Holding

The International Airports Authority of India and Central Warehousing Corporation, as custodians approved under Section 45 of the Customs Act, are entitled to levy demurrage on imported goods even for periods of Customs‑issued detention, and the Collector of Customs cannot lawfully direct them to waive such charges.

Summary

The importers (Grand Slam International and others) brought goods by air to Delhi, where Customs detained the cargo and later issued detention certificates. The International Airports Authority of India (IAAI) and Central Warehousing Corporation (CWC), approved custodians under Section 45 of the Customs Act, levied demurrage on the goods, offering only partial waivers per their rate schedules. The importers obtained writ petitions in the Delhi High Court, which directed the IAAI and CWC to release the goods without any demurrage for the periods covered by the detention certificates. On appeal, the Supreme Court examined the statutory powers under the International Airports Authority Act, 1971, the Customs Act, and related regulations, holding that the custodial authorities may lawfully charge demurrage even when detention is due to Customs, and that the Collector of Customs lacks authority to compel a waiver. The Court also affirmed that the public notice issued by Customs could not override the statutory powers of the IAAI and CWC. Consequently, the High Court's order was set aside and the writ petitions dismissed. The appeals were allowed.

Issues considered

The extent of the Collector of Customs' power under Section 45 of the Customs Act to direct custodial authorities not to levy demurrage for periods covered by detention certificates.
Whether the International Airports Authority Act, 1971 and the regulations framed thereunder permit the IAAI and CWC to charge demurrage despite Customs detention.
The legal effect of the 1986 Customs public notice (clause (vii)) on the liability of custodial authorities to collect demurrage.
The compatibility of the IAAI's demurrage policy with the Customs Act and the public notice.

Legislation cited

Aircraft Rules, 1920s. 56, s. 57, s. 58, s. 59
Customs Act, 1962s. 45, s. 63
International Airports Authority Act, 1971s. 16, s. 35, s. 37
Major Port Trusts Act, 1963s. 111
Warehousing Corporations Act, 1962

Subjects

demurragecustoms detentiondetention certificateInternational Airports Authority ActCustoms Actpublic noticebailmentstatutory interpretationport trustwarehousing

Judgment

INTERNATIONAL AIRPORTS AUTHORITY OF INDIA ETC. E'fC. A
v
MIS GRAND SLAM INTERNATIONAL AND ORS. ETC. ETC.

FEBRUARY 21, 1995
B
[R.M.' SAHAI, S.P. BHARUCHA AND N. VENKATACHALA, JJ.)

Customs Act--Section45--Levy of demurrage-/mport of goods-
Detention for clearanc~oods detained or seized by Customs depart-
ment-Detention certificate issued by Customs Authorities-Whether any
demu"age could have been charged for ~e period detention certificate was c
issued-Held, yes.
, ,,
I The respondents had imported goods by air· and. filed bills of entry
with the Customs authorities. The Customs authorities detained the goods
and passed an order enhancing the value of the goods. In appeal, the D
Custom, Excise and Gold (Control) Appellate Tribunal quashed the order
of the Additional Collector; the goods were released and the Collector of
)
Customs issued detention certificates for the periods of the detention
stating that the detention was due to pendency of acJJudicatlon proceed·
ings. The respondents thereupon applied to the Authority for waiver of
demumige charges for the perl'>ds covered by the detention certificates. E
However, the appellants Instead of treating entire period as free period
determined the liability of the respondent in accordance with Rate
Schedule framed by them for the periods for which the detention certifi·
cates had been issued. 'The.respondents filed writ petitions challengJng the
_I, requirement to ·pay demurrage for the periods for which the detention F
certificates bad been issued. The High Court, while allowing the petitions
held that Airport Authority and the Central Warehousing Corporation
being custodian of the Customs Department, the Authority was not entitled
to recover any amount on account of demurrage charges for the periods
_/
for which detention certificates bad been issued. These appeals bad been
Oled against the Judgment and orders of· the High Court directing the G
appellant to release the go~ds imported by the respondents without cbarg·
--( Ing any demurrage thereon for the periods for which defentlon certificates
had been Issued by the Collector of Customs.

Th~ appellant urged that the power to levy demurnp bJ the mter- H.·
149
150 SUPREME COURT REPORTS [1995] 2 S.C.R.
I

A national Airport Authority of India is derived from the International
Airport Authority Act, 1971, it could not be regulated or controlled by any ·
order statute; that the Customs Authorities could neither levy demurrage
no waive it, therefore, the Detention Certificate could not compel the
. appellants to treat the entire period during which the goods remained in
their custody to be free period and that the rate schedule for. demurrage
B having been made in exercise of statutory power and the appellants have
been granted waiver to the extent of 80% und~r the Policy framed by the
IAAI, the respondents were not entitled to any relief.

Allowing these appeals, this Court
c HELD: Per Majority (S.P. Bharucha and N. Venkatachala, JJ. by
} separate concurring judgments).

The orders passed by the High Court relieving respondent-1 from
his liability to pay demurrage charges were liable to be set aside and the
D Writ Petition stand dismissed. [199-A, B]

Per S.P. Bh<l1Ucha, J.

1.1. An importer is liable to pay demurrage th«>ugh he is not respon·
sible for the delay in clearing his goods. Under the provisions of the
E International Airports Authority Act, 1971, the International Airports
Authority of India are entitled to charge demurrage even in respect of
periods during which the importer was unable to clear goods from its
premises for no fault or negligence on his part. The Authority was entitled
to charge demurrage even hi respect ,of periods during which the importer
p was unable to clear goods because of the detention thereof by the Customs ''-

authorities and also for the period for which a detention certificate bad
been issued. The Airport Authority is an entity in its own right. By virtue·
of the power vested in the Authority u/s 37, the Authority bas framed
regulations called the IAAI (Storage and Processing of Goods) Regula-
tions, 1980. Under the Regulations the Authority is empowered to levy
G ·charges, including storage charges and demurrage. The Authority may in
its discretion waive charges in deserving cases. The provisions of the
In~ernational Airports Authority Act, 1971 are similar to the provisions of
, the Major Port Trusts Act, 1963 and the Port Trusts Act that preceded it.··
~d the regulations framed by the Authority u/s 37 of the Act, in reganl le
H the storage or processing of imported goods and the policy in regard te
INIERNATIONALAIRPORT AUIBORI1Y v. GRAND SIAM INTERNATIONAL 151

the waiver of demurrage, are also similar to those of the Boards of A
Trustees of the ports.
~

Trustees of the Port of Madras v. Mis Aminchand Pyarelal and Ors.,
(1976] 1 S.C.R. 721, Board of Trustee of the Port of Bombay v. Indian Goods
Supplying Co.,, (1977] 3 S.C.R. 343 and Board of Trustees of the Port of
Bombay v. Jain Hind Oil Mills Company and Ors., (1987] 1 S.C.R. 932, B
relied on.

