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Judgment
By this petition, Petitioners seek a declaration that the auction of 28,000 kgs. of Balanced Polyester Films by B. P. T. on 21-9-1995 is illegal, bad in law, null and void and that the said auction be set aside.
The facts giving rise to this writ petition, briefly, are as follows :- The first Petitioners imported the above goods from France for actual use in the manufacture of Audio Magnetic Tapes. The consignment arrived in Bombay in February 1995. Pending arrival of the said consignment, the first Petitioners applied for Advance Licence to the Director General of Foreign Trade to enable to first Petitioners to clear the consignment without payment of customs duty. According to the first Petitioners, they were issued Advance Licence in September 1994 but without DEEC book (Import). The Bill of Entry was filed in February 1995. The goods arrived in February 1995. According to the Petitioners, they were pursuing with the Officers of the Director General of Foreign Trade for issue of DEEC book but the same was not issued in February 1995. According to the Petitioners, books were issued only on 22-9-1995 and 3-10-1995. In the meantime, the goods were not cleared because of non-availability of the said books/certificates. Since the goods were not cleared, B. P. T. charges started mounting. On 11-7-1995, B. P. T. gave final notice of sale of the uncleared cargo. By the said notice, Petitioners were informed that if the goods are not cleared within two months, the goods would be put to sale by public auction/tender under Sections 61 and 62 of the Major Ports Trust Act, 1963. By the said notice the Petitioners were informed that that was the final notice. The Petitioners did not clear the goods. The Petitioners, however, made payment of B. P. T. charges on 21-7-1995 up to date. On 17-8-1995, B. P. T. gave second notice to the Petitioners asking the Petitioners to clear the goods failing which goods would be sold by public auction/tender without any further notice. By the said notice, the Petitioners were informed that the said goods would be put to sale on 28-8-1995 or any date thereafter. Once again the Petitioners failed to clear the goods although they paid up to date B. P. T. charges. On 22-9-1995, Petitioners received a Fax from one Raj Chemicals informing the Petitioners that the above goods have been sold by auction by B. P. T. and the same have been purchased by the friends of Raj Chemicals and if the Petitioners were interested then Raj Chemicals would ask the buyers to relinquish their rights. In view of the said letter, the present Writ Petition came to be filed on 26-9-1995.
The Affidavit in reply has been filed by B. P. T. and by the Auction Purchaser. As per the said Affidavit in reply, it is pointed out that on 21-9-1995 sealed envelopes were invited and the bids contained in the sealed envelopes were opened in front of the bidding public; that the rate per kg. quoted by Respondents No. 2 was the highest and the goods in auction were knocked out in favour of Respondents No. 2, that the Respondents No. 2 were a regular bidder, that a sum of Rs. 5 lacs was given as deposit by Respondents No. 2; that B. P. T. has Account Payment which is regularly maintained by B. P. T. and B. P. T. has issued Identity Card in favour of Respondents No. 2 on 23-9-1995. Respondents No. 2 paid Rs. 46 lacs against the delivery of the said goods to be made by B. P. T. to the second Respondents. According to B. P. T. in view of Section 62 of the said Act, 1963, B. P. T. cannot be sued as storage area and Warehouse by importers and consignees. According to B. P. T., despite the above two notices the consignee did not clear the goods and in the circumstances goods came to be auctioned. According to B. P. T., the Committee was constituted in July 1984 consisting of trustees to streamline the auction/tender procedure and in the light of the recommendations of the said Committee the B. P. T. has been putting the goods to sale by following the practice of inviting sealed tenders because the experience of B. P. T. was that such a procedure (fetched) better price and also ensured expedition. The report of the Committee is dated 24-7-1994. The said report of the Committee was adopted vide Resolution dated 14-8-1994 passed by B. P. T. According to B. P. T., Petitioners'' goods landed in the port premises in February 1995, the general landing date of the goods was 14-2-1995 and the Petitioners were obliged to clear the goods by 17-2-1995 failing which demurrage become payable and the time u/s 62 started running. However, Petitioners did not clear the goods by 17-2-1995 and the goods remained in the port premises for a period exceeding two months without being cleared and in the circumstances B. P. T. took steps to dispose of the goods u/s 62 of the said Act. Accordingly, B. P. T. gave a written notice, dated 11-7-1995 to the first Petitioners stating that the Petitioners'' goods are lying uncleared and they are liable for sale by public auction and that if the Petitioners did not clear the goods within next ten days, the goods would be sold by way of auction/tender on 21-7-1995 or any other subsequent date without any further notice to the first Petitioners. The second notice was similarly given on 17-8-1995. B. P. T. also published notice of sale in the Official Gazette. B. P. T. also gave an advertisement of auction sale/tender in the news paper, dated 14-8-1995 and in the circumstances, the goods came to be sold. According to B. P. T., a general circular has been issued by the Collector of Customs on 6-7-1989 by which B. P. T. was authorised to put the goods to sale by auction/tender except those goods which are seized/detained by various Authorities under the Customs Act. In