COX & KINGS (AGENTS) LTD. v.

THEIR WORKMEN AND ORS.

March 18, 1977

[V. R. KRISHNA IYER, R. s. SARKARIA AND JAswANT SINGH, JJ.J

Industrial Disputes Act, 1947-S. 2(b) and s. 19(3)-Scope of-Dedsion given without going into merits of a dispute-If an award-Second reference iu

uch a case-If could be made within a year.

The term 'Award' has been defined by s. 2(b) of the Industrial Disputes Act, 1947 to mean an interim or a final determination of any industrial dispute or of any question relating thereto by a Labour Court. Section 10, which describes the matters that can be referred to a Labour Court etc. for adjudication provides in sub s. (I) that where an appropriate government is of opinion that any industrial dispute exists or is apprehended it may, at any time, by order in writing ... ( c) refer the dispute or any matter appearing to be connected with or relevant to the dispute, if it relates to any matter specified in the second schedule, to a Labour Court for adjudication. Under s. 19(3) an award shall remain in operation for a period , of one year from the date on which the award becomes enforceable under s. 17A.

An industrial dispute relating to the dismissal of three workmen of the appellant had been referred to a Labour Court. The Labour Court held that the reference was invalid because, as the workmen had not served demand notice on the management prior to the reference, no industrial dispute could legally come into existence before the reference.

After serving a demand notice on the manage.ment within a month thereafter the workmen raised an industrial dispute relating to the same matter. The Labour Court rejected the employer's preliminary objection that in vie\V of s. 19, the se.cond reference was not competent in that it was made within one year of the first award, and decided the case on merits. The Labour Court held that the termination of the services of the workmen was illegal and ordered reinstatement with back wages from the date of termination.

The employer's writ petition under Art. 226 of the Comtitution i1npugning the Labour Court's decision was dismissed by the High Court.

Dismissing the appeal,

HELD : The Labour Court's determination in the first. reference did not possess the attributes essential to bring it within the definition of an award. The mere fact that this order was published by the Government under s. 17(1), did not confer that status on it.

[339 D]

l(a) The definition of 'award' under s. 2(b) falls in two parts (i) determination, final or interim, of any industrial dispute and (ii) of any question relating to an industrial dispute. The basic posttJ.late common to both the parts of the defintion is the exi'stence of on industrial dispute, actual or apprehended.

The 'detern1ination' contemplated by the definition is of an industrial dispute or a question relating thereto on merits.

[338 D]

(b) In the instant cases the order of the Labour Court in the first reference did not determine the question or points specified in government order of reference, nor was it an adjudication on merits of any industrial dispute or a question relating thereto.

The only question determined by the Labour Court was about the existence of an industrial dispute which in its opinion was a sine qua non for the validity of the reference. Rightly or wrongly it found that this preliminary jurisdictional fact did not exist because no industrial dispute had come into existee.ce in accordance with law and in consequence. the reference was invalid. There was, therefore, no determination of the dispute on merits on the question relating thereto.

[339 C-D]

Tcclinological Institute of Textiles v. /ts Workn1en and Ors. [1965] 2 LLJ 149, A followed.

Manage1ne11t of Baflgalore Woollen, Cotton & Silk Mills Co. Ltd. v. The Workmen and Anr. [1968] 1 SCR 581, referred to. rt/#· Workmen of Swadeshi l.'otton Mills Co. Ltd. v. Swadeshi Cotton A-tills Co.

Ltd. Kanpur and Ors. 42 Indian Factories Journal p, 25.5, not a~ved.

(b) Moreover the decision of the Labour Court in the first reference did not B impose any continuing obligation on the parties bound by it. The second reference was, therefore, not barred by oo.ything contained in subs. (3) or other provisions of s. 19. [340 Cl

2. The Labour Court was not justified in awarding compensation to the workmen for wages relating to the period prior to the date on which the demand notice for reinstatement was served on the management. [140 I-I]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 375 of 1976.

(Appeal by Special Leave from the Judgment and Order dated 7.11.1975 of the High Court at New Delhi in Civil Writ No. 1123 of 1975)

G. B. Pai, 0. C. Mathur and D. N. Mishra, for the appellant.

M. K. Rarnarnurthi, S. C. Jain and Madan Mohan, for respondent No. 1.

The Judgment of the Court was delivered by

SARKARIA, J.-Th principa[ question that arises in this appeal by special leave is : Whether an order of the Labour Court to the effect, that since no demand of the workmen had been served on the employer, no industrial dispute had come into existence in accordance with law, and as such the Reference was invalid and the Court had no jurisdiction to adjudicate the matter referred to it by the Government, is an "award" for the purposes of Section 19 of the Industrial Dis-

!putes Act, 1947, (for short, called the Act)?

Cox & Kings (Agents) Ltd. (for short, the Management) dis- F missed from service three of their workmen after a domestic enquiry conducted against them on certain charges.

In May 1967, the Lt. Governor of Delhi made a Reference under s. 10 read with s. 12(5) of the Act to the Labour Court, Delhi, to deter.nine :

"Whether the terminations of services of S/Shri H. S.

Rawat, Bidhi Chand and Ram Sarup Gupta were unlawful and unjustified, and if so, to what relief are these workmen entitled?"

By an amendment of their written statement in February, 1969, augmented by an application dated 17.8.1971, the Management rais- H ed a preliminary objectiQn that since no demand notice had been •served on the Management, no industrial dispute had legally come into exllitence, and as such the Reference was invalid and the Labour

.A Court had no jurisdiction to adjudicate it.

By an order, dated September 27, 1972, the Labour Court accepted the objection, holding :

" that no industrial dispute came into existence before this reference as the workmen have failed to establish serving of demand on the management prior to this reference.

The effect of this finding is that the reference could not have been made for adjudication and the same is accordingly invalid and hence !he question of deciding the issue as In the reference or other issu1:s does not arise as the industrial dispute under reference did not come into existence in accordance with Jaw before this reference.

This award is made accordingly."

Thereafter, the workmen on 25.l 0.1972, raised a dispute by serving demand notices on the Management.

By his order dated 2.5.1973, the Lt. Governor, Delhi, again made a Reference to the Labour Court, under the Act for adjudication of the same matter relating to the termination of the services of the aforesaid workmen.

The Management raised, inter alia, a preliminary objection that a second Refere, ncc within one year of the first 'award', dated September D 27, 1972, was not competent in view of what is contained in sec. 19 of the Act.

By an order dated 2.5.1973, the Labour Court dismissed the preliminary objections.

