3 SCC 151, relied on.

4. There is no apparent inconsistency between the decision of this
F
Court in Sanjeev Woollen Mills case and Grand Slam Intemational's case.
This Court may direct the Corporations to waive the demurrage charges if
an application is filed by the Revenue. (1094-B; F-G]

Union of India v. Sanjeev Woolen Mills, (1998] 9 SCC 647 and Interna-
G tional Airports Authority of India & Ors. v. Grand Slam International & Ors.,
(1995] 3 sec 151, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2681 of
2001. )..

H From the Judgment and Order dated 22.2.99 of the Delhi High Court
SHIPPING CORPN OF INDIA LID."· C.L. JAIN WOOLEN MILLS [PAITANAIK, J.] 1083
in CM No. 1553/99 in C.W.P. No. !604/91. A
WITH
Civil Appeal Nos. 2682-2684 of 200 I.

Dushyant Dave, Dinesh Mathur for JBD & Co. for the Appellants.
B
Mukul Rohtagi, ASG, B. Datta, N.K. Bajpai, K.K. Dhawan, B.K.
Prasad, P. Parmeshwa~an, G.L. Rawal, D. Rama Krishna Reddy, D.B. Reddy,
R.K. Joshi, Sushi! Kr. Jain and A.P. Dhamija for the Respondents.

The Judgment of the Court was delivered by
c
PATTANAIK, J. Leave granted.

In this batch of appeals, a common question of law having arisen, they
were heard together and are being disposed of by this common judgment. 111e
question for consideration is whether the appellant, who under the tenns of
the contract between him and the owner of the goods, having a lien over the
D
goods, until tl1e dues are paid can be forced to release tl1e goods, without
charging any demu1Tage, merely because the custo1ns authorities issued a
detention order for a specified period ? We would discuss the question in
relation to the facts in the case between tl1e Shipping Corporation of India
v. C.L Jain Woolen Mills. The respondent C.L. Jain Woolen Mills, impo1ted E
tl1e consignment of polyester filament yam from Korea to India. The port of
load was Bnsan in Korea and the port of discharge was Bombay in India,
but the place of delive1y of goods was !CD, Delhi. The goods thus being
brought to the port of Bombay were discharged but there had been no customs
clearance at Bombay and tl1e sealed container was transhipped to !CD, Delhi, F
where it remained with tl1e Container Corporation of India. 11ie Shipping
Co1poration of India is engaged in the business of can"iage of goods. On the
terms and conditions contained in the Bill of Lading, in respect of the goods .
consigned to it, the corporation claims that the goods cannot be released
unless demunage charges are paid. After the goods arrived in Delhi and
remained in the custody of the appellant, the customs authorities being of the G
opinion that import of polyester filament yam weighing 5,376 kgs. was
unauthorised and di1'ected confiscation of the same, valued at Rs.11.5 lakhs
under Section lll(d)of the Customs Act, 1962. The said customs authorities
however permitted the owner to redeem the goods on payment of Rs. 7 lakhs.
That apart, a penaity of Rs. I lakh was also levied under Section 112(a) of H
1084 SUPREME COURT REPORTS [2001] 2 S.C.R.
A the Customs. The owner of the goods assailed the order before the Customs,
Excise & Gold (Control) Appellate Tribunal [for short CEGAT]. The tribunal ~
instead of deciding the objections raised by the owner to the validity of the
order of the Additional Collector of Customs, ordered that the advance licence
and DEEC Book he amended and adjourned the appeal for a period of three
months. The owner. therefore, approached the Delhi High Court by filing a
B
writ petition, which was registered as Writ Petition No. 1604/91, praying
quashing of the order of the customs authorities, confiscating the goods and
imposing the penalty and that of the Import Trade Control Authority enhanc-
ing the export obligation from 14,497.5 kgs. to 22,330 kgs. of polyester
fabric. It was the contention of the owner before the High Court that in
c accordance with the expmt policy and the "Duty Exemption Scheme", raw
materials could be cleared for home consumption witl1out payment of import
duty. To avail of the facility, the impmter is required to apply for grant of
licence called the "Advance Licence' and on tl1e basis of the same, raw
materials could be imported without payment of any duty. According to the ·\
D owner, under the licence, tlms issued by the Controller of Imports and
Exports, entitling import of raw materials witl1out payment of duty, the
customs autho1ities committed error in proceeding with tl1e confiscation
proceedings and ordering confiscation as well as levying penalty. The cus-
toms autl1orities as well as the Controller of Imports and Exports had been
arrayed as party respondents in the writ petition. Both of tl1em as well as
E Union of India resisted the claim of the owner, who had imported tl1e goods
in question. The High Court disposed of the writ petition by judgment dated
9th September, 1994, quashing tl1e order of the Additional Collector of
Customs dated 10th August, 1990 as well as tl1e order of the Customs Excise
and Gold (Control) Appellate Tribunal dated 21st March, 1991 and directed
F the C0llector of Customs to release the goods forthwith. The High Comt also
fmther held that since the action of the customs auth01ities is illegal, the
goods in question will have to be released to the owner without payment of
any detention or demutTage charges by the owner. Needless to mention, the
Shipping Corporation of India, the appellant in the present appeal, who was
the carrier and who under t]1e Bills of Lading had a lien over the goods, until
G the dues are paid had not been made a party to the aforesaid writ petition.
At this stage it may also be noticed that during pendency of the writ petition
in the High Court, an interim order had been passed, entitling the owne• to
take release of the goods on payment of Rs. 5 lakhs to the customs authorities
and a bank guarantee of Rs. 5 lakhs but the owner had not taken advantage
H of the said interim order and the goods continued to remain in the custody
SHIPPING CORPN OF INDIA LID. v. C.L. JAIN \VOOLEN MILLS {PATTANAIK, J.] 1085
of the present appellant and demurrage charges went on accruing. The order A
...... of Delhi High Court was assailed in this Comt by filing a Special Leave
~ Petition by t11e Customs Authorities but that Special Leave Petition however
I stood dismissed on 13.11.95 in SLP No. 5671/95. The owner of the goods
having failed in his attempt to get the goods released, notwithstanding the
orders of the High Cou~t in CWP No. 1604/91, filed an application for
B
initiating a contempt proceeding, which was registered as CCP No. 120/95.
The High Court however came to hold that the auth01ities cannot be held to
be guilty of disobeying the orders of tl1e Court and accordingly, dismissed
the contempt petition. While dismissing the contempt petition, the learned
Judge, granted liberty to the owner to move the Division Bench of the High
Court for appropdate directions regarding payment of demurrage/detention c
charges. Pursuant to t11e aforesaid observations in tl1e contempt proceedings,
an application being filed by the owner, the same was registered as CM 4829/
96. That application was disposed of by tl1e Division Bench of Delhi High