view of the said permission granted by the Customs Authority vide letter dated 6-7-1989, there was a general permission given to the B. P. T. to dispose of the goods u/s 45 of the Customs Act. According to B. P. T. on receipt of notice of sale dated 11-7-1995 addressed by B. P. T. to the first Petitioners. B. P. T. was approached by the Petitioners'' Customs House Agent, Dharamdas & Company, who offered to pay B. P. T. charges in respect of the goods and also undertook to clear the goods by 31-7-1995 vide written request dated 21-7-1995 for withdrawal of the goods from the sale. The Customs House Agent of the Petitioners also gave written undertaking to effect the delivery by 31-7-1995. The Customs House Agent of the Petitioners also paid the additional 10 days'' demurrage charges in order to enable the Customs House Agent of the Petitioners to clear the good within the said period. According to B. P. T., the Petitioners'' Agent were expressly informed about the sale of the goods if they fail to clear the goods by the stipulated date, namely, 31-7-1995. Despite the above, the goods were not cleared. Despite the above facts, second notice was given on 28-8-1995 by which the Petitioners were categorically informed that the goods would be sold on 28-8-1995 or by any other subsequent date without any further notice. Ultimately, the goods were sold at the tender sale held on 21-9-1995 to the second Respondents and the sale was confirmed on the spot in favour of the second Respondents. Respondents No. 2 were category ''A'' purchasers. They have deposited Rs. 5 lacs with B. P. T. which stands adjusted towards the sale price of the goods. In the present case, the reserved price in respect of the above goods at the above tender sale was Rs. 121.30 per kg. and the goods were sold at the rate of Rs. 124 per kg. It is also contended on behalf of the B. P. T. that in the present case since the offer received by the B. P. T. was more than reserved price, the sale was confirmed on the spot. According to B. P. T. the second Respondents were ''A'' Class registered purchaser. A deposit of Rs. 5 lacs made by Respondents No. 2 came to be adjusted towards the earnest money and the Respondents were obliged to make the balance payment which they made. In the present case, therefore, it is the case of the B. P. T. that they have acted in accordance with law and no mala fides can be imputed against B. P. T.
Mr. Bharucha the learned counsel appearing on behalf of the Petitioners contended that, in the present case, provisions of Sections 61 and 62 of the said Act, 1963 have not been followed. Mr. Bharucha contended that no notice of sale was given to the Petitioners. Mr. Bharucha contended that twice the notice of sale was given. That on each occasion, the Petitioners paid B. P. T. charges up to date. That the Petitioners were never told thereafter that despite payment property would be put to sale. Mr. Bharucha contended that u/s 62 of the Major Ports Trust Act, 1963 it was incumbent upon B. P. T. before resorting to power of sale to give notice. In the present case, B. P. T. did not do so and, therefore, the sale was null and void and liable to be set aside. Mr. Bharucha the learned counsel appearing on behalf of the Petitioners further contended that, in the present case, undertaking allegedly given by the Petitioners'' Customs House Agent cannot be read as notice of sale. Mr. Bharucha contended that the said undertaking must be read as a whole and it only indicates that B. P. T. was required to receive its charges from the Petitioners and it cannot be construed that the Petitioners had constructive notice of the fact that if the payment is not made, property would be put to sale. Mr. Bharucha further contended that, in the present case, the property has been sold to the second Respondents who are professional buyers/bidders at the auction sale/tender conducted by B. P. T. from time to time. Mr. Bharucha contended that Respondents No. 2 have not paid 20% as required under the various circulars issued by B. P. T. Mr. Bharucha further contended that in view of the said breach Respondents No. 2 are not bona fide purchasers of the goods. Mr. Bharucha further contended that in the present case under Sections 61 and 62 of the Major Ports Trust Act, 1963 the goods can be sold by B. P. T. by auction sale and not by tender sale. Mr. Bharucha contended that, in the present case, if B. P. T. wanted to go in for tender sale then special reasons were supposed to be recorded whereas in the present case B. P. T. has put the goods to tender sale only by referring to general circular/Resolution of 1994 passed by the Committee and by the B. P. T. In the Circumstances, Mr. Bharucha contended that provisions of Sections 61 and 63 have not been complied with. Mr. Bharucha further contended that the gross irregularities are committed every day in tender sales where professional bidders take part and goods worth several lacs are disposed of for small amounts or at a price which constitutes undervaluation. Mr. Bharucha further contends that when the Legislature has made auction sale as the basis for putting the goods to sale, it was not open to B. P. T. unless special circumstances are recorded for putting the goods to sale by tender. Mr. Bharucha further contends that, in the present case the worth of the goods was much more. He contends that the goods have been sold at the rate of Rs. 124 per kg whereas according to the Petitioners, goods were worth at least Rs. 200 per kg. Mr. Bharucha further contends that, in the present case, permission of the Customs has not been taken u/s 45 of the Customs Act and in the circumstances, the tender sale was bad in law. In the above circumstances, Mr. Bharucha contends that the auction sale is liable to be set aside.