After recording the evidence produced by the parties, !he Court held on merits, !hat the termination of the services of 3 workmen was illegal and unjustified. The Court further found that Bidhi Chand workman had become gainfully employed elsewnere as a driver with better emoluments and it was therefore sufficient to award him compensation without any relief of reinstatement, at the rate of 50% of his wages for three years from 1966 to 1969 to the date of his getting employment elsewhere.

It fmther found that Ram Sarup Gupta had remained unemployed after his dismissal in 1966. It therefore directed his reinstatement with full back wages and continuity of service.

As regards H. S. Rawat, !he Court fonnd that he could not have remained unemployed throughout but was doing some work or the other for his living, may be with occasional spells.

The Court therefore held that Rawat was entitled to reinstatement and continuity of service with 50% back wages till the award came into operation and he got his reinstatement.

This award was made by the Labour Court on 1-5-1975.

The Management impugned thfr award by filing a writ petition

1under Art. 226 of the Constitution in the High Court of Delhi. Only

three contentions were canvassed by the Management at the preliminary hearing before the High Court : ( i) That the determination, dated 27.9.1972, by the Labour Court was an 'award' as defined ins. 2(b) of the Act, and in view of sub-s. (3) of s. 19, it had to be in operation for a period of one year.

It could be terminated only by a notice given under sub-ss. ( 4) & ( 6) of s. 19.

Since no such notice was given, !he award continued to be in operation.

The second award, dated 1-5-1975, could not be validly made during the period, the

fu:st award was in operation; (ii) The demand for reinstatement was A not made by the workmen till 1972 and the Labour Court was not justified in awarding them the relief of reinstatement together with compensation for back wages from 1966 onwards; (iii) The onus to show that the workmen had not obtained alternative employment, after their dismissal, was. on the workmen and this onus has not been discharged.

On the other hand, the Labour Court wrongfully did not permit the Management to adduce additional evidence to show that the workmen B had obtained alternative employment and, in consequence, were not entitled to back wages.

Regarding ( i), the High Court held that since the 'award' dared 27.9.1972, was not one which imposed any continuing obligation on the partie'S, but had ended with its pronouncement, nothing in subsections (3) and (6) of sec. 19 was applicable to it. c

As regards (ii), the High Court held that once the dismissal of the workmen was found illegal, it was inevitable to award the compensation from the dates of dismissal till they found alternative employment or till the date of the award, as the case may be.

In regard to (iii), the High Court said that the question of burden of proof as to who is to prove, whether the workmen did not get alternative employment for the period for which back wages have been awarded to them could arise only if no evidence was given by either party or if the evidence given by them was evenly balanced.

Neither of these circumstances was present before the Labour Court, and there was no good reason to disturb the finding of fact recorded by the Labour Court on this point.

The High Court tbns rejected all the three contentions, and, in the result, dismissed the writ petition in limine, with a speaking order.

Hence this appeal.

Shri G. B. Pai has reagitated all the three points before us.

He assails the findings of the High Court, thereon.

Regarding point No. (i) Mr Pai's argument is that the determination, dated 27.9.1972, also, was an 'award' within the second part of the definition of the term in e. 2(b) of the Act, inasmuch as it determined a question relating to an industrial dispute.

Emphasis has also been laid o, n the point that this 'award', dated 27 .9.1972 was

duly published by the Government under s. 17(1) and had assumed finality under sub-s. (2) of the same section.

This award dated 27.9.1972-proceeds the argument-bad to remain operative under sub-s. (3) of s. 19 for a period of one year from the date on which

it became enforceable under 8. 17 A i.e., a date one month after its publicatio, n. It is submitted that no second Reference could be validly made by the Government during the period the first award remained operative, and since the :o.econd Reference, dated 2.5.1973 was made before the expiry of such period of the first award (which had not been terminated in the manner laid down in s. 19) it was invalid and the consequeintial adjudication by the Labour Court on its basis, was null and void.

In this connection counsel has relied upon a

.7 -43 6SCI /77

judgment of this Court in Management of Bangalore Woollen, Cotton & Silk Mills Co. Ltd. v. The Workmen and anr.(') wherein it was held that when there is a subsisting award binding on the parties, the Tribunal has no jurisdiction to consider the same points in a fresh reference.

Jn that case, the earlier award had not been terminated and the Reference was therefore held to be incompetent.

Reference bas also been made to a single Bench Judgment of the Allahabad lligh Court in Workmen of Swadeshi Cotton Mills Co. Ltd. v Swadeshi Cotton Mills Co., Ltd., Kanpur and ors.(2)

As against this, Shri M. K. Ramamurthi maintains that the Labour Court's order, dated May 1, 1972, was not an 'award' within the definition of the term in s. 2(b) inasmuch as it was not a determination, on merits, of any industrial dispute or of any question relating C to an industrial dispute.

In this connection reliance has been placed on a judgmoot of this Court in Civil Appeal No. 241 of 1964 (Technological Institute of Textiles v. Its Workmen and ors. (3).

Before dealing with the contentions canvassed, it will be worthwhile to notice the relevant statutory provisions.

D The terms 'award' and 'industrial dispute' have been defined in

the Act as follows :

'Award' means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National Industrial Tribunal and includes an arbitration award made under s. lOA". [vide s. 2 (b)].

"Industrial dispute" means "a; ny dispute or difference between employers and employens, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person", [vide s. 2(k)].

Section 10 describes the matters which can be referred to Boards, Courts or Tribunals for adjudication.

Only clause (i) of subsection ( 1) is material for our purpose. I! provides;

"Where the appropriate Government is of opinion that any industrial dispute exists or is apprehended, it may at any time by order in writing-

(a) (b)

(c) refer the dispute or any matter appearing to be connected with, or relevant to the dispute, if it relates to any

(1) [196R] I S.C.R. 581.

(1) 42 Indian Factories Journ•I p. 255.

(3) [1965] 2 L.L.J. 149.

.matter .specified in the Second Schedule to a Labour Court 'A .for .adjudication".

Sub-section ( 4) requires the Labour Court to confine its adjudi- .cation to those po\nts of dispute and matters incidental thereto which

<he appropriate Government has referred to it for adjudication.

The material part of section 19 reads as under :

"(1)

(2) ..

(3) An award shall, subject to the provisions of this section remain in operation for a period of one year from the date on which the award becomes enforceable under

&1~ c

Provided that the appropriate Government may reduce .the said period and fix such period as it thinks fit :

"Provided further that the appropriate Government may, before the expiry of the said period, extend the period of operation by any period not exceeding one D year at a time as it thinks fit so, however, that the total

(4)

( 5)

period of operation of any award does not exceed three years from the date on which it came into operation.