1.2. None of the provisions of the Customs Act entitle the Collector
~- of Customs to debar the collection of demurrage for the storage of im·
ported goods. They do not entitle him to impose conditions upon the
proprietors of ports or airports before they can be approved as Customs
c
ports or Customs airports Section 45 provides that all imported goods
imported in a Customs area must remain in the custody of the person who
,.l
has been approved by the Collector of Customs until they are cleared and
such person is obliged not to permit them to be removed from the Customs
area or otheIWise dealt with except under and in accordance with the D
permission of the Customs officer. Section 45 does not state that such
person shall not be entitled to recover charges from the importer for such
-I
period as the Customs authorities. direct. (186-G-H, 187-A]

1.3. An importer must land the imported. goods at a sea-port or .
airport. He can clear them only after completion of Customs formalities.
E
For this purpose, the sea ports and airports are approved and provide
storage facilities and Customs oftlcers are aecommodated therein to
facilitate clearance. For the occupation by the imported goods of space ln
the sea-port or airport, the Board or the Authority which is Its proprietor
_J,
is entitled to charge the importer. That until Customs clearance the Board. F
or the Authority may not permit the importer to remove his goods from
its premises does not imply that It may not charge the Importer for the
space his goods have occupied until their clearance. [187·C·D]

- /(" 1.4. It cannot be gainsaid that, by reason of unjustified detention of
his goods by the Customs authorities, the importer is .put to loss by having G
to pay demurrage charges for the periods of such detention. 1be Central
-< Goftl'llment is empowered by section 35 of the International Airports
Authority A.ct, 1971, and section 111 of the Major Port Trusts Act,. 1963,
'lo Issue to the Authority and the Board of Trustees, respectively, dinctlons
-• . .11dons of p0lky after giving them an opportunity, as ~ as practld· · H
)

152 SUPREME COURT REPORTS (1995) 2 S.C.R

A able, of expressing their views. The Central Government can, if so advised,
after giving to the Authority and the Boards of Trustees the opportunity
of expressing their views, direct them not to levy demurrage charges for
periods covered by detention certificates. [187·E·ff]

1.S. The Central Warehousing Corporation is established under the
B provisions of the Warehousing Corporations Act, 1962. The provisions of
the Warehousing Corporations Act are substantially similar to those of the
International Airports Authority Act, 1971, and the Major Port Trusts Act,
1963. What bas been held in regard to the International Airports Authority
I
applies as well to th,e Central Warehousing.Corporation. [188-B] ~'

c Per Venkatachala, I. (concurring)

1.1. An· authority created under a statute even if the custodian of the
imported goods because of the provisions of the Customs Act, 1961 would
be entitled tO charge demurrages for the Imported goods In Its custody and
D make the Importer.or consignee liable for the same even for periods during
which be/It was unable to clear the goods· from the.Customs area, due·to
fault on the part of the Customs author(tles or of other authorities who
might have Issued detention certlftcates owning such fault. [196-B, 1'7·A] ·

i.2 When the IAAI In exercise of its powers conferred by sub-section
· E (1) of section 37 of the Intematlonal Airports Authority Act, 1971, and with
the prior approval of the Central Government have made regulations
called the International Airport Authority (Storage and Preservation of
Goods) Regulations, 198o, regulating levy of charge or surcharges, scale
of charges and waiver of charges payable by the owner In case of
F warehoused goods with the IAAI, those Regulations not only do not -=ome
in conmct with the Customs Act or its Regulations or its Rules but
conform to the requirement of the provision of section 63 of the Customs
~ When In pursuance of the said Regulations policy directions are
Issued by the IAAI In supersession of earlier instructions on the subject
of waiver of dem~rrage charges on production of detention certlftcate
G Issued by the Cutoms authorities showing that detention of goods was for
· . no fault of consignee, it can be safely concluded that any directions Issued
by Customs Collector contrary to such Regulations and the policy direc· )-
dons as those Issued without authority In law are ultra vires his powen.
Therefore, condition (vii) In clause (d) of the Customs PublliNotlce No.
"'
H . ~·~the IAAI not to collect the custody charges in respect of the·
' .. ·. . . '
INTERNATIONAL AIRPORT AlTIHORITY v. ORANDSLAM INTERN~TIONAL · 153

goods for which detention certificate.s may be issued by the Collector of A
Customs or his delegatee, has to be regarded as conditions iinposed by the
Collector of Customs without being conferred any power in that regard
either in the Act or the Rules or the Regulations. If condition (vii) of clause
(d) of the Customs Public Notice was regarded as that imposed by the
Collector or Customs without authority of law, it having been imposed B
ultra vires his powers under the Act or Rules or Regulations no Court can
direct the IAAI to release the goods of the consignee without collecting
from him demurrage charges levied according to its Regulations in respect
of the goods, which it had taken care of as the custodian ~erely because
there was a detention certificate of the Collector of Customs or his
delegatee issued to the IAAI which had been approved as the custodian of C
such goods by the Collector of Customs under sub-section (1) of section
45 of the Act. (193-G-H, 194-A-E] .

1.3. The IAAI, an authority constituted under the ·International
Airports Authority Act, 1971, when is entitled to collect charges for keeping D
custody of the imported goods by regulations made thereunder and ac·
cording to its policy, the Collector of Customs or his delegatee could not
direct the IAAI by issuance of a detention certificate to release the goods
of tile Importer without collecdo:m of the charges liable to be paid in respect
thereof, Inasmuch as the Collector of Customs or his delegatee has not
been empowered under the provisions of the Act or its Rules or its E
Regulations to direct release of the imported goods without collection of
keeping ch'!rges, for the keeping of which by the IAAI, charges are to be
paid under the Rules made under the International Airports Authority
Ad, 1971. (197-C·D]
F
1.4. Since Central Warehousing Corporation created under
warehousing Act,· 1962 stands in the same footing as that of the IAAI
created under the International Airports Authority Acts, 1971 in the
matter of keeping of goods as custodians on behalf of the Customs Depart· G
ment and the entitlement of both of them under the respective Ad, Rules
and Regulations to levy and collect demurrage charges from the ownen or
consignees of such goods, not being different, the view taken on the ,
entitlement of IAAI to.levy and collect charges for keeping goods by it u
·cutodian on behalf of the Customs Department, equally holds for Central ·
W•oula& Corporation. (197-E-F]
1
H
154 SUPREME COURT REPORTS (1995) 2 S.C.R.
'
A 1.5. The Collector of Customs empowered under sub-section (1) of
section 45 of the Customs Act, 1962 to approve persons to be custodians
of imported goods in customs are~s until theY. are cleared as prov~ded for
therein, while approving the International Airports Authority of India to
be custodian of such imported goods received at the customs area the
B container Freight Station, ewe Complex, by issue of public notice or :
otherwise in that regard, if by such notice or otherwise directs such
custodians not to collect custody charges from the consignees of such
goods·" the Cargo", because of detention certificates issued by him or his
delegatee, will not be acting within the powers conferred upon him under
the Act, its Rules or its Regulations and hence directions given by the ·
C Customs Collector or his delegatees to release the goods of importers or
consignees without collecting demurrage charge from them cannot be
enforced by Courts either against IAAI or ewe. (197-G-H, 198·A·Cl

Board of Trustees of the Port of Bombay v. lndian Goods Supplying
Co., (1971) 3 SCR 343; Trustees of the Port of Madias v. M/s. Aminchand
D Pyarelal and Ors., (1976) 1 SCR 721 and Board of Trustees of the Port of
Bombay v. Jai Hind Oil Mills Co. and Ors., (1987) 1 SCR 932, relied on.