* Comt by order dated 18th January, 1999. The Division Bench, while dispos-
ing of the petition, came to hold tl1at the entitlement of tl1e carrier of the goods
D
to charge demurrage charges and if so, whether the customs authorities would
be liable to pay the same or not is not required to be answered and is a matter,
which should be sorted out between tl1ose two corporations and the customs
autl101ities. But so far as t11e owner of the goods are concerned, he having
been absolved of any liability to pay the demurrage charges by virtue of the
...._ judgment of Delhi High Court dated 9.9.94 in CWP No. 1604/91, he would E
be entitled to get the goods released without payment of the detention and
demurrage charges. The High Court, therefore called upon tl1e customs
department as well as the two c01porations, who are the caniers to s01t out
tl1e matter within a specified period and further held that if any detention or
demutTage charges are payable, the same shall be paid by tl1e customs F
department within tluee weeks. It further directed the catrier of the goods,
~ including the appellant lo release the goods after tl1e customs department pays
the detention/demurrage charges. Notwitltstanding the aforesaid order, the
goods not being released, when a fresh contempt petition was filed, registered
as CCP No. 89/99, the High Coll11 issued notice on 25.2.99, calling upon the
alleged contemnor to file their reply by 11th March, 1999. Against the
G
initiation of the aforesaid contempt proceeding, the Shipping Corporation of
India tiled SLP No. 3391199. The order dated 18.1.99 was also assailed by
..( the Shipping Co1poration, which was registered as SLP No. 5001199. The
Container Corporation of India filed a special leave petition on identical
circumstances and raising identical question, which is SLP No. 9021/99. The H
y