Where the appropriate Government, Whether of its own motion or on the application of any party bound by the award, considered that since the award was made, there has been a material change in the circumstances on which it was based, the appropriate Government may refer the award or a part of it to a Labour Court, if the award was that of a Labour Court or to a Tribunal, if the award was that of. a Tribunal or of a National Tribunal for decision whether the period of operation should not, by reason of such change, be shortened and the decision of Labour Court or the Tribunal, as the case may be, on such reference shall be final.

Nothing contained in sub-section (3) shall apply to any award which by its nature, terms or other circumstances does not impose, after it has been given effect to, any continuing obligation on the parties bound by the award.

(6) Notwithstanding the expiry of the period of operation under snb-section (3), the award shall continue to be binding, on the parties until a period of

two months has elapsed from the date on which H notice is given by any party hound by the award to the other party or parties intimating its intention to

terminate the award.

(7) No notice give.a under sub-section (2) or sub-section

(6) shall have effect, unless it is given by a party representing the majority of persons bound by the settlement or award, as the case may be."

There is no dispute that the order on the earlier Reference was made by the Labour Court on 27-9-1972, while the second Reference with the same terms of Reference to that Court was made by tho Government on 2.5.1973, i.e., within one year of the earlier order.

It is common ground that the period of one year for which an award normally remains in operation under sub-s. (3) was not reduced or curtailed by the Government under sec. 19 or under any other provision of the Act.

It is further admitted between the parties that no notice was given by any party of its ntention to terminate the Order dated 27.9.1972.

The controversy with regard to the first point therefore narrows ""' down into the issues whether the determination dated 27.9.1972, of the Labour Court was an award as defined in s. 2 (b) of the Act:/

The definition of award in s. 2(b) falls in two parts.

The first part covers a determination, final or nterim, of any industrial dispute.

The second part takes in a determination of any question relating to an industrial dispute.

But the basic postulate common to both the parts of the definition, is the existence of an industrial dispute, actual or apprehended.

The "determination" contemplated by the definition is of the industrial dispute or a question relating tl1ereto, on merits. It is to be noted further that sec. 2, itself, expressly makes the definition subjet:t to "anything repugnant in the subject or context".

We have therefore to consider this definition in the context of sec. 19 and other related provisions of the Act.

Mr. Pai concedes that the order dated 27.9.1972, is not a deter. mination of any industrial dispute, as such, falling under the first part of the definition.

However, his argument is that the expression "or F •any question relating thereto" in the second part of the definition is of wide amplitude and should be spaciously construed.

It is maintained that a question, whether or not an industrial dispute exists, will itself be a questi..0n relating to an industrial dispute within the intendment of the second part of the definition.

The contention appears to be attractive but does not stand a close G examination.

Sub-section (1) of sec. 10 indicates when and what matters can be referred to the Labour Court for adjudication.

The sub-section expressly makes formation of opinion by the appropriate Govemmnt,

that any industrial dispute exists or is apprehended" a _condillon_ precedent to the exercise of the power of making a Reference.

Subsection ( 4) gives a mandate. to the La.hour Court to confin~ its judi cation to those points of dispute which have been specified m the Order of Reference, or are incidental thereto. From a conjoint reading of cl.(b) of s. 2 and sub-section (1) and (4) of sec. 10, it is

clear that i, n order to be an 'award' within the second part of the defi- A nition, a determination must be-(i) an adjudication of a question or point re:ating to an industrial dispute, which has been specified in the Order of Reference or is incidental thereto : and (ii) such adjudication must be one on merits.

Now let us test the Labour Court's order, dated 27.9.72 in the light of the above enunciation.

That Order did not satisfy any of the B criteria indicated above. It did not determine the questions or points

specified in the Government Order of Reference.

Nor was it an adjudication on merits of any industrial dispute or a question relating thereto. The only question determined by the Order, dated 27.9.1972, was about the existence of a preliminary fact, viz., existence of an industrial dispute which in the Labour Court's opinion was a siM qua non for the validity of the Reference and the exercise of further C jurisdiction by the Court.

Rightly or wrongly, the Court found that this preliminary jurisdictional fact did not exist, because "no industrial dispute had come into existence in accordance with Jaw", and, in consequence, the Reference wa6 invalid and the Court was not competent to enter upon the Reference and determine the matter referred to it.

With this finding, the Court refused to go into the merits of the question referred to it. There was no determination on D merits of an industrial dispute or a question relating thereto.

We are therefore of opinion that Labour Court's determination dated 27.9.1972, did not possess the attributes essential to bring it within th• definition of an 'award'.

The mere fact that this order was published by the Government under s. 17(1) of the Act did not confer that status on it

In the view we take we are fortified by the principle laid down by this Court in Technological Institute of Textiles v. Its Workmen

(supra).

In that case, there was a settlement which in the absence of necessary formalities, was not binding on the parties.

Certain items of dispute were not pressed and withdrawn under the terms of such settlement.

In the subsequent reference before the Industrial Tribunal some of the items of dispute were withdrawn and no F award was made in respect thereto.

Thereafter, these items wera again referred for adjudication along with certain other matter~ to the Tribt1nal. It was contended on behalf of the Management that subsequent reference with regard to the items which had been withdrawn and not pressed in the earlier reference, was barred under sec. 19, because the earlier award had not been terminated in full.

Ramaswami J., speaking for the Court, repelled this contention. with these G observations :

"It is manifest \n the present case that there has been no adjudication on merits by the industrial tribunal in the previous reference with regard to the matters covered by items ( 1) and (3) of the present reference, because the workmen had withdrawn those matters from the purview of H the dispute.

There was also no settlement in Ex. R. 4, because the demands in question had been withdrawn by the workmen and there was no agreement between the parties

A in regard thereto. Our conclusion, therefore, is that the bar of s. 19 of the Industrial Disputes Act docs not operate with regard te the matters covered by items (1) and {3) of the present reference and the argument put forward by the appellant on this aspect of the case must be rejected."

8 Although the facts of the case before us are different, yet the principle enunciated therein viz., that the bar of sec. 19 operates only with regard to a detennination made on merits, is fully applicable.

By any reckoning, the decision dated 27.9.1972 of the Labour Court by its very nature did not impose any continuing obligation on the parties bound by it.

This was an additional reason. for holding thatl the earlier reference was not barred by anything contained in sub-section (3) or other provisions of section 19, c

We have gone thrqugh the single Bench decision o~ the Allahabad High Court in Workmen of Swadeshi Cotton Mills Co. Ltd. case

(supra).

That decision is to the effect that the finding recorded by the Labour Court that the matter referred to it for adjudication wru not an industrial dispute as defined! in the Act is itself a determination of a question relating to a:n industrial dispute, and would fall within

the definition of the term "award" under the Act.