Per R.M. Sahai, J. (dissenting)

1.1. The provisions in the International Airport Authority Act, 1971
E and Regulations framed thereunder cannot be read in isolation so far as
the custody of imported goods placed under it by Customs Department is
concerned. Both the Customs Act and International Airports Authority Act
are central enactments. In either, the Central Government is empowered
to make rules to carry out the objective of the Act. Both .the legislations
F are directed towards promoting social welfare. They should be interpreted
so as to advance public good and social justice'. (167-G-H; 168-~ BJ

1.2. The Public Notice issued in 1986 in exercise of powers under the
Customs Act, directing the appellants not to charge any dues for the period
the goods were detained appears to have been issued in the first instance
G to mitigate the hardship of the importers and therefore, it should be
construed.so as to remedy the mischief which was intended to be remedied.
Apart from that the court's duty while construing two provisions coveri~ - ,
the same Reid is to harmonise the two provisions in such a manner tat
I
none of them are rendered otiose. But that would be the result if sub-~
ff graph (vii) is ignored. The duty of the court is to effectuate the somt
I~

INTERNATIONAL AIRPORT AUIHORITY "· GRANDSLAM INTERNATIONAL 155

purpose by resorting to such constr':1ction as is beneficial and does not A
cause harm to any one or is rendered self-defeating. [168-E-G]

1.3. The intention and purport of the Notice is to avoid any harass-
ment and loss to a consignee. It attempts to reconcile the necessity arising
out of statutory functions performed by it and yet protects an importer B
from unintended, and, may be in some cases, unjustified delay in release
of goods resulting in huge demurrage. [168-H; 169-A]

1.4. The expression, otherwise dealt with, in clause (b) of sub-section
(2) of Section 45 of the Customs Act widens the ambit of the restriction
placed on the custodian. It places complete embargo on the IAAI or ewe C
to deal with the imported goods in its custody in any manner. The custody
by the IAAI or ewe is not as it popularly understood in the commercial
sense. It is a statutory custody governed by the provisions of law. There-
fore, once rules were framed or Public Notice was issued in exercise of
statutory power the IAAI or ewe cannot set up the claim that the D
intimation issued by the Customs Department could not be taken into
account ,for determination of free days. The issuance of Public Notice
would be covered in the expression, otherwise dealt with. When the goods
were entrusted in the custody of IAAI it was aware of the Public Notice. It
should be deemed to have accepted the custody subject to the condition.
In fact the statutory provisions leave no option for IAAI or ewe after E
1986 except to act in accordance with the provisions of the Act. The IAAI
or the ewe being only custodian of the Customs Department could not
ign~re the detention certificate issued in exercise of this power. Even on
principle of bailment the IAAI or ewe cannot escape from the effect of
detention certificate. Once the Customs Department issued directive to F
release the goods without charging any ground rent in pursuance of public
. notice issued under Section 45 of the Customs Act, the appellants as bailee
could not but to follow the directions which were in accordance with law.
The relationship of bailor and bailee arises out of the statutory provision
.• ·-1" between the Customs Department and the IAAI or ewe and not with the
consignee. It does not make the IAAI or ewe a gratuitous bailee. In any G
case, even if any amount is legally due, the IAAI may claim from Customs
Department but not from consignee. (166-B, 169-B-8; 170-A-E]

1.S. The adjudicatory process is time consuming. From Assistant
Collector of Customs to the Tribunal itself it may take sumdently long H
I

156 SUPREME COURT REPORTS (1995) 2 S.C.R.

A time. By the' time the consignee is able to extract himself from the cobweb
of various stages he may find himself landed in the soup of demurrage. If
he is to pay the charges which in many cases due to passage of time may
be many times more than the value of goods; the entire exercise ·may be
waste. It would be anomalous that a person who ultimately succeeds in
B vindicating his claim that the goods are properly valued or that the import
c was in accordance with law is faced with demurrage of goods which may

be not only more than the value of goods but the .value plus duty and
penalty even. To remedy from such hardship sub-paragraph (vii) was
enacted by way of Public Notice. It recognises the legal consequences which
must follow the _adjudication by directing that no..demurrage should be
C charged for that period as in law the decision by the Tribunal dates back
to the date of detention. And by fiction of law it is assumed tl,iat the
Customs Department clears that goods as it should have done when the
goods had landed. Even otherwise if the policy decision of capacity to pay
is read alongwith rate prescribed then levy of demurrage may defeat the
D very purpose and objective of the policy. Payment of three times or four
ti11,1es of demurrage of value of goods because the goods were detained at
the instance of Customs Authorities does not accord with the policy
decision. It is not in common interest. One of the settled principles of
construction is to read a provision in such manner that it may not be
E self-defeating. The levy of demurrage at the prescribed rate by ignoring the
Public Notice issued by the Customs Department in 1986 is apt to lead to
such disasterous consequences. Even according to the International Air·
ports Authority (Storage & Processing of Goods) Regulations, 1980, the
imported goods are under the control of the Customs Department. 1be
p · Airport Authority acts only as custodian of· the goods on behalf of the
Customs Department. (174-B-H, 175-A]

2. Legislations, Rules or regulations are enacted to regulate the day
to day activities. But they cannot be exhaustive and the practical dlmcul·
ties arising in working out these have to be resolved by developing prin·
G ciples by the Court which are justice oriented, serve public purpose and
promote social interest without doing violence to the language of the
Section and the objective of enactment and if the provision was enacted to
remedy any event then to construe it in a manner in which It may carry
out the objective of the enactment which was intended to suppreis tbe
ff mischief. [168·D·E]
INTERNATIONALAIRPORT AUTHORITY v. GRANDSLAM INTERNATIONAL 157

3. From 1976 to 1993 the entire scenario of cargo traffic from air has A
under gone tremendous change. The busy traffic, the spate of smuggling,
manoeuvring of importing goods by camouflaging to avoid payment of duty
have multiplied putting immense pressure on the IAAI and the Customs
Department. At the same time the honest and bona fide consignee shQuld
be protected for sake of credibility. The Customs Department on it'i part
may consider the feasibility of framing a policy by dividing the imported
B
goods in different categories. Where the import is not prohibited or it is
against licence or permit and the only dispute is about valuation or the
tariff item under which it falls it may be released on fUmi.shing of bank
~- guarantee or security sufficient to secure the interest of Department
subject to final decision. This determination should be done at the airport. c
It would obviate the necessity of storing goods, save the, IAAI or ewe from
unnecessary botheration, protect the Department and serve the importer
better. Tiii then the Public Notice issued by Custo.ms Department appears
to be reasonable and practicable solution to the problem. The IAAI or
ewe may be well advised to change its regulations and fall in line with
the policy decision and refrain from charging any demurrage for the
D
period Customs Department issues a certificate under sub- paragraph
(vii) of the Public Notice. It would avoid litigation, harassment and would
be conducive to public interest. (175-B-EJ

The Board Trustee of the Port of Bombay v. Indian Goods Supplying E
Co., (1977) 3 SCR 943, Board of Trustees of the Port of Bombay v. Jai Hind
Oil Mills Company and Ors., (1987) 1 SCR 932 and Trustees of the Port of
Madras v. M/s. Aminchand Pyarelal and Ors., (1976) 1 SCR 721, distin·
guished.
J.,
F
CML APPELLATE JURISDICTION : Civil Appeal No. 798 of
1992 Etc. Etc.

From the Judgment and Order dated 24.9.91 of the Delhi High Court
·---..( in C.W.P. No. 554 of 1991.
G
V.R. Reddy, Additional Solicitor General, R.F. Nariman, Joseph
-<. Vellapalli, V. Shekhar, Atulkumar, Tarun Bajaj, Vinod Kumar, Aruncsh-
war Gupta, Ranjan Mukherjee, M. J. Paul, Ms. Manjula Gupta, Rajiv
Dutta, Ms. Sushma Suri, A. Subba Rao, S.P. Sharma and V.K. Mchra for
the appearing parties; H
}
I
158 SUPREME COURT REPORTS •.
[1995J 2 s.~.R.

