Glencore (India) Pvt. Ltd. vs Union of India (UOI)

P.C. Radhakrishnan, J

Rule is made returnable forthwith in both the Petitions. Heard parties.

In Writ Petition No. 18 of 1998 the Petitioners are the consignors who had exported 125 Metric Tonnes of Copper Wire Bars from Rotterdam (Belgium) to Nhava Sheva in favour of the consignee namely Respondent No. 5, Sharp Menthol India Pvt. Ltd. on 22nd June, 1997. It appears that the consignee, inspite of repeated notices from the Jawaharlal Nehru Port Trust Authorities, did not bother to clear the goods lying in the port. Ultimately, the Port Trust Authorities, after complying with the provisions of Sections 61 and 62 of the Major Port Trust Act, held an auction of the aforesaid Copper Wire Bars on 26th December, 1997 wherein the Respondent No. 4 was the successful bidder. The Petitioner, in Writ Petition No. 18 of 1998 namely M/s. Glencore (India) Pvt. Ltd. had not received payment from the consignee and after having come to know of the said auction rushed to this Court and obtained a stay restraining the Port Trust Authorities from handing over the auctioned goods to the auction purchaser. The Petitioners being consignors have challenged the auction on the ground that they were not given any notice of auction.

The Petitioner, in Writ Petition No. 471 of 1998, was a prospective auction purchaser, has also challenged this auction on the ground that the goods which have been auctioned viz. 125 Metric Tonnes of Electrolytic Copper Wire Bars of an Brand, CIS Origin (Unwrought or Unalloyed) whereas in all the public auction notices published in the Gazette as well as published in the newspaper the aforesaid cargo viz. Electrolytic Copper Wire Bars of MI Branch, CIS Origin (Unwrought and Unalloyed) has been wrongly described as "Nett Electr". If one were to see the description of the other cargo mentioned in the said auction notice, the cargo have been clearly described whereas only in this case the cargo has been totally wrongly described. The learned Counsel for the Port Trust also fairly stated that this was an error and he pointed out that as to how the said error had occurred. The goods were described in the manifest as 25,008 KGS NETT ELECTROLYTIC COPPER WIRE BARS OF MI BRAND, CIS ORIGIN (UNWROUGHT AND UNALLOYED). Obviously the column 25,008 KGS NETT means the weight of the said Cargo. The next sentence reads as Electrolytic Copper Wire Bars of MI Brand, apparently while typing it was wrongly typed as "NETT ELECTR". This is how the mistake seems to have occurred and ultimately even in the public notices which have been published in newspapers and also in Gazette carries the same mistake. The contention of the Petitioner in Writ Petition No. 471 of 1998 is that they are dealers in Ferrous Metals and as they were not aware of the description of the goods they could not take part in the aforesaid public auction, in view of the totally wrong and meaningless description of the goods as "Nett Electr". The learned Counsel for the Petitioner in the said petition also brought to our notice that the total quantity of Electrolytic Copper Wire Bars, which was auctioned on that day was 1,25,565 Kgs. of which the market value was about Rs. 1.25 Crores whereas the auction purchaser was able to purchase it at Rs. 87 Lacs at said auction.

The learned Counsel for the Port Trust Authorities submitted that his clients are keen in receiving their entire dues of ground rent charges and sale expenses with regard to the aforesaid goods which are lying in their custody. The learned Counsel for the Port Trust Authorities states that the ground rent charges up to 20th February, 1998 comes to Rs. 4,37,587/- and the sale expenses comes to Rs. 8,51,837/-. The learned Counsel for the Petitioner in Writ Petition No. 18 of 1998, after taking instructions from his clients, states that they are ready and willing to pay the entire ground rent up to date and till the date of release of goods and also to bear the sale expenses. The learned Counsel for the Port Trust Authorities also consents to the goods being released by the Port Trust Authorities after the entire payment of ground rent up to date of release of goods and sale expenses is paid over to them and that the Petitioners will be at liberty to re-export the goods back.

Mr. Mehta, the learned Counsel for the auction purchaser, strongly contended that as his client is a bona fide auction purchaser and as per Section 61(3) of the Major Port Trust Act, even if no notice was given to the consignor, the title of the bona fide purchaser should not be invalidated for the reasons of omission to give such a notice. Contention of the learned Counsel is that as his client is bona fide purchaser of the said goods at the auction held by the Port Trust Authority hence ought not to be disturbed.

Whereas the Petitioners in both the petitions contend that the auction held by the Port Trust Authorities is totally vitiated inasmuch as the auction notices all throughout wrongly describe the cargo as "Nett Electr which has no meaning at all. The learned Counsel for the auction purchaser states that "Nett Electr." means Electrolytic Copper Wire Bars. It appears that Electrolytic process is even adopted in case of Lead, Zinc and various other metals. The word ''Nett'' can obviously play no role in describing the goods. Similarly, the word ''Electr.'' also cannot describe any goods. Obviously, the auction purchaser was in the know of the contents as such he was able to compete in the said auction otherwise any other person, who might have seen the description as ''Nett Electr.'' would not have been able to decipher the contents of the cargo. Another vital fact is that the market price of the goods in question was about 1.25 crores whereas the auction purchaser has been able to purchase it at Rs. 87 Lacs. This is a clear case where there is an admitted mistake in description of the goods which obviously vitiates the auction.

The learned Counsel for the petitioner in Writ Petition No. 18 of 1998 states that they will pay all the dues payable to the Port Trust Authorities as pointed out hereinabove. The learned Counsel for the Port Trust Authorities is also fully agreeable that on receipt of all the amount due and payable, as pointed out hereinabove toward ground rent charges and sales expenses, the Port Trust Authorities will allow the said petitioners in Writ Petition No. 18 of 1998 to clear the goods enabling them to re-export the same. In the circumstances, we make the rule absolute in the aforesaid terms with no orders as to costs.

At this stage Mr. Mehta, the learned Counsel appearing for the auction purchaser, prays for stay of this order for a period two weeks. On our suggestion to the learned Counsel as to whether his clients would be ready and willing to bear the ground rent charges payable to the Port Trust Authorities during the period of stay, if his clients were to fail in the Supreme Court of India, the learned Counsel submitted that his client was not agreeable. In view thereof, we are not inclined to grant any stay inasmuch as it would cause monetary hardships to the Port Trust Authorities as well as to the Petitioners in Writ Petition No. 18 of 1998. Unnecessarily the limited space of the Port Trust Authorities would be blocked.

The learned Counsel for the auction purchaser now applies for a direction to the Port Trust Authorities to refund the earnest money deposit of Rs. 18 lacs which the auction purchaser had deposited. We do hereby direct the Port Trust Authorities to refund the said amount of Rs. 18 Lacs to the auction purchaser within a period of one week from today.

Parties to act on a copy of this order duly authenticated by the Court Shirestedar of this Court.