1086 SUPREME COURT REPORTS [2001] 2 S.C.R.

A Union of India also assails tl1e order dated 18.1.99 by filing Special Leave
Petition No. 3063/2001 along witli the application for condonation of delay.
This batch of cases were listed before a Bench of two learned Judges on 11 tlJ
Febmary, 2001 and al"ter hearing the matters for sometime, tl1e Bench felt that
tl1ere appear·s to be some inconsistency between the decision of tliis Court
in Union of India v. Sanjeev Woolen Mills, [1998] 9 SCC 647 and tlie Grand
B
Slam lntemational's case repotted in 1995(3) SCC 151 and as such observed
tl!at tl1e cases should be placed before a Three Judge Bench md that is how,
this batch of cases are before tl1is three Judge Bench. When these appeals
by grant of special leave were placed before the Three Judge Bench on 1st
March, 2001, we had directed tlie goods be released to tl1e owner without
C any conditions but such release will be subject to the ultimate decision in
these appeals.

The stand of tlie caniers in tliis Court is that in view of the provisions
of the Bills of Lading Act as well as the te1ms and conditions under which
tl1e goods have been imported the corporation-carrier retains a lien over the
D goods until all the dues including the demmrnge charges are paid and the
order of the Delhi High Comt in the writ petition to which tl1ese caniers were
not parties, will not obliterate that right. The furtl1er contention of tliese
corporations is tliat the order of tl1e High Court dated 18.1.99 without
determining the rights of the carrier and directing to sort out the matter with
E tl1e customs authorities is unsustainable and as such tl1c same should be set
aside. The stand of tl1e customs autl1orities and the Union of India on the other
hand is that the customs authorities cannot be required to pay the demll!Tage
charges merely because the action of the customs autl10rities in detaining the
goods was found to be illegal by the Court of law. According to the Union
of India in such a case when a detention certificate is issued by tlie customs
F
autl101ities, tl!e canier of goods will not be entitled to claim any demunage
charges notwitl"tanding the terms and conditions of the contract under which
tl1e goods had been canied and on this score, the order of the High Court
dated 18.1.99 is enoneous. The contention of the importer of the goods on
the other hand is that in view of the findings of tl1e High Court in CWP No.
G 1604/91, specifically holding that the goods in questions be released witliout
payment of demurrnge or detention charges and the further finding to the
effect tliat the order of the customs authorities in confiscating and levying
penalty is illegal and invalid, the importer cannot be made liable to pay the
demmrnge and detention charges. It is the further submission of the importer
H that notwithstanding the clear directions of the High Court, non-release of
SlllPPING CORl'N OF INDIA LID.'· C.L JAIN WOOLEN MILLS (PATIANAIK, J.J J087
,... goods was a gross violation of the Court's order and, therefore, the appro- A
-- priate authorities should be suitably dealt with.

In view of the submissions made at the Bar appearing for different
parties, referred to earlier, the first question that arises for consideration is
whether in the case in hand, the imponer of the goods can be made liable
to pay any demurrage/detention charges? It is undisputed that under the terms B
and conditions of Bills of Lading, the carrier had a lien over the goods until
,.{., all the dnes are paid and the goods having been kept, not being released, the
corporation-carrier was entitled to charge demurrage charges. But in view of
the specific directions of the Delhi High Court in the writ petition filed by
the importer of the goods, challenging the legality of the order of the customs c
authorities in confiscating the goods and levying penalty and that order
having reached finality by dismissal of the special leave petition against the
same filed by the Union of India, the liability of the importer to pay the
demurrage charges ceases and that question cannot be re-opened.