In our opinion, this is not a correct statement of the law on th<:> point. ,

The next submission of Mr, Pai is that since the demand for reinstatement was not duly made by the workmen before 28 . 10. 1972, the Courts below were not justified in awarding to the workmen, compensation for back wages from 1966 onwards.

On the other hand, Mr. Ramamurthi maintains that such a claim F was presumably agitated by the workmen in proceedings before the Conciliation Officer, in 1966.

While conceding that technically, no demand notice for reinstatement was served by the workmen on the Management before 25. 10. 1972, Counsel submits that the Management were aware of the workmen's claim to reinstatement, since 1966, and in these circumstances, the Management should not be allowed to take shelter behiud this technical flaw, and deny just compensation to G them from the date of wrongful dismissal.

We have carefully considered the contentions advanced on both sides.

After taking into consideration all the circumstances of the case, we are of opinion that the Labour Court was not justified in awarding compensation to the workmen, for wages relating to the H period prior to 25.10.1972 i.e., the date on which the demand notices for reinstatement were served on ihe Management.

To this extent, we would accept the contention of the appellants.

The third contention of the appellants is that the onus of prov- A mg that they had not obtained alternative employment elsewhere after the termination of their services, was on the workmen and they had failed to discharge that onus. '

"" We find no merit in this cqntention.

').·

'_[he question of onus oft loses its importance when both the parties adduce whatever evidence they had to produce.

In the instant case, both the parties led their evidence and closed their respective cas!lS.

Subseque?tly, at .a. late stae, the Management made an application for adducmg additional evidence. The Labour Court declined that application.

The High Court found-and we think rightly, no good reason to interfere with the discretion of the Labour Court.

It may be remembered further, that this appeal arises out of a petition under Art. 226 of the Constitution, and in the exercise of that special jurisdiction? the High Court .does not reopen a finding of fact based on legal evidence. The findmgs of the Labour Court to the effect, that after their dismissal, Ram Swarup Gupta was unable to find any alternative employment elsewhere, while Rawat was able to find on! Y intermittent employment elsewhere, were based on evidence produced by the parties. The High Court was therefore right in not interfering with those findings of fact.

Lastly it was urged by Mr. Pai, that the employers had lost confidence in the employees, and therefore, compensation, without reinstatement, would have been adequate relief.

It is submitted that the business of the employers is that of Travel Agents and such a sensitive business can be successfully carried on only with the aid of employees whose fidelity and integrity is beyond doubt.

It is stressed that the employees of the appellants, have to handle daily lot of cash received from their clients in the discharge of their duties. It is pointed out that the charge against H. S. Rawat was one of misappropriation of such funds and this charge was established in the domestic enquiry.

The Labour Court, proceeds the argument, did not displace that finding of the domestic Tribunal, but ignored it on the ground that the charge was stale and had been condoned.

In short, the argument is that the employers had lost confidence in this employee. who could no longer be entrusted to perform sensitive jobs on behalf of the Manageme, nt, without detriment to its business.

We are unable to accept this contention.

Firstly, this point was not argued before the High Court. Second- G ly, the observations of the Labour Court, read as a whole, show that, in its opinion, the charge of misappropriation of funds had not. been proved against H. S. Rawat.

This is what tl; ie Labour .Court said on the point :

"I am therefore of op\nion that the charges had been condoned and they could not be revived . again. and the . ct

of reviving the charge on account of his Uruon act1V1hes was an act of unfair labour practice on the part of the Management and amounted to victimisation. Even the

342 SUPRBMI! COURT Rl!PORTS

[1977] 3 S.C.R.

A charges in the charge-sheet Ex. M/5 have not been established before me, that the workman withdrew the fnnds from the company on false pretences for revenue stamps and misappropriated the same."

Thus there is no factual basis for this belated contention, and we

""'I repel the same.

For the foregoing reasons, we dismiss this appeal with the modification that in addition to the relief of reinstatement with continuity of service, S/Shri H. S. Rawat and Ram Swarup Gul'ta shall be entitled to 50%, and full back wages, respectively, from 25.10.1972.

It may be recalled that the special leave to appeal in this case, was granted on the condition that the appellants shall pay the coslli

of this appeal to the respondents, in any event.

We order accordingly. ·

P.B.R.

Appeal dismissed.

COX & KINGS (AGENTS) LTD

THEIR WORKMEN AND ORS

March 18, 1977

V. R. KRISHNA IYER

R. s. SARKARIA

JAswANT SINGH, JJ

Industrial Disputes Act, 1947

S. 2(b)

s. 19(3)

s. 2(b)

Industrial Disputes Act, 1947

Section 10

s. 19(3)

s. 17A

s. 19

Art. 226

s. 17(1)

s. 2(b)

[1968] 1 SCR 581

s. 19

Cl

2

G. B. Pai

0. C. Mathur

D. N. Mishra

M. K. Rarnarnurthi

S. C. Jain

Madan Mohan

SARKARIA

Section 19

Cox & Kings (Agents) Ltd.

Delhi

s. 10

s. 12(5)

Labour Court, Delhi

H. S.

Rawat

Bidhi Chand

Ram Sarup Gupta

September 27, 1972

25.l 0.1972,

September D 27, 1972

sec. 19

H. S. Rawat

Rawat

Art. 226

High Court of Delhi

s. 19

s. 19

sec. 19

G. B. Pai

Pai

s. 17(1)

s. 19

s. 19

Allahabad lligh Court

M. K. Ramamurthi

May 1, 1972

s. 2(b)

s. 2

s. 2(k)

Section 10

Second Schedule

section 19

sec. 19

s. 2

s. 2(b)

sec. 2

sec. 19

sec. 10

s. 2

sec. 10

s. 17(1)

sec. 19

Ramaswami

s. 19

Industrial Disputes Act

sec. 19

section 19

Allahabad High Court

28 . 10. 1972

Ramamurthi

25. 10. 1972

Art. 226

Ram Swarup Gupta

Ram Swarup Gul'ta


1 ·

RANA SHEO AMBAR SINGH v.

ALLAHABAD BANK LTD.

February 18, 1977

[l\I. H. BEG, C. J., A. C. GUPTA :~ND P. S. KAii.ASAM, JJ.]