A The following Judgments of ~~e Court were delivered by

R.M. SAHAI, J. International Airports Authority of Iitdia
(hereinafter referred to as 'IAAI') and the Central Warehousing Corpora-
tion, Container Freight Station, Patparganj (in brief 'CWC'} obtained ieave
B of this Court under Article 136 of the Constitution of India against direc-
tion issued by the High Court of Delhi for release of imported goods
without payment of any demurrage charges for the period for . which
detention certificate had been issued by the Customs Authorities.
I·~

What persuaded the High Court to iake this view in favour of the
C respondents was founded on construction of Section 45(2) of the Customs
Act, 1962 ('Act' for short) and issuance of detention certificate by the
Customs Authorities. What is the nature of these certificates? Whether
they are)inding on the IAAI? Is there any conflict in the Public Notice
issued by tl.i~ Customs Authorities and Regulations framed by the I A.AI,
D are some of~ questions which arises for consideration in these appeals. ·
But before adverting to these issues facts in brief may be mentioned. ·

In Appeal No. 798 of 1992 the respondent filed with the Customs
Authorities bill of entry on cargo temunal along with all documents tO' seek
clearance of goods, namely, printing papers etc. of CIF value of Rs.
E 17,846.00. The valuation given in the bill of entry was objected to by
Additional Collector of Customs, and he passed an order on 8th November
1989 enhancing the value of the goods and directing confiscation of the
same. In appeal the Customs, Excise & Gold (Control) Appellate Tnounal,
New Delhi quashed the order of the Additional Collector of Customs on
p 3td July 1990. Since the order enhancing the valuation ai;id directing
confiscation was quashed the Collector of Customs issued detention cer-
. tificate from 7.8.1989 to 12.7.1990. It was mentioned in the certificate that
the detention was due to case of the respondent pending before the
Collector and in the appeal. The respondent thereupon applied for waiver
of the demurrage charged for the relevant period. On 18th December 1990
G it pres~nted an application showing as 'out of charge' of the Customs. B~t
on 9th January 1991 it was informed by the appellant that the total liability
of the demurrage charges was Rs. 1,49,100 out of which Rs. 79, 364 was
waived for the period of detention that is, 7.8;89 to 12.7.90. The appellant
further condoned the periOd from 18.12.90 to 9.1.91 as the application for
H waiver was received and processed during this period. According to the
I
· IN'I1!RNA110NALAIRPORT Al.TIHORllYv. GRANDSLAM INTBRNATIONAL[SAHAI, J.I 159

appellant the respondent was liable to pay Rs. 69,736 as on 9.1.91 and A
thereafter the liability was Rs. 300 per package per week or part thereof.
The liability of the respondent till 12.6.1991 was determined at Rs. 1.15,936.

In Appeal No. 4227 of 1992 the respondent imported a consignment
of wool waste. It was seized by the Collector of Customs under Section 110 B
of the Act as on sample examination it appeared to be synthetic waste
which was restricted item which could not be imported without a valid
import licence. The respondent was issued notice to show cause why the
goods of declared value of Rs. 1,93,237 should not be confiscated under
Section lll(d) and lll(m) of the Act and action under Section 112 be
taken. The explanation of the respondent that test being based on sample C
drawn on 10% examination was not correct nor did it represent test of
entire consignment, was not accepted. And the respondent was given an
option to clear the goods on payment of Rs. 50.000 as fine and in addition
penalty of Rs. 1,00,000. In appeal on test of 71% of consignment by the
chemical examiner it was held that consignment was wool waste. Conse- D
quently the appeal was allowed. And in pursuance of the order of the
Tribunal the Additional Collector of Customs passed the order dated 17th
December 1990 directing release of the goods. On 24.1.1991 the Assistant
Collector sent a letter to the appellant that since the goods of the respon-
dent were seized by Cust~ms Department on 29th April 1986 and they have
been directed to be released by the Additional Collector of Custoins on E
17.12.1990 the, 'demurrage/ground rent and other charges accrued on
consignment from 29.4.1986 to 29.12.1990 may be waived'. The appellant
replied this le~er on 25.1.1991 informing the Assistant ·Collector of Cus-
toms that the matter for waiver of ground rent for the period 31.1.1987 to
29.12.1990 has been referred to the Regional Officer/Head Office..But the F
Assistant Collector, Custoins was requested. to inform the importer that
they will have to bear entry fee, handling and insurance charges and ground
rent after 29.12.1990 in case the Head Office agrees for waiver.

In Appeal No. 3971 of 1992 the respondent had imported .multi-
cable-transit/cable sealing system. The clearance of goods was claimed G
under Tariff Item No. 85.47 on payment of duty@ 135.75% The depart-
-< ment on the other hand directed it to be cleared by paying duty @ 181.75%
under Tariff Item No. 39. However, the claim of the respondent was
ultimately accepted. And provisional clearance was granted on payment of
demurrage charges. After the claim was accepted the respon~ent wrote a H
160 SUPREME COURT REPORTS [1995] 2 S.C.R.

A letter tO the appellant that since the claim had been accepted by the
Customs Authorities and IAAI at the time of release had stated that this
question of refund shall be considered after final decision was taken by the
Customs Authorities the amount of Rs. 3,26,645 paid towards demurrage
may be refunded. But the respondent was informed that the claim of refund
was not admissible.
B
In each of these cases the Customs Department had issued Detention
Certificate and informed IAAI and CWC that no demurrage may be
charged for the period during which the goods were in custody of IAAI or
the CW~:'4ue to pendency of adjudication proceedings. But the IAA1 or
·cthe CWC)nstead of treating entire period. as free period granted rebate
and calculated demurrage in accordance with Rate Schedule framed by
them. The a~ount of demurrage in each case came to be two or three times
more than the value of the goods, therefore, the respondents approached
the High Court by way of writ petitions under Article 226 of the Constitu-
D tion of India. The petitions were allowed and it was held that the IAAI or
the CWC being custodian of the Customs Department could not ignore the
Detention Certificate, therefore, no demurrage could be charged for the
period the proceedings were pending. The High Court relied on Mis
Trishul Impex v. Union of India (1991) 2 Delhi Lawyer 1. This decision in
its turn relied on an earlier decision given in Trans Asia Carpets v. Union
E of India, CCP No. 97/87. The decision in Trans_~'!_(supra) proceeded on
the basis. that Airports Authority being an agent of the . Collector 9f
Customs was bound by the Detention Certificate granted by the Collector
of Customs. In Trishul Impex (supra) it was held that the container depot
where the goods were deposited being the custodian for Customs
F Authorities it was bound by the certificate and was liable to release the
goods without any demurrage. ·

It is the correctness of this view that has been as&ailed in these
appeals. The learned counsel for the appellants urged that the power to
levy demurrage by the IAAI is derived from the International Airports
G AUthority Act, 1971. It could not be regulated or controlled by any other
Statute. It was submitted that the Customs Authorities could neither levy
demurrage nor waive it. Therefore, ~e Detention Certificate could not
compel the appellants to treat the entire period during which the goods
remained in their custody to be free perlod. According to learned counsel
H in any case the a.te Schedule for Demurrage having been made in exercise
\

INTERNATIONAL AIRPORT AU'JHORrrY v. GRANDSLAM INI'llRNATIONAL [SAHA!, J.J 161

of statutory power and the appellants having been granted waiver to the A
extent of 80% under the Policy framed by the IAAI the respondents were
not entitled to any relief.

The word 'demurrage' defined in clause (g) of Regulation 2 of the
Regulations framed by the IAAI is extracted below :
B
"Demurrage means the rate or amount payable to the airport by a
shipper or consignee or carrier for not removing the cargo within
the time allowed."