The next question that arises for consideration which is a larger issue, D
namely if the customs authorities do not release the goods and initiates
proceedings and finally passes order of confiscation but that order is ulti-
mately set aside in appeal and j( is held by Court of law that the detention
of the goods was illegal, then in such circumstances whether the carrier of
the goods who had lien over the goods for non-payment of duty, can enforce E
the terms and conditions of the contract against the customs authorities,
making the said authorities liable to pay the demurrage charges. Needless to
mention, demurrage charges are levied for the place the goods occupy and
for the period it remains not being released, on account of lack of customs
clearance. It may be noticed at this stage that the customs authorities exercise
its power under the provisions of the Customs Act whereas the claim of the
F
Corporation who acts as a carrier is based upon the terms and conditions of
+ the contract between the importer and the carrier. So far as the powers of the
customs authorities are concerned, the same are circumscribed by the provi-
sions of the Customs Act, 1962. Section 8 of the Customs Act empowers the
Collector of Customs to approve proper places in any customs port or customs G
airport or coastal port for unloading and loading of goods and specify the
limits of the customs area. Section 33 prohibits unloading of imported goods
at any place other than tl1e place approved under Section 8(a) of the Act.
Section 34 provides that the imported goods shall not be unloaded from any
conveyance except under the supervision of the proper officer. Section 45 H
y

1088 SUPREME COURT REPORTS (2001] 2 S.C.R
A provides for clearance of imported goods. The same provision may be
extracted herein below in extenso:

"Sec.45 Restrictions on custody and removal of imported goods:

(I) Save as otherwise provided in any law for the time being in
B force, all imported goods, unloaded in a customs area shall
remain in the custody of such person as may be approved by
the [Commissioner of Customs] until they are cleared for home -4_
consumption or are warehoused or are transhipped in accord-
ance with the provisions of Chapter VIII.

c (2) The person having custody of any imported goods in a customs
area, whether under the provisions of sub-section (!) or under
any law for the time being in force - (a)shall keep a record of
such goods and send a copy thereof to the proper officer; (b)
shall not permit such goods to be removed from the customs >t
D area or otherwise dealt with, except under and in accordance
with the permission in writing of the proper officer.

(3) Notwithstanding anything contained in any law for the time
being in force, if any imported goods are pilferred after unload-
ing thereof in a customs area while in the custody of a person
E referred to in sub- section(!), that person shall be liable to pay
-+
duty on such goods at the rate prevailing on tl1e date of delivery
of an import manifest or, as the case may be, au import report
to the proper officer under section 30 for the arrival of the
conveyance in which the said goods were carried.
F Under the aforesaid provision, the imported goods would remain in the
custody of the person approved by the Customs Commissioner, until they are
cleared for home consumption or are warehoused or are traushipped in
accordance with the provisions of Chapter VIII. Section 47 of the Act is the
*
provision to obtain clearance of goods for home cousnmption. Section 49
G provides for storage of imported goods in public warehouse, or in a private
warehouse, if permitted by the Deputy Commissioner of Customs or Assistant
Commissioner of Customs. Under Chapter IX of the Act, the Deputy Com-
missioner or Assistant Commissioner of Customs may appoint public ware-
houses wherein dutiable goods may be deposited, as provided in Section 57
of the Act. Under Section 58, the Deputy Commissioner or Assistant Com-
H
-
SIDPPING CORPN OF INDIA LID. v. C.L JAIN WOOLEN MILLS [PAITANAIK, J.] 1089
missioner may even license private warehouses wherein dutiable imported A
.... goods could be deposited. ·But all warehoused goods would be subject to the
control of the proper officer of the customs department, as provided in Section
62 and the owner of the goods is required to pay the rent and warehouse
charges to be fixed by the Commissioner of Customs, as provided in Section
63. No warehoused goods could be taken out of the warehouse except for
B
clearance of home consumption or for removal to another warehouse, as
stipulated in Section 67 of the Act. Section 68 provides the procedure which
an importer would follow for clearing the warehoused goods for home
consumption. The expression "warehouse" has been defined in Section 2(43)
to mean a public warehouse appointed under Section 57 or a private ware-
house licensed under Section 58. It is thus apparent from different provisions c
mentioned above that the customs authorities have full power and control
over the imported goods and without the permission of the customs authori-
ties, the goods cannot be cleared. But at the same time, there is no provision
in the Customs Act, conferring power on the Customs Authorities to prohibit
or injunct any other authority where tl1e imported goods are stored from
D
charging the demurrage charges for the services rendered for storing the
imported goods. We are not concerned in the present case with the provisions
of either the Major Ports Trust Act or International Airport Authorities Act,
as the imported goods had not been stored either in any Major Port or in the
international air cargo. It may however be necessary to examine some of the
provisions of the Bills of Lading Act as well as the Contract Act, since the E
claim of both, the Shipping Corporation and Container Corporation, charging
demurrage for the space occupied for the goods, not being released, is on
account of the contract between them. Under the Indian Bills of Lading Act,
1956, every consignee of goods, named in a Bill of Lading and every
endorsee of a Bill of Lading, is vested with absolute right over the goods. F
The Bill of Lading is a well known mercantile document of title, which is
transferred in the business world by endorsement passing to the endorsee, the
* title of the goods covered by such Bill of Lading. Clause (18) provides for
payment of demurrage charges in case of non-clearance of goods within the
free time available. The said clause is extracted herein below in extenso:
G
"Clause 18 - Delivery of goods in Container: If receipt of goods in
container(s) is not taken by the merchant within 48 hours after dis-
charge from the vessel (or after the arrival of the goods at place of
delivery ifnarned herein) the carrier shall he at liberty at his discretion
either to unpack the container(s) and to put the goods in safe ou behalf H
-
1090 SUPREME COURT REPORTS [2001] 2 S.C.R.
A of the merchant an? 11t the merchant's risk and expense or to charge
demurrage in accordance with the carrier's tariff applicable to the route
over which the goods are carried. If unpacking the goods of container(s)
is required for whatever reason and the contents cannot be identified as
to the marks and numbers, cargo sweepings liquid residue and any
unclaimed contents not otherwise accounted for shall be allocated for
B
completing delivery to the merchant. The carrier shall not be required
to separate or deliver goods in accordance with the brand, marks,
numbers, size or types of packages as stated by the merchant in his
particulars but only to deliver total number of containers (if same
loaded by the merchant or packages or uni ts) (if container( s) loaded by
c the carrier) shown on the face of this Bill of Lading.

