KHANBHAI ESOOF BHAI Vs. UNION OF INDIA

JUDGEMENT

(1.) The Petitioner-firm at the material time carried on business, inter alia, of purchasing old ships and dismantling and breaking up the same. Sometime in the year 1978, a vessel named M.V. Ocean Star had called at the Port of Bombay for the purpose of loading cargo. After loading, on 6th December i 978 the said vessel had capsized and sank in the Bombay harbour. The owners of the vessel did not take any steps to salvage the wreck of the said vessel. The Deputy Conservator of the Bombay Port Trust as Receiver in terms of the provisions of Section 14 of the Indian Ports Act, 1908 , had issued notice to the owners of the vessel who did not take any action. It is not disputed that after the said vessel was salvaged by Respondent No, 4 along with the broken parts and scrap the vessel had vested in the Government of India.

(2.) In November 1980 the Deputy Conservator of the 4th Respondent had issued tender notice for disposal of the said salvaged vessel and its parts and scrap, in the prescribed tender form it was inter alia, stipulated : "Customs duty on the vessel is payable by the successful tenderer" vide Clause 6. It was further stipulated : "4% service charges on the purchase price is payable to MSTC Metal Scrap Trading Corporation Ltd., Calcutta 700020 by the prospective buyer" vide Clause 7. Although in terms of the instructions issued the tenderness were entitled to seek clarification on any of the clauses or terms and conditions of sale before hand, if so necessary (vide Clause F of the instructions), the Petitioners at that stage did not raise any objection regarding the conditions for payment of customs duty and 4 per cent service charges to Respondent No. 5 Corporation by the successful tenderer.

(3.) On 13th January 1981 the Controller of Stores, Bombay Port Trust, with reference to the quotation submitted by the Petitioners, informed the Petitioners that their offer for purchase of the wreck of M.V. Ocean Star including its broken parts and scrap for a sum of Rs. 5,11,111/-had been accepted. It was again specifically mentioned in the said acceptance letter that the sale was subject to the conditions set out therein. One of the said conditions was that customs duty as admissible on the above vessel was payable by the Petitioners to the Customs Authority. Secondly, the Petitioners were required to pay 4 per cent service charges on the purchase price in respect of the scrap to the Metal Scrap Trading Corporation Ltd. It is significant that even at this stage the Petitioners did not take any objection to the demand made for payments of the customs duty and 4 per cent service charges. By their letter dated 27th May 1981 the Petitioners bad requested the Controller of Stores, Bombay Port Trust, to deliver the vessel Ocean Star and her broken parts and scrap. The Deputy Controller of Stores, Bombay Port Trust, by his letter dated 3rd June 1981 had advised the Petitioners about the manner in which the delivery of the vessel and her broken parts etc. was to be taken. Only after the Deputy Conservator of the Bombay Port Trust by his letter dated 9th July 1981 had, inter alia, asked the Petitioners to lodge the necessary deposit with the Docks Manager and to settle the customs duty, the Petitioners for the first time by their letter dated 23rd July 1981 had raised objection regarding the demand for payment of the customs duty and commission charges to the Metal Scrap Trade Corporation Ltd. The Controller of Stores, Bombay Port Trust, by his letter dated 30th July 1981, had disputed the said contentions of the Petitioners and had again demanded payment of the customs duty and commission charges By their letter dated 14th September 1981 the Petitioners admitted that they had signed the tender which stipulated, inter alia, payment of customs duty and commission charges. In the said letter the Petitioners had taken subsequently the same stand which they later on took by filing this Writ Petition. According to the Petitioners, the said conditions for payment of customs duty and service charges were legally untenable because customs duty was not attracted. Secondly, no services had been rendered by the Metal Scrap Trading Corporation Ltd. Therefore, no charge was payable to the Corporation.