Execution of. a 1nort:;:age decree-Proprietary ri1d1ts in Sir, Khudkhast land and grove land )\,'hicll were n1ortgaged 1vere extilu.:uisill'd and the Bliumidari rig/it an altogether new right created by U.P. Zaniindari Abolition and Land Reforms Act. 1950 (U.P. Act 1 of 1951 )-Jf'i'let1ier trees being a part of a grove are included in the "grore-land" which V!!!ifS in th:J U.P. State Governnunt free frqm all encun1brances-Scove of ectio-i 6(a) (i). 6(/i) and 1~ of the U.P. Zamindari Abolition & Land Refor1ns Act, 1950.

In Rana Sileo A1nbar Singh v. Allahabad Bank Ltd., Allaliabad (1962) - 2 SCR p.441, this Court held that the respondent could not enforce his nghts ur, der the mortga_ge by the sale of the new Bhumila1i rights created in favour of the mortgagor by s. 18 of the U.P. Zamindari Abolition and Land Reforms Act, 1950 and that the respondent could only enforce his rights against the appellant in the manner provided under s. 6(h) of the Act read with s. 73 of the Transfer of Property Act, and follo\v the compensation awarded to the intermediary. Despite this decision having been brought to the notice in the execution proceedings initiated by the respondent attachment of the trees in groves belonging to the ap{'.lellant was ordered by 1he executing Court taking the view that there is a distinction behveen the tr.'!es and a grove and grove land.

The Di iision Bench of the Allahabad High Court (Lucknow Bench). upheld the views of the Executing Court and dismissed the aopeat.

AllO\\'ing the appeal by certificate, the Court,

HELD : ( 1 )_ The vieW that there is a dis_tinction beh.\'een trees and a grove ar.d p:rove land and, therefore exect1tion aga:nst trees in groves could be proceeded against cannot be accepted in the light of th~ definition of the intermediary

g:rove under s. 3(13) of the U.P. Zamindari Aboiition and Land Reforms Act, 1950, viz., "intermediary's grOve" means grovland held or occupied by an intermediary as uch. [34 : D-E, H]

(2) Groves are only collection of trees in plots of land so as io preclude cultivation in them. The uncut trees are deemed to be parts of the la-nd. The proposition is W_!ll settled under the general la\v. that trees, before they are cut, fcrm parts of 'land'. And are inseparable part is ahvays included in the \\'hole.

[34E-FJ

(3) Section 18(1)(a) of the Act provide that an "intermediary grove" is bhumidary property.

Rights in it are parts of bhumidari rights. [34F] ·

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2041 of 19~. . .

(From the Judgment and Decree dated 2.2.1966 of the Allahabad High Court (Lucknow Bench) Lucknow in First Execution Appeal No 5/62).

S. N. Pre.sad, for the appellant.

G. C. M:11hur and 0. P. Rana for the respondent.

The Judgment of the Court was delivered by ••

BEG. C.J.-'01is appeal by certificate raises the simple question whether :ertain trees, said to be part of a grove, are included in

SUPREME COURT REPORTS

U 9771 3 SC.R.

grove-land, which, under section 6(a) (i) of the U.P. Zamindari Abolition and Land Reforms Act, 1950 (hereinafter referred to as the Act), vests in the State of Uttar Pradesh free from all encumbrances. This very question was raised by the respondent-decree holder in the. execution proceedings in this very case, between the same parties which came to this Court on an earlier occasion.

We have perused the judgment of this Court reported in 1962 (2) S.C.R. 441, in the case.

We find that the position taken by the respondent-decree-holder then also was that, after the coming into force of the Act, what could still be sold in execution of the decree was the right in trees of groves as these continued to vest in the intermediary.

This Court rejected that submission and held that after vesting of all the rights mentioned in section 6 Gf the Act in the State of Uttar Pradesh, new bhumidhari rights came mto existence under section 18 of the Act.

It also held that the only way in which a mortgagee could enforce his right against the mortgagor after the Act came into force is provided in section 6(h) of the Act, read with section 73 of the Transfer of Property Act, 1882, so that nothing more than the compensation awarded to the intermediary could be proceeded agaimt by the mortgagee.

We are surprised that, even after that decision which, according to the appellant-judgment-debtor, constitutes a complete answer to any further execution proceedings iu respect of any part of bhumidhari rights, execution should have proceeded against trees in groves and the view taken by the execution court, that there is a distinction between trees and a grove and groveland, should have been upheld by a Division Bench of the Allahabad High Court (Lucknow Bench).

We find that it is impossible for us to accept this opinion in view of the definition Olf the intermediary's groveunder section 3 (l 3) of the Act, which says : "intermediary's grove' means grove-land held or occupied by an intermediary as such." This means that "grove- Jand" and "" "intermediary's grove" are equated.

And groves are only collectioi; s of trees iu plots of land so as to preclude cultivation in them.

The uncut trees are deemed to be parts of the "land''.

Section 18 (I) (a) of the Act provides that an "intermediary's grove" is bhumidhari property. Rights in it are part of bhumidhari rights.

After these clear words of the enactment. we think it is not necessary even to consider previous definitions or to make out specious or unrealistic distinctions between standing uncut trees, which are parts of groves, and groves and grove-land.

The proposition is well settled, under the general Jaw, that trees, before they are cut, form parts of 'land'.

And, an inseparable part is always included in the whole. In view of this very clear legal position, we allow this appeal

mid set aside the judgments and decrees of the High Court and the Execution Court with costs.

ll S.R.

Appeal allowed.

RANA SHEO AMBAR SINGH

February 18, 1977

l\I. H. BEG

A. C. GUPTA

Allahabad Bank Ltd

s. 18

s. 6(h)

s. 73

Transfer of Property Act

Allahabad High Court (Lucknow Bench)

s. 3(13)

Section 18(1)(a)

S. N. Pre.sad

P. Rana

BEG. C.J.-'01is

section 6(a)

Uttar Pradesh

section 6

section 18

section 6(h)

section 73

Transfer of Property Act, 1882

Allahabad High Court (Lucknow Bench

section 3

Section 18


...

BOARD OF TRUSTEE OF THE PORT OF BOMBAY A v.

INDIAN GOODS SUPPL YING CO.

March 21, 1977

[M. H. BEG, C.J., A. C. GUPTA AND P. S. KAILASAM, JJ.J

D<'murrage-Demurrage claimed as per the scale framed under 3. 43A of the Bombay Port Trust Act (Act 6 of 1879) and approved by the Central Govern- 1nel}t-Whether the claim of demurrage by the Port Trust for the period du.ring whzch the goods were detained with it in respect of Import Trade Control formalities is maintainable-Whether the D.O. letter dated 7-9-1952 fro1n the Central Government to the Port Trust, a direction under s. 43B (lA) of the Act.

The appellant, a statutory body framed the scales of rates of demurrage of C goods under section 43 (a) of the Bombay Port Trust Act 1879 which wa~ sanctioned by the Central Government.