Clause (2) of the Bill of Lading defines 'Carrier's Tariff as follows:

"Clause (2)- Carrier's Tariff:

The terms of the carrier's applicable tariff are incorporated herein and
D
copies of the relevant provisions of the applicable tariff are obtainable
from the carrier or the agents upon request. In the case of inconsist-
ency between this Bill of Lading and the applicable tariff, this Bill
of Lading shall prevail."

E Clause (14) confers a lien on the goods for all sums payable under the
contract. The said clause is quoted below in extenso:

"Clause (14). FREIGHT ETC. EARNED

........ All unpaid charges shall be paid in full and without any offset,
F counterclaim or deduction. Any error in freight or other charges or in the
classification of Goods is subject to correction and if on correction the freight
or charges are higher the Canier may collect the additional amount from
shipper or consignees. The Carrier shall have a lien on the Goods and any
documents relating thereto for all sums payable to the Carrier under the
contract (including without limitation unpaid freight and dead freight upon
G any portion of the Goods covered by the Shipping Order granted in respect
hereof which may not have been shipped) and the General Average contri-
bution to whomsoever due and for the cost of recovering the same and for
that purpose shall have the right to sell the Goods by public auction or private
treaty without notice to the Merchant. The Merchant shall indemnify the
H Carrier against all and any costs incurred by the Carrier in exercising his
f

SllIPPING CORPN OF INDIA LID. v. C.L JAIN WOOLEN MILLS [PATIANAIK, !.] 1091
rights under this clause." A
The expression "Carrier" under the definition clause in the Bill of Lading
means the Shipping Corporation of Indra Limited and/or associated company
on whose behalf the Bill of Lading has been signed.