Mr. Pratap the learned counsel appearing on behalf of the B. P. T. contends that u/s 61 of the said Act, 1963 the goods are sold after two months if rates or rent are not paid or lien for freight is not discharged whereas Section 62 of the said Act, 1963 refers to disposal of the goods by B. P. T. if the goods are not removed from the premises of B. P. T. within the time prescribed. Mr. Pratap contends that Section 62 is the relevant section which is applicable in this case. Mr. Pratap contends that in the present case, importer/consignee cannot use premises of B. P. T. as Warehouse. Mr. Pratap further contends that there is an acute paucity of space in the B. P. T. premises on account of heavy congestion. On the other hand, he pointed out that on several occasions consignees/importers find it easier to pay B. P. T. charges and use the B. P. T. premises for storage because if the goods are required to be stored in Warehouse then the Warehouse charges would be more than the rent and the other charges payable to B. P. T. by such consignee/importer. Mr. Pratap contends that in the present case, the petition is vague in the sense that the Petitioners have not given any details regarding the assessment order passed by the Customs. Mr. Pratap further contends that the Petitioners have not disclosed the relevant facts. Mr. Pratap further contends that, in the present case, no reasons have been given by the Petitioners as to why the goods are not being cleared although they landed in Bombay in February 1995. Mr. Pratap further contends that, in the present case, the Petitioners were put to notice twice regarding impending sale. Mr. Pratap pointed out that by first notice dated 11-7-1995. Petitioners were informed that if they do not clear the goods, property would be sold, that by another notice dated 17-8-1995, Petitioners were categorically informed that if they did not clear the goods by 28-8-1995 the goods would be sold. Mr. Pratap also contends that the Petitioners'' Customs House Agent was also categorically informed that the property would be put to sale if the goods were not cleared and further notice would not be given with regard to sale. Mr. Pratap placed heavy reliance on the undertaking given by the Customs House Agent of the Petitioners dated 21-7-1995 which clearly indicates that if the goods are not cleared they will be listed for sale immediately on the expiry of the period mentioned in the notice. Mr. Pratap further contended that the said undertaking dated 21-7-1995 clearly indicates that time was given upto 31st July 1995 to clear the goods but the same were not cleared. Mr. Pratap further contends that the Customs House Agent of the Petitioners as well as the Petitioners were fully aware of the provisions of Section 62 of the Major Ports Trust Act, 1963. Mr. Pratap further contends that the Petitioners were duty bound to clear the goods and the goods cannot remain with B. P. T. only because they were paying up to date rent and other charges. Mr. Pratap further contends that on account of heavy congestion faced by B. P. T. from time to time a Committee was constituted in 1984, that the Committee recommended sale procedure that procedure from 1984 is being followed regularly because it is more expeditious and it helps B. P. T. to clear the goods faster, that B. P. T. has been able to attain better price by following the tender sale procedure rather than auction sale procedure and in the circumstances Mr. Pratap contends that it is not possible every time to give notice before confirmation of the sale because that would further delay the procedure. Mr. Pratap further pointed out to the news paper advertisement clearly informing the Petitioners that the goods would be put to auction sale/tender if they are not cleared by the stipulated date. Mr. Pratap further pointed out that, in the present case, Respondents No. 2 have offered rate of Rs. 124/-per kg. whereas the reserved bid was Rs. 121.50 per kg. and in the circumstances the sale was confirmed on the spot. Mr. Pratap further contends that after discounting sales tax and other tax component, the second Respondents have paid 20% of the value of the goods and in the circumstances there is no breach of the terms and conditions of the tender sale.