Similar word used in Port Trust of Madras Act, 1905 came up for inter- C
pretation before this Court in Trnstees of the Port of Madras v. M/s.
Aminchand Pyarelal & Ors., (1976) 1 SCR 721. It was explained that the
word was not used in the strict mercantile sense, 'but merely to signify a
charge which may be levied on goods after expiration of 'Free days'. This
ratio has been reiterated in The Board of Trnstee of the Port of Bombay v.
Indian Goods Supplying Co., (19n) 3 SCR 343 and Board of Trnstees of the D
Port of Bombay v. lai Hind Oil Mills Company & Ors., (1987) 1 SCR 932.
The dispute, thus is whether the days or period dm-ing which adjudication
proceedin~ were pending before the Customs Authorities could be con-
sidered to be free days on any principle of law, statutory or otherwise, or
it can be held to be so on construction of Regulations and policy framed E
by the IAAI read with the Act and the Public Notice issued under it. But
before coming to it, it appears necessary to state that the basic controversy
that arose inAminchand Pyarelal (supra) and Indian Goods Supplying Co.
(supra) centred round whether a consignee could claim immunity from
paying any demurrage when the detention of the goods was not due to any
fault or negligence of the importer. It was answered in the negative. In the F
latter decision that is Indian Goods Supplying Co. (supra) the Court after
referring to the earlier decision in Aminchand Pyarelal (supra) and some
English decisions held :

"The position therefore is that even though the delay in clearing G
the goods was not due to the negligence of the importer for which
he could be held responsible yet he cannot avoid the payment of
demurrage as the·rates imposed are under the authority <>flaw the
validity of which cannot be questioned."

But that is not the issue in these appeals. The respondents did not claim H
l

162 SUPREME COURT REPORTS [1995) 2 S.C.R.

A any immunity from payment of demurrage because their goods were
detained for no fault on their part. What was claimed and accepted was
that the IAAI or ewe being a custodian of Customs Department the
intimation given by it that no demurrage should be charged from the
respondent for the period mentioned in the detention certificate should
have been accepted and acted upon by it. To examine the correctness of
B this claim it is necessary to ascertain the nature of relationship between the
Customs Department and IAAI and notice certain provisions in the Act;
the Public Notice issued under it, the Regulations framed by the IAAI and
the rate schedule framed by it. Section 45 of the Act reproduced below :

c "45. Restrictions on custody and removal ofimported goods.

(1) Save as o~erwise provided in any law for the time being in
force, all imported goods unloaded in a c~toms area shall remain
in the custody of such person as may be approved by the Collector
of Customs until they are cleared for home consumption or are
D warehoused or are transhipped in accordance with the provisions
of Chapter Vlll.
' .
(2) The person having custody of any imported goods in a customs \
area, whether under the provisions of sub-section (1) or under any
law for the time being in force, -
E
(a) shall keep a record of such goods and send a copy thereof to
the proper officer;

(b) shall not permit such goods to be removed from the customs
area or otherwise dealt with, except under and in accordance
F with the permission in writing of the proper officer."

This section permits removal pf imported goods from the 'customs area'
which under clause (11) of Section 2 of the Act means:

"2. (11) "customs area" means the area of a customs station and
G
includes any area in which imported goods or exported goods are
ordinarily kept before clearance by Customs Authorities;"

It is thus clear that the imported goods are kept at the airport or the
Warehousing Corporation in the customs area over which it is the Cwitoms
H Department which exercises control No goods can be removed from there
'
INTERNATIONAL AIRPORT AU'IHORITYv. GRANOSLAM IN'IERNATIONAL [SAHA!, J.) 163

either by the importer or even the Custodian. The detention is to enable A
the Customs Department to proceed in accordance with law and determine
if the valuation disclosed was correct or the goods had been properly
imported etc.· A person importing the goods is required to comply With
rules and notification issued by the Government permitting, prohibiting or
regulating import. Whether the importer is complying with· the Rules or B
not and acting in accordance with law is entrusted to the Customs Depart-
ment. No goods can be cleared except with permission of the Customs
Department. Therefore, it is by operation of the statutory provision that an
area specified as customs area is under control of the· Customs Depart-
ment. In fact fictionally it is the Customs Department which for purposes
of imported goods, its checking, storage, release etc. is in control of it. C

The imported goods are detained in the customs area either for
assessment of duty under Section 17(3) and 17(4) of the Act or for
clearance unper Sections 45 to 47 of the Act. These appeals are concerned
with detention for clearance. The levy of demurrage for detention at the D
instance of Customs Department during adjudication proceedings en-
. ganged attention of the Government even in past. In Indian Goods Supply-
ing Co.'s case (supra) the Central Government issued a letter requesting
the Port Trust Authorities to modify its rates as it was unreasonable to
charge an importer any demurrage once it was accepted that clearance was
delayed on account of reasons beyond his control. But Since this was only E
a letter of request and the Board in pursuance of it opted for graded scale
the court was of opinion that it could not be treated as a direction binding
on the Port Trust.

It appears the Collector or Customs, New Delhi in order to overcome F
this difficulty and for maintaining and regulating control over goods which
are unloaded at Indira Gandhi International Airport, issued Public Notice
in 1986 in exercise of powers vested under Sections 8, 33, 34 and 45 of the
Act read with Rules 56, 57, 58 and 59 of the Aircraft Rules, 1920. Para-
graph (a) of it specifies the limits of customs area as whole of existing area
constituting the Indira Gandhi International Airport, New Delhi including G
domestic arrival and departure area, Cargo Terminal New Int~rnational
Terminal Complex ('CTNITC' for short) and the entire premises of the
Central Warehousing Corporation located at Gurgaon Road, New Delhi
excluding M/s. IAAI's Import Cargo Warehouse (Monkey torn). Paragraph
(b) approves all places where parking/halting of aircraft is permitted by the H
164 SUPREME COURT REPORTS [1995) 2 S.C.R.

A Civil Aviation Department, the International Airport Authority of India for
'
unloading/loading of imported/export goods. Paragraph (c) assigns func-
tions under Sections 33 and 34 of the Act to the officers of the Customs/Air :;.-...
customs posted at IG~ Airport. Paragraph (d) approves M/s. IAAI as
custodian of the cargo under Section 45 of the Act. The cargo is required
B to be stored in IAAI's CTNITC subject to the conditions - (i) that the cargo
shall be subject to the control or customs; (ii) that M/s IAAI shall maintain
detailed account of all imported and exports goods received by them as
'custodian' and shall produce such account for inspection by a gazetted
officer or customs.

C Sub-paragraph (vii) of paragraph (d) which is material· reads as
under:

"(vii) In case of goods detained/seized etc. by customs, the
warehousing/storage charges shall be calculat,ed by M/s. IAAI for
the period due minus the charges for the period of detention at
D
the instance of Customs as certified by the Assistant Collector of
Customs".