The two provisions of the Contract Act, on which Mr. Dave, appearing B
for the appellant, strongly relied upon, may now be noticed. Section 170 is
the right of lien of the bailee for the services rendered in respect of the goods
and the bailee has right to retain the goods until he receives due remuneration
for the services he has rendered. Section 171 is the General lien of bankers,
factors, wharfingers, attorneys and policy brokers, who also retain as a
security, the goods bailed to them. The contention of Mr. Dave, for the
c
appellant is the right of the appellant to claim demurrage charges in respect
of the goods, which is in his custody, the said goods not being released, within
a specified period, flows from the terms and conditions of the contract
between the importer and the corporation and that right cannot be taken away
by issuance of a detention certificate by the Customs authorities under the D
provisions of the Customs Ac• and as such even if a Coutt directs that the
importer is not liable to pay the demurrage charges, because of the illegal
detention of the goods by the customs authorities, the appellant would not
be bound by the same, particularly, when the appellant was not a party to
the proceedings between the customs authorities and the importer. Learned E
Additional Solicitor General, Mr. Mukul Rohtagi however, on the other hand
contends that Section 45(2)(b) of the Customs Act prohibits release of
imported goods from the customs area, except in accordance with the
permission in writing of the proper officer. The expression 'otherwise dealt
with' in the aforesaid provision is also a restriction placed on the custodian
and that is a complete embargo for the goods being released. The prohibition F
in question is in relation to removal of goods as well as dealing with the goods
in any manner. This being the manner of restrictions imposed for removal of
the goods and at the same time, conferring power on the customs authorities,
if after initiation of adjudication proceedings, a Court of law nullifies the
same and the customs authorities then issues a detention certificate, then the G
importer would not be liable for paying any demurrage charges, notwithstand-
ing the contract between the importer and the appellant, and at any rate, the
customs authorities cannot be fastened with the liability of paying the
demurrage charges. Jn this view of the matter, the order of the Delhi High
Court dated 18.1.99 must be held to be erroneous. The rival contentions
H
1092 SUPREME COURT REPORTS (2001] 2 S.C.R.
A require careful examination of the different provisions of the Custom~ Act,
the Contract Act as well as the Bills of lading.

Before examining the correctness of the rival submissions, one thing
is crystal clear that the relationship between the importer and the carrier of
goods in whose favour the Bill of lading has been consigned and who has
B stored the goods in his custody, the relationship is governed by the contract
between the parties. Section 170 of the Indian Contract Act engraft the
principle of Bailee's lien, namely if somebody has received the articles on
being delivered to him and is required to store the same until cleared for
which he might have borne the expenses, he has a right to detain it until his
c dues are paid. But it is not necessary in the case in hand to examine the
common law principle and the bailee's lien inasmuch as the very terms of
the contract and the provisions of the Bills of Lading,, unequivocally con-
ferred power on the appellant to retain the goods, until the dues are paid. Such
rights accruing in favour of the appellant cannot be nullified by issuance of
a certificate of detention by the customs authorities unless for such issuance
D
of detention certificate any provisions of the Customs Act authorises. We had
not been shown any provisions of the Customs Act, which would enable the
customs anthoritics to compel the carrier, not to charge demurrage charges,
the moment a detention certificate is issued. It may be undoubtedly true that
the customs authorities might have bona fide initiated the proceedings for ..
E confiscation of the goods which however, ultimately turned out to be unsuc- -I
cessful and the Court held the' same to be illegal. But that by itself, would
not clothe tl1e customs authorities with the power to direct the carrier who
continues to retain a lien over the imported goods, so long as his· dues are
not paid, not to charge any demurrage charges nor the so-called issuance of
p detention certificate would also prohibit the carrier from raising any demand
towards dernurrage charges, for the occupation of the imported goods of the
space, which the proprietor of the space is entitled to charge from the
importer. The importer also will not be entitled to remove his goods from the
premises unless customs clearance is given. But that would not mean that
demurrage charges could not be levied on importer for the space his goods
G have occupied, since the contract between the importer and the proprietor of
the space is in no way altered because of the orders issued by the customs
authorities. The learned Additional Solicitor General, vehemently argued and
pressed sub-section 2(b) of Section 45 in support of his contention that the
imported goods have to be dealt with in accordance with the permission in
H writing of the proper officer of the customs department and in exercise of
SHIPPING CORPN OF INDIA LTD. v. C.L. IAIN WOOLEN MILLS (PATIANAIK, J.] 1093
such power when customs authorities initiate adjudication proceeding and A
'>-- ultimately confiscate and levy penalty, when such order is struck down and
a detention certificate is issued, the said issuance of detention certificate
would come within the expression "otherwise dealt with" used in Section
45(2)(b), and therefore, the proprietor of the space would be bound not to
charge any demurrage charges. We are unable to accept this contention
B
inasmuch as the expression "otherwise dealt with" used in Section 45(2)(b),
in the context in which it has been used, cannot be construed to mean, it
authorises the customs officer to issue a detention certificate in respect of the
imported goods, which would absolve the importer from paying the demur-
rage charges and which would prevent the proprietor of the space from
levying any demurrage charges. Having scrutinized the provisions of the c
Customs Act, we are unable to find out any provision which can be remotely
constrned to have conferred power on the customs authorities to prevent
the proprietor of the space from levying the demurrage charges and,
thereby absolving the importer of the goods from payment of the same. In
fact the majority decision in Grand Slam Intemational's case, [1995] 3 SCC
D
151, clearly comes to the aforesaid conclusion with which we respectfully
agree.

