Case Note & Summary
This is a suit filed by the Board of Trustees of the Port of Bombay against an importer for recovery of port trust charges (wharfage and demurrage) accruing before an order of confiscation by customs authorities. The defendants imported a consignment of moulding powder in July 1976, which landed on 22 July 1976 with a last free day of 26 July 1976. The defendants failed to clear the cargo, and the customs authorities detained it for import trade control formalities. On 8 September 1977, the Deputy Collector of Customs passed an order of confiscation under Section 111(d) of the Customs Act, 1962 read with Section 3 of the Imports and Exports (Control) Act, 1947. The plaintiff claimed Rs.56,495.76 as port trust charges from the last free day up to the date immediately prior to the confiscation order, with interest at 12% per annum from the date of suit until payment. The defendants contested the suit, arguing that the suit was barred by limitation, since the cause of action arose on 27 July 1976 (expiry of last free day) and the suit filed on 2 August 1980 was beyond the three-year period under Article 113 of the Limitation Act, 1963. They also contended that the Board should have sold the goods under Sections 61 and 62 of the Major Port Trusts Act, 1963. The plaintiff contended that the right to sue accrued only upon the confiscation order when the demurrage crystallised, and that the Board's power to sell goods was discretionary. The court held that the suit was not barred by limitation. It reasoned that the liability for demurrage continues despite customs detention, and the right to sue accrues when the confiscation order is passed, not earlier. The Board's powers to sell goods under Sections 61 and 62 are permissive and do not change the accrual date. The suit filed within three years of the confiscation order was thus within limitation. The court decided the limitation issue in favour of the plaintiff, though the incomplete text does not specify final relief granted beyond this finding.
Headnote
A) Limitation - Accrual of Right to Sue - Article 113, Limitation Act, 1963 - Suit for recovery of Port Trust charges prior to confiscation - The right to sue for demurrage and wharfage does not accrue immediately upon the importer's default in clearing goods after the last free day, but only when the Customs authorities pass an order of confiscation, as that is when the liability crystallises; the Board's powers under Sections 61 and 62 of the Major Port Trusts Act, 1963 to sell goods are permissive and do not compel immediate suit. Held that suit instituted on 2 August 1980 was within three years of the confiscation order dated 8 September 1977, hence not barred by limitation. (Paras 7-14)
Issue of Consideration
Whether the suit for recovery of Port Trust charges is barred by limitation, and when the right to sue accrues under Article 113 of the Limitation Act, 1963.
Final Decision
The suit is not barred by limitation. The right to sue for demurrage and wharfage accrued on the date of the confiscation order (8 September 1977), not on the expiry of the last free day. The suit filed on 2 August 1980 was within the three-year limitation period under Article 113 of the Limitation Act, 1963. The Board's power to sell goods under Sections 61 and 62 of the Major Port Trusts Act, 1963 is permissive and does not compel immediate suit. The Court answered Issue 1 in the negative, finding the suit not barred by limitation.
Law Points
- Legal points not extracted
- Liability for demurrage continues despite customs detention
- Right to sue for demurrage accrues on date of confiscation order
- Board's power to sell goods under Sections 61 and 62 of Major Port Trusts Act
- 1963 is discretionary and does not affect accrual of right to sue
- Article 113 of Limitation Act
- 1963 applies
- Port Trust charges recoverable for period prior to confiscation order