The language of the sub-paragraph is clear and unambiguous. Unlike
the letter of request sent by Central Government in Inman Goods Supplying
E Co. 's case (supra) it is a direction by the Collector of Customs to the
custodian of goods at the airport or the warehouse not to charge any
warehousing or storage charges for the period the goods detained or seized
by the Customs Department are kept in custody subject to the issuance of
a certificate by the Assistant Collector of Customs that the goods were
F detained at the instance of Customs Department. But what was urged by ,~-
the learned counsel for the appellants was that this Public Notice was not
binding on the appellants as they were independent statutory bodies. To
examine the merit of this submission, the question that arises is whether
the Notice was issued in valid exercise of power. If it be so then what
consequence flow out of it? It will then have to be examined whether it is --.,..__
G binding on the appellants. And lastly even if it is not binding the Public
Notice issued by the Collector of Customs and rate schedule framed by the
appellants being parallel legislation occupying the same field how should ., ,..
they be construed? The validity of the Notice was not challenged by the
appellants. As a matter of fact it was not adverted to either by the High
H Court nor any reliance was placed on it by the respondents. But reference
INTBRNATIONAL AIRPORT Al.TIHOIUI'Y •· GRANDSLAM INTBRNATIONAL[SAHAI. J.] 165

of it was found in one of the decisions rendered by the High Court and A
thereafter on our request, the learned counsel for the appellants supplied
copies of it. Even when the appeals were listed for further hearing the
learned counsel for the appellants did not urge and probably rightly that
it was issued in violation of statutory power or the Collector of Customs
exceeded its jurisdiction yet it appears necessary to trace the source of B
power of this Notice as it shall have important bearing on the legal effect
of it. It purports to have been issued under sections 8, 33, 34 and 45 of the
Act and Rules 56 to 59 of the Aircraft Rules, 1920. Each paragraph of the
Notice appears to have been issued to carry out the purpose of the ~ections
mentioned in it. For instance, Section 8 of the Act empowers the Collector
to approve proper places in the airport for unloading of goods and clause C
(b) of it empowers the Collector to specify the limits of customs area.
Paragraph (a) of the Notice achieves this purpose. Paragraphs "(b) and (c)
I of the Notice have been issued to carry out the objective of Sections 33
and 34 of the Act and Rules 57 to 59 of the Aircraft Rules which provide
for unloading of goods at approved places with permission of the proper D .
officer of the Customs Department. . Paragraph (d) and its various sub-
paragraphs achieve the objective of Section 45 by spelling out details of
restriction subject to which the custodian may carry out its activities of
warehousing imported goods. It is thus obvious that the Notice was issued
to carry out purposes of the Act. Section 156 empowers the Central
Government to frame rules and Section. 157 empowers the Board to make E
regulations consistent with the Act to carry out the purposes of the Act.
Section 152 empowers the Central Government to issue notification that
any power exercisable by the Board under the Act may be exercised by the
Collector of Customs. It is not claimed that no notification was issued 'by
the Central Government empowering the Collector to exercise the powers F
of the Board. Therefore, the Collector could exercise the same power as
the Board. Consequently, the Notice issued by him cannot be said to be
invalid. It must be assumed to have been issued in exercise of powers under
Section 157 to carry out the purposes of the Act.

The next question is what is the consequence of it. Clause (b) of G
-( sub-section (2) of Section 45 of the Act extracted earlier provides that the
persons having custody of the imported goods in customs area, that is,
IAAI or CWC shall not permit such goods to be removed from the
Customs area or otherwise deal with except in accordance with the per-
mission. in writing of the proper officer. The word 'oth~rwise' is defined in H
\
166 SUPREME COURT REPORTS [1995] 2 S.C.R.
'
A Standard Dictionary to mean, 'in a different manner in another way'. In
Webster Dictionary it is defined to mean, 'in a different manner, in other
respects'. The expression, 'otherwise dealt with', therefore, widens the
ambit of the restriction placed on the custodian. It places complete embar- .
go on the IAAI or CWC to deal with the imported goods placed in its
B custody in any manner. The two restrictions that is prohibition to remove
goods and dealing with it in any manner otherwise completely debar the
custodian from exercising any right or control except with the permission
of the proper officer of Customs Department. No discussion is needed to
explain the expression that the custodian of the goods shall not be entitled
to remove the imported goods but it appears necessary to explain the scope
C of expression 'otherwise dealt with'. How it has to be understood in the
context in which it has been used? That would obviously depend on the
natlire of functions of the custodian in respect of imported goods. Section \
16 of the International Airports Authority Act, 1971 is the only Section
which lays down the functions which are required to be performed by the
D IAAI. Clause ( d) of sub-section (3) of Section 16 empowers the IAAI to
establish warehouses at the airport for the storage or processing of goods.
This would include providing for levy of charges for storing of goods,
handing it, insurance etc. And on failure to pay the charges to dispose of
the goods. The IAAI has in fact framed Regulations to carry out its
E functions of \varehousing. It shall be adverted to later. But in view of clause
(b) sub-section (2) of Section 45 of the Act it cannot deal with goods plaeed
in its custody in any manner except with the permission of the Customs
Department. The function of the appellants in respect of warehousing of
the goods would, thus, be covered in the expression, 'otherwise dealt with'
used by clause (b) of sub-section (2) of Section 45 and, therefore, the
F appellant could not deal with the imported goods or perform any function 1'\....

without obtaining an order in writing by the proper officer. This would
obviously include the right of the appellants to sell the goods for non-pay-
ment of demurrage. This is the appellants even though independent
statutory bodies are precluded from dealing with the goods or selling it
G without obtaining permission of the proper officer. This restriction on the
right and power of the appellants has been statutorily regulated by issuing
Public Notice. It does not interfere with the right of the appellants to frame
their rate schedule and charge demurrage. Nor does it interfere with right
to charge dues for keeping the goods in the warehouse. It only provides
H that where the goods have been detained or seized at the instance of the
IN'IERNATIONAL AIRPORT Al.TIHORITY v. ORANDSLAM INTEPJ'IATIONAL[SAHAI. J.] 167

Customs Department the dues might be calculat.!d minus this period. This A
c6uld have been done by the Central Government or the Board or the
Collector. Therefore, the issuance of Public Notice directing the appellants
not to charge any dues for the period the goods were detained would be
covered in the expression, 'otherwise dealt with'. It is further strengthened
by Section 150 of the Act which lays down precedence for sale of goods
B
which are not confiscated. The payments to the Custodian under clause ( d)
of sub-section (2) of the Section is to be made only after meeting the
expenses of sale, freight and duty. The appellants could not, therefore,
ignore sub-paragraph (vii) of paragraph (d) of the Notice. It is no more
a request by the Central Government but an exercise of power by the
appropriate authority under the Statute. It is not inconsistent with any C
provision of the Act.
{
l
It would not be out of place to mention that Chapter IX of the Act
deals with warehousing. Section 63 of the Act falls in it. It deals with
payment of rent and warehousing charges. Sub-section (1) of it requires D
the owner of any warehoused goods to pay to the warehouse-keeper rent
and warehouse charges at the rates fixed under any law for the time being
in force or where no rates are so fixed, at such rates as may be fixed by
the Collector of Customs. Sub-section (2) of Section 63 empowers the
warehouse-keeper to sell the goods if the dues are not paid within ten days
from the· date it becomes due. But the right can be exercised only with E
permission of the proper officer. Therefore, it cannot be legitimately urged
that the Customs Department could not issue a Notice which would affect
the right of appellants to fix charges etc. The Public Notice issued in 1986
does not interfere with rate schedule of the appellants but it only fixes free
period or period during which no rent can be charged in exercise of F
statutory power. The International Airports Authority Act, 1971 does not
preclude the Customs Department expressly or impliedly from framing any
such regulations. ·

What is apparent from a study of these various Sections of the Act
is that the provisions in the International Airports Authority Act, 1971 and G
Regulations framed thereunder cannot be read in isolation so far as the
custody of imported goods placed under it by Customs Department is
concerned. If sub-paragraph (vii) of the Notice is understood, as urged by
the learned counsel for the appellants, as having no effect on the appellants
as they are statutory bodies then it would result in rendering the Notice as H
168 SUPREME COURT REPORTS (1995) 2 S.C.R.
'
A dead letter or waste paper or it would create conflict b~tween two parallel
provisions i~ two different statutes dealing with same ~object. That would )-
not be in consonance either with principles of interpretation or construe-
tion. Both the Act and International Airports Authority Act are central
enactments. In either, the Central Government is empowered to make rules
to carry out the objective of the Act. Both the legislations are directed
B towards promoting social welfare. They should be interpreted so as to
advance public good and social justice.