Later on the Central Government in its D.0. letter dated 7th September 1952 addressed to the appellant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reruions beyond hi!! control. It also expressed its hope that the appellant would reconsider its deci- !; ion and fall in line with the practice of the Calcutta and Madras Ports. Th• Port considered this letter and after taking into consideration the several circumstances suggested that demurrage may be levied on a graded scale and the Central D (Jovernment did not take any further action. In fact, the appellant has pre~ cribed reduced demurrage levy from the expiry of the free days.

In respect of the three consignments of Chinese newsprint imported by the respondent for home consumption in India, the appellant claimed demurrag• for the period from March 25, 1957 and as the amount wa~ not paid the goods were sofd in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950 /- and interest thereon from the appellant being the

aggregate loss sustained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the .demurrage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the good~ by auction.

The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter ai 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed.

The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent.

Allowing the appeal by special leave the Court,

HELD : (I) The High Court was in error in holding that the importer of tho goods cannot be held responsible for any delay not attributable to his own default and that dernurrage under s. 43(a) could never be imposed as long <i~ rhe goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 El

(2) The D.O. letter addressed by the Government of India should not 1'1 construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.0. wonlJ idicate that the Government wanted the .Port Trust to consider the Governments proposal

nnd nothing further.

The Port Trust considered 1-he proposal and made it~ report.

Section 43B(1A) has no application to thi~ case.

[346 F-HJ

(3) It is no doubt true that before clearance i111 given by the Import Trade Control Authorities and the Customs Authoritie", the good:'! cannot be cleare<l H by the importer. Neither can the Port Tn1st deliver the goods without the con~

ent of the Import Trade Control Authorities. Tak_ing into acout the hardship caused to the importer because of the delay certa1~ conccsions 1n demurrac:e

rates are permitted.

A~ the scales of rates are permitted by virtue of the statutory

powers conferred on the Board under s. 43 and as the rates have been approvctl by the Central Governmet u!'der s. 43B, the rates have the force of law and cannot questioned. Taking into account the hardship to the importers certaiu conces~1on has beeJI given bu~ the legality of the rate which are being levied accordmg lo law cannot also be questioned. [347 C-D; J;-F]

Trustees of the Port of Madra. v. Mis Aminclwnd Pyare/a/ & Ors. [1976] -.....

SCR 721, followed. 1

( 4) Even tougb the delay _in clearing the goods was not due to the negligen:e of the importer for which he should be held responsible yet he cannot avoid the pa_Yf!lent of drnurrage as the rates imposed are under the authority of law, the vahd1ty of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was d_ue to any act of the Port Trust or persons for whom the Port Trust is respon- Sib!e. [349 G-H]

. Aktieselskabet Reidar v. Arcos, Limited [1927] 1 K. B. 352; Budgett & Co. v.

B1pprngton & Co. [1891] 1 Q. B. p. 35 and Compania Crystal De Vapores of Panama v. Herman & Molwr:a (lndia) Ltd. [1953] 2 All. E. R. 508, quoted with approval.

(5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which n1ake reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formalities have not been compJeted. [350 C-D]

(6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goQds until such rates are fully paid.

The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A-BJ

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1353 of 1975.

(Appeal by Special Leave from the Judgment and Order dated 1-11-1974 of the Bombay High Court in Appeal No. 493 of 1966 from original Decree.)

F. S. Nariman, B. R. Zaiawala, B. S. Bisaria, J. B. Dadachanji,

0. C. Mathur, K. J. John and Shri Narain, for the appellants.

P. H. Parekh and Miss Manju Jetely, for the respondent.

The Judgment of the Court was delivered by

KAILASAM, J.-This appeal by special leave is preferred by the Board of Trustees of the Port of Bombay against the judgment of the Bench of the. Bombay High Court in first appeal confirming the decree passed by the City Civil Court and dismissing the appeal with costs. The respondents, Indian Goods Supplying Co., a partnership firm in Bombay, filed suit No. 3304 of 1959 in the Bombay City Civil Court at Bombay praying for a decree against the Trustees of the Port of Bombay in the sum of Rs. 24,950 with interest.

Three consignments of Chinese newsprint were imported by the respondents for home consumption in India.

The first 2 consignments arrived on February 16,

1957. Suffice it to say that the clearance of the two consignments as well as the third consignment

_.,

was considerably delayed and the Port Trust claimed demurrage for the period from March 25, 1957. The respondents disputed the right of the Port Trust to charge any demurrage for the period during which the goods were detained by the Customs authorities for analytical test as well as for the Import Trade Control formalities.

It is common ground that so far as the period for analytical test certified by the Customs authorities is concerned the Port Trust cannot charge demurrage. But so far as the period during which the goods were detained for the Import Trade Control formalities by the Cos-· toms authorities the Port Trust claimed demurrage.

Due to protracted correspondence between the parties the goods were not cleared and ultimately the suit was filed by the respondents for recovery of a 8'lm of Rs. 24,950 and interest thereon from the Port Trust being the aggregate loss sustained by them.

The appellants denied that liability and pleaded that the Port Trust was in law entitled to collect the demurrage levied on the respondents and that as they failed to pay the demurrage the Port Trust was entitled to sell the goods by public auction.

The City Civil Court, Bombay, decreed the suit for a sum of Rs. 24,950 with interest at the rate of 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit.

The appellants preferred an appeal to a Division Bench of the- Bombay High Court which dismissed the appeal and confirmed the

decee passed by the City Civil Court.

Whert the appeal was pending before the High Court the appellants deposited the decretal amount in court which was withdrawn by the respondents.

Mr.

Nariman, counsel for the Port Trust, stated that the Port Trust does not want to ask for the repayment of the money and that he will confine himself to the question of the correctness of the decision of the Bombay High Court holding that the Port Trust is not entitled to collect demurrage in the circumstances of this case. It is therefore sufficient for the purposes of the appeal to confine ourselves to determining the question of law which has been raised before the High Court and decided by it.

The question that was raised before the H; gh Co.urt wa~ wheter the claim of demurrage by the Port Trust for the penod durmg which the goods were detained with the Port Trust in respect of Import Trade Control formalities is maintainable.

The High Court held that the importer df the goods cannot be held responsible for any delay not attributed to his own default and that he iporter who_se goods are detained by the Customs Departent 1s enttled to clun the clearance of goods without demurrage durmg the penod for which the Customs Department has detained them.

The appellants, the Board of Trustees of the Port. of Bombay, H is a statutory body constituted by the Bombay Port Trust Act. Act 6 of 1879 and is a body corporate.