We have also examined the decision of this Court in Union of India
•-' v. Sanjeev Woolen Mills, [1998] 9 SCC 647 and we do not find any apparent
inconsistency between the decision of this Court in Grand Slam and that of E
~
the Sanjeev Woolen Mills. In Sanjeev Woolen Mills, the imported goods were
synthetic waste (soft quality), though the customs authorities detained the
same, being of the opinion that they were prime fibre of higher value and
not soft waste. On account of non-release, the imported goods incurred heavy
demurrage charges but the customs authorities themselves gave an undertak-
ing before the High Court that in the event the goods are found to be synthetic
F
waste, then the Revenue itself would bear the entire demurrage and container
charges. Further the Chief Commissioner of Customs, later had ordered
unconditional release of goods and yet the goods had not been released. It
is under these circumstances and in view of the specific undertaking given
by the customs authmities, this Court held that from the date of detention of G
the goods till the customs authorities intimated the importer, the importer
... would not be required to pay the demurrage charges. But in that case even
subsequent to the orders of the customs authorities on a suit being filed by
-'.
one of the partners of the importer-fmn, an order of injunction was issued
and, therefore it was held that for that period, the importer would be liable H
1094 SUPREME COURT REPORTS [2001] 2 S.C.R.
A for paying the demurrage and container charges. The judgment of this Court
in Sanjeev Woolen Mills, therefore, was in relation to the peculiar facts and
circumstances of the case and the Conrt had clearly observed that the order
in question is meant to do justice to the importer, looking to the totality of
the circumstances and the conduct of customs authorities. Thus, we see no
inconsistency between the ratio in Sanjeev Wollen Mills and the Judgment of
B
this Court in Grand Slam. That apart, the judgment in Grand Slam was a three
judge bench judgment. In the case in hand, as has already been stated earlier,
the earlier judgment of Delhi High Court dated 9.9.94 in C.W.P. No. 1604/
91, has become final, which entitles the importer to get the goods released
without payment of the detention and demurrage charges. In the contextual
c facts, notwithstanding the judgment of the High Court, the goods not having
been released, the impugned order and direction dated 18.1.99, cannot be held
to be infirm in any manner. In the absence of any provision in the Customs
Act, entitling the customs officer to prohibit the owner of t11e space, where
the imported goods have been stored from levying the demnrrage charges,
levy of demnrrage charges for non-release of the goods is in accordance with
D
the terms and conditions of the contract and as such would be a valid levy.
The conclusion of the High Court to the effect that the detention of the goods
by the customs authorities was illegal and such illegal detention prevented
the importer from releasing the goods, the customs authorities would be
, __
bound to bear the demurrage charges in the absence of any provision in the
E Customs Act, absolving the customs authorities from that liability. Section
45(2)(b) of the Customs Act cannot be construed to have clothed the customs
authorities with the necessary powers, so as to absolve them of the liability
of paying the demurrage charges. In the aforesaid premises, we see no
infirmity with the directions given by the Delhi High Conrt on 18.1.99. The
F goods in question, having already been directed to be released, without the
payment of the demurrage charges, the importer must have got the goods
released. Having regard to the fact situation of the present case, it would be
meet and proper for us to direct t11e Shipping Corporation and Container
Corporation, if an application is filed by the customs authorities to waive the
demnrrage charges. The appeal is disposed of accordingly.
G
B.S. Appeals disposed of.