In the present case, I wish to point out that judicial note may be taken of the fact that there is heavy congestion in the matter of clearance of the goods which land in the Bombay Port. This congestion is mounting by the day. In such circumstances, as of today, B. P. T. is right in its contention that it is a statutory duty of the consignee/importer to clear the goods as expeditiously as possible. Merely because consignee/importer pays up to date rent or other charges to the B. P. T., it does not follow that he has right to keep the goods in the B. P. T. premises. Ultimately, it will depend on the facts of each case. In the present case, the Petitioners have been informed by two abovementioned notices of July 1995 and August 1995 calling upon the Petitioners to clear the goods and also to pay up to date charges to the B. P. T. The Petitioners as well as their Agent were also informed by the B. P. T. that the goods should be cleared by 31-7-1995. It is true that the Petitioners paid up to date charges from time to time but that does not give him right to retain the goods and to use the B. P. T.''s space. I find merit in the contention of Mr. Pratap the learned counsel for the B. P. T. that on several occasions consignees/importers find it more convenient to use the B. P. T.''s premises because B. P. T.''s charges are comparatively less than the charges of the Warehouse. Section 62 of the Major Ports Trust Act, 1963 clearly indicates that the goods must be cleared within the stipulated period and if they are not cleared then the goods may be put to sale by the B. P. T. Section 62 stands on a different footing from Section 61. In the present case, on facts, I am satisfied that the Petitioners have not given any reason for not clearing the goods after 31st July 1995. To say that because they were waiting exemption from the Customs would not justify non-clearance of the goods from the B. P. T. premises at least after 31st July 1995. In the present case, B. P. T. took note of the above fact initially that the Petitioners have not obtained DEEC (Import). B. P. T. therefore, gave them time upto 31st July 1995 from February 1995 but thereafter it was not possible for the B. P. T. to extend the continuation of the goods in the B. P. T. premises. B. P. T., therefore, informed the Customs House Agent of the Petitioners who agreed to clear the goods by 31st July 1995. In the facts and circumstances of the case, therefore, there is no breach of Section 62 of the Major Ports Trust Act, 1963. In the facts and circumstances of the case, there are no mala fides that could be attributed to the B. P. T.
In the present case, the B. P. T. has received the price calculated at the rate of Rs. 124 per kg. It was above the reserved bid. In the present case, therefore, B. P. T. was fully justified in confirming the sale on the spot. In the present case, B. P. T. as received 20% of the prescribed value by the sale procedure. In the circumstances, the sale in favour of Respondents No. 2 cannot be faulted.
It is also sought to be argued on behalf of the Petitioners that the goods have been sold at the rate which is highly undervalued. It is not possible in writ jurisdiction to examine this aspect. The procedure laid down has been followed by the B. P. T. If the goods are sold at the rate which according to the Petitioners, is not the market value then the Petitioners would be entitled to file suit against the Auction Purchaser. In writ jurisdiction, it is not possible to examine the disputed facts. In the present case, in view of the circular issued by the Customs, there is full compliance of Section 45 of the Customs Act by the B. P. T.
In the present case, I wish to make certain observations regarding the Scheme of Section 61 and Section 62 of the Major Ports Trust Act, 1963. It is true that the Act contemplates holding of the auction sale in the first instance and it is only if cogent reasons are given by the Competent Authority, then the auction sale could be by-passed and tender sale could be resorted to. In the present case, reasons have been given as far back as in 1984 for by-passing the auction sale procedure. However, reasons given for by-passing the auction sale in 1986 cannot continue to prevail for all times. In the circumstances, a Committee of B. P. T. should once again meet and decide whether the tender sale procedure should continue or not and whether tender sale procedure should apply to all cases. The Committee will have to once again examine whether professional bidders should be permitted to take part in tender sales or whether auction sale should be resorted to as a rule and only in exceptional cases the tender sale should be resorted to. The Act makes it very clear that auction sale is a rule and the tender sale is an exception. However, looking to the reality of the situation and looking to the congestion in the B. P. T., the above Committee will have to once again sit and decide in 1995-96 as to whether the auction sale procedure should be dispensed with or not. The Committee will also have to consider whether irregularities are prevailing in the matter of tender sale particularly in the context of professional bidders coming on the scene. The above observations are made because this Court is approached in several matters on the footing that goods worth lacs of rupees are being sold by tender sale procedure for smaller value. In other words, under valuation has been alleged practically in several matters and in the circumstances, Committee should be constituted once again to examine the matter in the light of the experience of the B. P. T. from 1984 till today in the matter of tender sale and other cognate matters.
Before concluding, I wish to point out that the matter was argued at length before me on 11-12-1995. The matter was kept reserved for judgment. On 13-12-1995, Mr. Pratap the learned counsel for the B. P. T. made an application that, in the present case, there is suppression of material facts. Accordingly, the matter was kept for further arguments on 19-12-1995. B. P. T. has filed further Affidavit on 18-12-1995. However, without going into the allegations made by the B. P. T. in the said Affidavit, dated 18-12-1995, in view of the above facts and in view of the legal position referred to hereinabove Petition is required to be dismissed.
Subject to what is stated hereinabove, in the facts and circumstances of the case, no interference is called for. In the present case, importers were given full opportunity to clear the goods. In the present case. I do not find any arbitrariness or mala fides as alleged by the Petitioners. Hence, Writ Petition fails. Rule is discharged with no order as to costs.
Mr. Mehta applies for stay of the order for 6 weeks. In the facts and circumstances of the case, stay refused.
Issuance of certified copy expedited.