"Just as the different words, phrases and provisions of a statute --._.
should not be isolated and given an abstract meaning, so the statute
c itself in .its entirety should not be interpreted solely by reference
to its own terms, but rather by reference to the other laws of the
state, and particularly to those pertaining to the same -~object".
Crawford's, Interpretation of Laws, 1989 p. 420.

Legislations, rules or regulations are enacted to regulate the day to
D day activities. But they cannot be exhaustive and the practical difficulties
arjsing in working out these have to be resolved by developing principles
by the court which are justice oriented, serve public purpose and promote '-
social interest, of course, without doing violence to the language of the
Section and the objective of enactment and if the provision was enacted to
E remedy any event then to construe it in a manner in which it may carry out
the objective of the enactment which was intended to suppress the mischief.
The Notice appears to have been issued in the first instance to mitigate the
hardship of the importers and therefore it should be construed so as to
remedy the mischief which was intended to be remedied. Apart from that
,l
F the court's duty while construing two provisi~ns covering the same field is
to harmonise the two provisions in such a manner that none of them are
rendered otiose. But that would be the result if sub- paragraph (vii) is
ignored. The duty of the couit is to effectuate the social purpose by
resorting to such construction as is beneficial and does not cause harm to
any one or is rendered self-defeating. How such construction shall be self-
G defeating shall be explained later.
...;>-
Further, the intention and purport of the Notice is to avoid any
harassment and loss to a consignee. It attempts to reconcile the necessity
arising out of statutory functions performed by it and yet protects an
H importer from unintended and, may be in some cases, unjustified delay·in
'
INTERNATIONALAIRPoRT AUllfORITY v. ORANDSLAM INTERNATIONAL(SAliAI, J.) 169
\

release of goods resulting in huge demurrage. For instance in the5e very A
~ appeals the demurrage charges are three to four times of value of the
goods. And that too whe~ it has been found that delay was due to
adjudication proceedings. It.' is to overcome this practical difficulty yet
statutory necessity that the Customs Department issued Public Notice in
1986. The IAAI or the CWC:being only custodian of the Customs Depart-
B
ment could not ignore the ·detention certificate issued in exercise of this
power. No such Public Notice issued in exercise of power under Section
45 of the Act arose for consideration in the earlier cases. In Aminchand
'-r- . Pyarelal (supra) the decision turned on validity of bye-laws framed by the
Port Trust. Clause 13(b) of it provided for graded charges· for the period
goods were detained on account of Import Trade Control Formalities. It c
/ was held by the High Court to be ultra vires as charging demurrage for _
I period when consignee was not at fault was unreasonable and unwarranted.
It was this view of the High Court which was reversed as the bye-laws had
been framed by a Port Trust whose members were representatives includ-
ing a Customs Officer. The Court found after examining Section 109 of the D
. Act that levy of graded demurrage was n~ither arbitrary nor unreasonable.
-~ In the other decision that is Indian Goods Supplying Co. (supra) the Court
accepted the claim of the Port Trust that it being entitled to claim demur-
rage under the contract entered with the consignee the same could not be
denied to it unless it w~ found that the delay in release of the goods was E
due to conduct of the Port Trust. Therefore, the ratio of these deciSions iS
not helpful in deciding the effect of detention certificate issued by the
Assistant Collector of Customs under the Public Notice issued under
Section 45 of. the Act. When the goods were entrusted in the custody of
./, IAAI it was aware of the Public Notice. It should be deemed to have
accepted the custody subject to the condition. In fact the statutory
F
provisions leave no option for the IAAI or ewe after 1986 except to act
in accordance with the provisions of the Act. The custody by the IAAI or
ewe is not as it is popularly understood in the commercial sense. It is a
statutory custodY. governed by the provisions of law. Therefore, once rules
were framed or Public Notice was issued in exercise of statutory power the G
IAAI or ewe cannot set up the claim that the intimation issued by the
....( Customs Department could not be taken into account for determination of
free days. Even on principle of bailment the IAAI or ewe cannot escape
from the effect of detention certificate. Clause (6) of Procedures and Tariff
of ewe provides that subject to above terms and conditions, the rights and H
170 SUPREME COURT REPORTS [1995) 2 S.C.R.
.,
A liabilities of the Corporation shall be as that of a bailee. A bailment under
Section 148 of the Indian Contract Act, 1872 means 'delivery' of goods by
. one person to another for some purpose, upon a contract that they shall,
·.'when the purpose is accomplished, be returned or otherwise disposed of
· iiccording to the directions of the persons delivering them'. Here the goods
B were handed over to the IAAI or ewe for the statutory purpose con,
templated by Section 45 of the Act. The goods were to be returned after
completion of proceedings as directed by the Customs Department. Sec-
tion 160 of the Contract Act specifically provides for the bailee to return
or deliver the goods according to the bailor's directive. The direction not
to charge any demurrage does not result in making the IAAI as a gratuitous
C bailee as the IAAI is entitled to charge insurance charges, handling· charges
and demurrage except the dues mentioned for the period in the detention
'
· · certificate. Therefore, once the Customs Department issued directive to \
•release the goods without charging any ground rent in pursuance of Public
Notice issued under Section 45 the appellants as bailee could not but to
D follow the directions which were in accordance with law. The relationship
of bailor and bailee arises out of the statutory provision between the
Customs Department and the IAAI or C'!t'C and not with the consignee.
It does not make the IAAI or CWC a gratuitous bailee: In any case, even
if any amount is legally due, the IAAI may claim from Customs Depart-
:E ment but not from consignee.
The Regulations framed by the IAAI may now be examined. The
IAAI has framed International Airports Authority (Storage & ·Processing
of Goods) Regulations, 1980 in exercise of the powers conferred by sub-
section (1) of Section 37 of the International Airports Authority Act, 1971, /~
F 1971 (43 of 1971). Clause (g) of Regulation 2 of the Regulations defines
'demurrage' which has been extracted earlier. Regulation 4 empowers the
IAAI to levy charges/surcharges which may include terminal charges,
storage charges, handling charges, demurrage, charges to cover_ insurance.
Regulation 5 empowers the authority to fix and revise from time to time
G sCale _of charges referred to in the Regulations. Regulation 6 empowers the
Chairman to waive the charges in deserving cases for reasons to be
recorded by him. He is further empowered to delegate his powers to.
Director of Cargo and Airport General Manager.

a. Replltion 8 is extracted below :
INTERNATIONALAIRPORTAUIHOIUIY v. GRANDSLAM INTl!llNATIONAL (SAHAI, J.J · 171

"Charge of cargo - The cargo will be stored in the International A
Air Cargo Complex under the control and supervisions of Customs
Authorities. While the Authority would be the custodian of the
import Cargo delivered to it by the carriers the responsibility for
export· cargo would be that of the shipper or his agent before
customs examination; of the Customs in respect of detained cargo B
during examination and of the carries after customs examination."