Chapter VI of the Act relates to Revenue nd Expenditure and provides for levy of rates.

Section

43 empowers the Board to frame a scale of tolls, dues, rents, rates and charges to be levied for each or any of the matters enumerated m clauses {a) to (d). Sub-section (a) enables framing of scale of rates relating to the landing, shipping, wharfage, cranage, storage or demurrage of goods.

We are concerned with the framing of the scale of rates for demurrage of goods.

Section 43B (I) requires that every scale framed by the Board shall be submitted to the Central Government for sanction and, when so sanctioned and published in the Bombay Government Gazette, shall have the force of law; and subject to the like sanction and publication, may from time to time be amended or added to by the Board. It is admitted that the Board framed a scale of rights for demurrage of goods and the scale so framed by the Board was submitted to the Central Government and was sanctioned by the Central Government and published by the Bombay Government in the Gazette as required.

The result is that under section 43B (I) the scales so framed by the Board and approvrd by the Central Government shall have the force of law.

The learned counsel for the appellants as the Port Trust in this appeal have given up its claims to refund of the money taken by the respondents. In view of this the counsel for the respondents confined his arguments to supporting the view taken by the High Court regarding the question of law.

He submitted that the Central Government had taken action under section 43B (IA) and had called upon the Board to modify the operation of such scales and therefore the Board was bound to modify the scales accordingly.

This contention is based on a D. 0. letter dated 7th September, 1952 addressed by the Government of India to the Port Trust which is typed at page 350 of the Supplement Paper Book No. 2.

In the D. 0. letter the Government expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. The letter concluded by expressing an earnest hope that the Bombay Port Trust will reconsider their decision and fall in line with the practice of the Calcutta and Madras Ports. It concluded by stating "We shall be grateful if you will kindly place the matter before the Trustees for their favourable consideration and intimate to us the result." The Board considered this letter and after taking into consideration the several circumstances, suggested that demurrage may be levied on a graded scale.

The Government of India was informed of the Resolution of the Board and no further action was taken by the Government.

The D. 0. letter addressed by the Government of fndia cannot be considered as a direction by the Central Government calling upon the Board to modify any portion of the scale framed by the Port Trust.

The language of the D. 0. would indicate that the Government wanted the Port Trust to consider the Government's proposal and nothin~ further.

The Port Trust considered the proposal and made its report.

We are unable to accept the plea of the learned counsel for the respondents that the D. 0. Jetter should be construed as a direction calling upon the Board to modify the portion of the scale framed by the Board. Section 43B (IA) has therefore no application to this case.

BOARD 01' TRUSTBB v. IN)JIAN GOODS co. (Kailasam, l.) 347

Chapter VII of the Port Trust Act enumerates the powers and functions of the Board. It is the duty of the Board to recover the rates to have a lien on the goods and seize and detain the goods until such rates are fully paid.

The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged. It can also dispose of goods not removed from the premises of the Board within the time limited.

Section 65 also provides the mode of application of proceeds of the sale.

Under section 66 the Board is entitled to distrain for non-payment of rates.

The Port clearance shall not be granted till the rates are paid.

It is thus a statutory duty of the Board to collect the ras prescribed.

The contention put forward on behalf ol the respondents is that they are in no way responsible for the delay in clearing the goods as the goods had been detained under the Import Trade Control Regulations. It is no doubt true that before clearance is given by the Import Trade Control authorities and the Customs Department the goods cannot be cleared by the respondents.

Neither can the Port Trust deliver the goods without the consent of the Import Trade Control authorities.

Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are permitted. The Port Trust has prescribed the reduced demurrage

kvy which is I/6th of the normal rate from the date of expiry of the free days up to the 60th day, 1 /3rd of the normal rate after the expiry of the 60th day, upto the 90'.h day, half the normal rate after the expiry of the 90th day up to the 120ch day, 2/3rd of the normal rate after the expiry of the !20th day upto the 150th day nd at the full rate after the expiry of the 150th day.

As the scale of rates are framed by virtue of the statutory powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B the rates have the force of Taw and cannot be questioned.

Taking into account the hardsh'p to the importers certain concession has been given but the legality of the rates which are being levied according to law cannot be questioned.

This view was taken by this Court in a recent decis'on reported in Trustees of the Port of Madras v. Ml s. Aminchand Pyarelal & Ors. (') Where it had to consider the validity of the scale of rates fixed by the Madras Port Trust.

In a suit by the Port Trust against the importer and the Union of India and the Customs authorities to recover the balance of demurrage amounting to about rupees three Iakhs the question arose whether the scale of charges in the Port Trust Regulations under the heading "Demurrage" was void and ultra vires for the reason that it was unreasonable and not within the authority of the Port Trust.

The relevant provisions of the Bombay Port Trust Act with which we are concerned are in pari materia with the provis:ons of the Madras Act which fell for consideration by the Supreme Court.

The Supreme Court held that the scale of rates and statement of conditions framed by the Madras Port Trost under sections 42, 43 and

43A are not by-laws

(I) [1976] I S.C.R. 721.

348 SUPREME COURT REPotll's [1977'1 ':i s.c.R.

and the sections confer authority on the Board to frame a scale of rates at which and a statement or conditions under which any of the services specified therein shall be performed. It observed "The Board's power to frame a scale of rates and statement of conditions is not a regulatory power to order that something must be done or something may not be done.

The rates and conditions govern the basis on which the Board performs the services mentioned in sections 42, 43 and 43-A. Those who desire to avail of the services of the Board are liable to pay for those services at prescribed rates and to perform the conditions framed in that behalf by the Board." The Court rejected the view of the High Court that demurrage being a charge for wilful failure to remove the goods within the free period can be levied only if the failure to remove the goods is due to the fault or negligence of the importer or his agent.

It also did not agree with the view taken by the High Court that the authority given to the Board to frame the scale of rates can be exercised only for the purpose of levying charges where the importer was not prevented by any lawful authority from clearing the goods from the transit area and he had defaulted or was negligent in clearing the goods. Justice Chandrachud, who spoke for the Court, observed in his judgment at page 736 supra that the statute had not placed any limitation on the power of the Board to fix rates and as the Board had the power to frame a scale of rates at which and the statement of conditions under which any of the services specified in the section shall be performed and as the Board has fixed the scale of rates it was difficult to see in what manner or respect the Board has exceeded its power under section 42. The Court proceeded to observe in rejecting the view of the High Court that the Board cannot fix rates of demurrage when the failure to remove was not due to some fault or negligence of the importer, that there is no such fetter on the Board's powers to fix the rates. This decision of the Supreme Court is on all fours with the facts of the present case and concludes the question.

