JALYAN UDYOG CALCUTTA Vs. UNION OF INDIA

JUDGEMENT

(1.) On April 24, 1968 the Chairman of Shipping Corporation of India addressed a letter to Government of India, Ministry of Transport and Shipping, seeking permission for purchase of secondhand ships for operating between Bombay and Persian Gulf, Calcutta and Atriatic and Calcutta and United Arab Republic. On June 1, 1968, the Minisgtry of Transport and Shipping informed the Chairman that the Government of India has no objection to the proposal to purchase and conditions. In pursuance of the permission, Shipping Corporation purchased two secondhand ships m.v. Vijay Jivan and m.v. Vijay Vaibhav. Vijay Jiwan arrived in Bombay Port on August 14, 1968, while Vijay Vaibhav on September 9, 1968. The Import General Manifest filed in respect of the two vessels referred to only the cargo on the board and not the vessels. The two vessels imported by shipping Corporation were registered under the Merchant shipping Act on August 23, 1968 and September 17, 1968, respectively. The two vessels were used by the Shipping Corporation from the year 1968 onwards as ocean going vessels. On October 11, 1958, the Customs Authorities had issued an exemption notification bearing No. 262-Cus. and it reads as under:

(2.) In the year 1980 the Shipping Corporation sold both the vessels to Vijaya Lines Private Limited and the purchaser also used the ships as ocean going vessels. In the year 1982 the ships were purchased by petitioner No. 2. The last overseas voyage of Vijaya Jiwan wan in February 1982, while that of Vijay Vaibhav in April 1982. The petitioner No. 2 used the vessels for plying between coast to coast and the last coastal voyage of Vijay Jiwan was undertaken in April 1983, while that of Vijay Vaibhav in May 1983. Both the ships thereafter were laid up in Bombay Harbour as it was realised that they had become petitioner No. 2 decided to scrap the vessels and there upon permission was sought from the Directorate General of Shipping, Bombay, respondent No. 5 to the petition. Respondent No. 5 granted permission on October 1, 1983 subject to three conditions, (a) formal sanction will be issued on receipt of communication indicating the name of the buyer and the sale price, (b) the vessel should be free from all encumbrances and necessary documents furnished, and (c) all outstanding dues of any seamen are settled. The permission also hecites that petitioner No. 2 should approach the Metal Scrap Trade Corporation (M.S.T.C.) Calcutta for getting clearance in the matter. Respondent No. 4 Corporation was constituted in the year 1978 as a canalizing agency for import of ships for the purpose of breaking. Petitioner No. 2 thereafter entered into tow agreements, both dated October 12, 1984, with petitioner No. 1 for sale of both the vessels for a consideration of Rs. 3 lakhs. The petitioners thereafter informed respondent No. 5 about the name of the purchaser and claimed that it is not necessary to seek clearance from M.S.T.C. as the ships were imported in India in the year 1968, that is prior to the constituion of M.S.T.C. as canalizing agency. In the meanwhile on March 1, 1984, Collector of Customs had issued a Public Notice in regard to the assessment of Indian Flag vessels for Scrapping/breaking purposes and the procedure in regard to the assessment. The Public Notice recites that the valuation of Indian Flag Vessels cleared for breaking will be on the basis of current import price of similar vessels imported by M.S.T.C. for scrapping during the period of sale. The notice further recites that the ship owners will have to approach the M.S.T.C. and obtain a certificate regarding the current import price of similar vessels imported by M.S.T.C. The ship owners were also required to secure a no objection certificate from the M.S.T.C. for sale of Indian Flag vessels. The no objection certificate would be granted on the conditions (a) the ship owners shall be deemed to be the importers and the entire liability to pay Customs duty shall rest on them. The ship owners shall also file the bills of entry and undertake to collect the sum representing the extimated amount of duty determined by the Customs, (b) the ship owners shall deposit the sum collected from the buyer with the Customs House on account of the ship sold, (c) M.S.T.C. will issue to objection certificate only after the evidence reflecting the payment of deposit of the amount with the Customs House is produced, and (d) the Customs House would then assess the bill of entry and adjust the deposit already available with them towards the duty chargeable on vessel and then permit clearnace.

(3.) The petitioners repeatedly informed respondent No. 5 that the procedure prescribed under the Public Notice dated March 1, 1984 cannot be applied in respect of sale of two vessels imported in the year 1968, but respondent No. 5 did not send any reply and that led the petitioners to file the present petition under Article 226 of the India in this Court on November 13, 1984. The petitioners sought several reliefs, but it is not necessary to set them out in detain in view of the fact that because of the subsequent events many of the reliefs no longer survive. The petitioners had sought interim relief of direction to the respondents to clear the ships for scrapping and also a direction to allow the petitioners the beaching of the ships and taking the ships to breaking yard. The learned Single Judge admitted the petition on November 29, 1984 but granted interim relief on condition that the petitioners should secure prior approval of M.S.T.C. Against the conditional interim relief, the petitioners preferred Appeal No. 1195 of 1984 before Division Bench of this Court, and the appeal was allowed by judgement dated June 27, 1985 and the interim reliefs sought by the petitioners were granted withput any condition but on the petitioner's furnishing the bank guarantee to the satisfaction of the Prothonotary and Senior Master. The Division Bench made it clear that the condition imposed by the learned Single Judge of obtaining the prior approval of M.S.T.C. was one which cannot be imposed in law. In pursuance of the interim order passed by the Appeal Court, both the vessels were scrapped.