Mr. Nariman, counsel for the appellants cited three decisions tif the English Courts in support of his contention that even on the basis of a contract the right of the Port Trust to recover demurrage cannot be denied unless the person claiming the demurrage is responsible for the delay. In Aktieselskabet Reidar v. Arcos, Limited ('), Lord Justice Atkin in answering the question whether if th" charterer has failed to complete the loading of the ship wjthin the lay days, and the ship during the demurrage days becomes, without the default of the shipowner, unable to carry as much cargo as she would have carried if loaded within the lay days, but receives from the charterer a full cargo for her diminished capacity, the loss falls upon the charterer in addition to the demurrage, expressed his opinion that the decision should be for the shipowner.

It was held that "The result of the authorities appears to be that in a contract fixing a number of lay days and providing for days at demurrage thereafter, the charterer enters into a binding obligation to load a complete cargo within the lay days subject to any default by the shipowner or to the operation

(1) [1927] I K.B. 354.

~- •

.,.

of any exceptions, matters which do not arise in Ibis 'case., ..

If however, for reasons other Ihan the shipowner's . default, !he charterer becomes unable to do that which he contracted to do--

namely, put a full and complete cargo on board during Ihe fiXed laydays, the breach is never repaired, !he damages are not completely mitigated, and the shipowner may recover !he loss !hat he. has. incurred in addition to his liquidated demurrage or his unliquidated damages for detention." Thus it appears clear !hat claim of demurrage cannot be resisted unless where the detention was due to the shipowner's default.

In the present case Ihe Port' Trust's claim for demurrage cannot be denied unless it is proved that the delay was due to the Port Trust itself. ·

In Budgett & Co. v. Binnington & Co., (') a clause in the charterparty fixed the number of Jay-days for unloading and allowed other days for dcmurrage.

During the lay-days a strike took place bolh amoog the labourers employed on behalf of the ship aud those employed by the consignees, with the result. that the unloading ceased, and could not be resumed till some days after the expiration of the lay-days. The Court of Appeal held that as the number of lay-days was fixed the consignees were liable to pay demurrage, nctwithstanding the inability of the shipowners, owing to the strike, to do their part in the unloading.

The test that was laid down by Lord Esher Master of the Rolls, was.

Has the 'hipowner failed in his duty through any default of his own or of persons for whom he is responsible? As the non-delivery was occasioned by something which the shipowner could not foresee or by the act of persons o-1er w horn he

had any control it was held that he was not liable.

Jn Compania Crystal De Vapores of Panama v.

Herman & Mohatta (India) Ltd., (') Justice Devlin quoted with approval the law laid down by Lord Esher in Budgett Co. v. Binnington & Co. (supra) which is in the following terms :-

"if the shipowner by any act of his has prevented the discharge, then, 'though the freighter's contract is broken, he is excused', he was referring to a case in which the shipowner's act preventing the discharge was in breach of his obligation to give the charterer all facilities for the discharge. But here the act of the shipowner which delayed the discharge was not a breach of any obligation of his."

The position therefore is that even though the delay in clearing the goods was not due to the negligence of the importer for which he could be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law the validity of which cannot be questioned. The claim cannot be resisted as there is no evidence that the delay was due-to any act of the Port Trust or persons for. whom the Port Trust is responsible.

(I) [1891) l Q.B. p. 35.

(2) [1953) 2 All. E.R. 508.

One other contention which was raised before the High Court but was not dealt with by it may be referred to.

It was submitted on behalf of the respondents that the definition of the words "free days" would not include the period of holidays or part of a holiday or Sunday in computing the number of free days during which the Customs Duty may not be assessed or received and therefore the period of detention of the goods during the operation of Import Trade Control formalities must be considered as free days. ln !he scale of rates charged at the docks framed by the Bombay Port Trust under sections 43, 43A and 43B of the Bombay Port Trust Act, 1879, in Section III reference is made to free days.

Under the heading "Free Days" it is provided that all goods will be allewed storage in Docks free of rent for 5 days.

It is further provided that in computing the number of free days Sundays and holidays referred to in by-Jaw 118 as well as any other days on which Customs Duty may not be assessed or received, will be omitted in the case of all goods liable to duty under section 20 of the Sea Customs Act.

The submission was that not only Sunday and holidays should be omitted but also other days on which Customs Duty may not be assessed or received will have to be omitted and this should be understood as days during which the Import Trade Control formalities could not be completed.

This contention cannot be accepted as these Rules are intended only to omit Sundays, other holidays and days on which the assessment of Customs Duty cannot be taken up and would not include the entire period during which the Import Trade Control formalities have not been completed.

The High Court was therefore in error in holding that . the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demurrage under section 43A could never be imposed as Jong as the goods were detained for the purpose of the operation of the Import Trade Control Regulation11.

In the result the appeal is allowed but due to the concession made by the learned counsel for the Port Trust there will be no order directing the refund of the money that had already been deposited by the Port Trust and withdrawn by the respondents.

The appellant also does not press his counter claim.

There will be no order as to costs in this appeal.

S.R.

Appeal allowed. •

.y.

BOARD OF TRUSTEE OF THE PORT OF BOMBAY

INDIAN GOODS SUPPL YING CO

March 21, 1977

M. H. BEG, C.J.

A. C. GUPTA

P. S. KAILASAM, JJ

s. 43B

section 43

Bombay Port Trust Act 1879

Central Government

7th September 1952

Calcutta

Madras

India

March 25, 1957

City Civil Court, Bombay

s. 43(a)

Government of India

Section 43B(1A)

s. 43

s. 43B

Section 43, 43A and 43B

Bombay Port Trust Act 1891

CIVIL APPELLATE JURISDICTION

Bombay High Court

F. S. Nariman

B. R. Zaiawala

B. S. Bisaria

B. Dadachanji

C. Mathur

Narain,

P. H. Parekh

Manju Jetely

KAILASAM

Board of Trustees of the Port of Bombay

Indian Goods Supplying Co.

Bombay City Civil Court at Bombay

February 16,

1957

Nariman

Chapter VI of the Act

Section

43

Section 43B

Bombay Government

section 43B

section 43B

7th September, 1952

Bombay Port Trust

Section 43B

Chapter VII of the Port Trust Act

Section 65

section 66

section 43

section 43B

Madras Port Trust

Union of India

Supreme Court

sections 42, 43 and

43A

SUPREME COURT REPotll's

sections 42, 43 and 43

Chandrachud

section 42

Nariman

Atkin

Esher

Devlin

sections 43, 43A and 43B

Bombay Port Trust Act, 1879

section 20

Customs Act

section 43A