Even atcording to these regulations the imported goods are under the
control of the Customs Department. It acts only as custodian of the goods
on behalf of the Customs Department. It is not the agent of the consignee.
Once the aircraft lands and the goods are handed over to the consignee C
the agreement between the carrier and consignee comes to an end and
thereafter inspection by the Customs Department, its detention and direc-
tion to store in the 'specified area' till the adjudication proeeedings are
over are statutory powers exercised under the Act. The IAAI has no
option. It cannot refuse inspection nor can it refuse to keep the imported D
goods. There is no materiaJ difference in the rules framed by the Customs
Department, the Public .Notice issued by it and the regulations framed by
the IAAI. The IAAI is custodian under either of the Customs Department.
Therefore it could not ignore the notice or the letter issued by the ASsistant
Collector of Customs in pursuance of it. As regards CWC it has not only
been appointed custodian under Section 45(11) of the Act but the Public B
Notice issued in November 1984 provides that it, 'would be required to
comply with the provisions of Section 45(2) of the Act ibid .as well as rules
and regulations and instructions issued from time to time on the subject
mentioned above'.
F
In pur!'uance of Regulation 6 IAAI has framed a policy of waiver of
demurrage charges. It is framed on principle of 'capacity to pay'. Paragraph
2 of the Policy incorporates the general principles. It divides the cargo
,_;J' imported for purpose of free period into there classes; (1) commercial, (2)
unaccompanied baggage, and (3) non-commercial car~o. It allows seven
calendar days from the date of landing ·as free period to commercial and G
non-commerciaJ cargo whereas the unaccompanied baggage is allowed 14
days. Clause (d) provides that unscheduled holiday& declared by Central
Government would be considered as free period. And clause ( e) allows as
free period the period of processing application for waiver of demurrage.
It further allows three days for postal communication as free period. But · · H
172 SUPREME COURT REPORTS [1995) 2 S.C.R.
'
A Paragraph 3 provides that beyond the period mentioned in Paragraph 2,
the cargo may be entitled to remission of demurrage in the circumstances
mentioned therein. Paragraph 3.1. provides that wherever detention certifi-
cate is submitted from the competent authority that the detention of the
goods was for no fault of consignee, then the consignee shall be entitled to
B demurrage on the scale mentioned in sub-paragraphs (a) to (g). Clause (a)
deals with detention of goods by the Customs in connection with I.T.C.
formalities. It provides for 80% waiver for first 90 days, 50% thereafter for
six months and full charges thereafter. Clause (b) permits 80% waiver for.
period under detention in transfer, 'of residents appeal where the appellate
authority decides the case in favour of the consignee without imposing any
C penalty'. And clause (c) allows 80% waiver for full period of detention
where the detention certificate shows that detention was by, 'customs for
analytical purposes, such detention should be for specific Analytical Test
by Customs Control Laboratory or Central Drugs Control Laboratory.'
This policy was framed by the IAAI in 1979 whereas the Public Notice was
D issued in 1986. For purposes of detention of imported goods by the
Customs Department at Indira Gandhi International Airport, therefore,
Paragraph 3.1. has to be read that where detention certificate has been
issued by the Customs Authorities in accordance with sub-paragraph (vii)
of the Public Notice no demurrage shall be charged for the period men-
tioned in it.
E
Same is the result even if the policy framed by the IAAI is examined
• from another aspect. The definition of 'demurrage' has already been ex-
tracted. It mentions the rate or amount payable by the consignee for not
removing the cargo within the time allowed. The regulation do not throw
p any light on the expression 'within the time allowed'. Paragraph 3 of the
Regulations provides the procedure to be followed for the storage and
processing of the goods in the International Air Cargo Complex at the
airport. Clause (b) relates to imported goods. It provides that the goods
shall be received by the officials of the Authority/Ground Handling agency
·from the carrier in the presence of Customs officials. The consignee will
G be responsible for getting his consignment examined by Customs and
obtaining 'out of charge' endorsement. It further provides that the officials
of the Authority will deliver the consignment to the consignee after collect-
ing demurrage and obtaining a valid receipt from him. The demurrage has
to be calculated in aecordance with the policy framed by the IAAI. The
H free days for which no demurrage shall be charged· has alrea<iy been
INTBRNA'DONALAIRPORT Al.111i0Rrl'Y v. ORANDSLAM INTl!RNA'DONAL (SAHAI, J.) 173

expla(ned. The time to calculate demurrage commences, according to A
paragraph 2 of the policy, from the date of landing after excluding free
days. When Public Notice requires the IAAI and ewe not to charge any
rent for the period detention certificate is issued then by operation of law
the expression 'within the time allowed' in the policy has to be read along
with the detention certificate issued by the Customs Department. The High B
Court appears to be right in taking the view Jhat if various clauses in the
Public Notice issued by the Customs Department are followed by the IAAI
then there appears no rationale for the view that sub-paragraph (vii) is not
binding on them as they. have have framed their own rate schedule. Any
other construction would result in rendering sub-paragraph (vii) as mean-
ingless. The learned counsel for the appellants submitted that it acted on C
the certificate and that is why it granted waiver of 80%. But that is not
what sub-paragraph (vii) requires. It specifically provides for charging no
demurrage for the period mentioned in the detention certificate. There-
fore, the lAAI or ewe should not have levied any charge for the period
mentioned in the detention certificate. In fact in clauses (b) and (c) of the D
Policy 80% waiver is allowed on account of court cases where court has
passed unconditional order in favour of the consignee. The Policy furthet
provides that, 'all the waiver in terms of powers (a) above shall be subject
to condition that respective authority certifying detention has not levied any
fine penalty or issued any warning to the consignee on this import'. On a
reasonable construction of the Policy, therefore, there would have been no E
difficulty in accepting the· claim of the respondents for waiver of 80%
during the entire period of detention. An importer may be entitled to
waiver in more than one clause. In a case where appeal is allowed in
entirety and no penalty or fine is imposed the consignee might be entitled
,J, to waiver both under clauses (a) and (g), therefore, the demurrage may not F
be chargeable more than 80% in such cases for the entire period of
detention.

The issue, however, is not whether 80% for the entire period of
detention should have been waived but whether any demurrage could have G
been charged for the period detention certificate was issued by the Assis-
tant Collector of Customs. If the appellants' claim that IAAI being a
statutory body it was entitled to frame its regulations and rate schedule is
accepted then it results in conflict between sub-paragraph (vii) of Public
Notice and paragraph (3) of the Policy framed by the IAAI. The legislative
intention in enacting Act being to check and control economic offences H
174 SUPREME COURT REPORTS [1995] 2 S.C.R.

A, ,such as smuggling, illegal import etc., the provisions have to be construed
to advance the purpose sought to be achieved without sacrificing the
consignee's interest. The provisions in the International Airports Authority
Act and the Policy framed thereunder cannot be construed so as to be
>-
self-defeating. But that would be the result if the construction suggested by
B the ·appellants is accepted. The adjudicatory process is time consuming.
From Assistant · Collector of Customs to the Tribunal itself it inay take
sufficiently long time. By the time the consignee is able to extract himself
from the cobweb of various stages he may find himself landed· in the soup
of demurrage. If he is to pay the charges which in many cases due to
passage of time may be many times more than the value of goods, the entire
C exercise may be waste. It would be anomalous that a person who ultimately
succeeds jn vindicating his claim that the goods are properly valued or that
the import was in accordance with law is faced with demurrage of goods
.which may be not only more than the value of goods but the value plus
duty and penalty even. For instance in Appeal No. 798 of 1992 the total
D value of the goods was Rs. 17,846 whereas the demurrage after allowing
rebate as provided in the Rate Schedule of the IAAI comes to Rs. 1,15,936;
If this amount is not paid the only remedy of the IAAI would be to dispose
of the imported goods and the total value it might be able to realise could
be somewhere· near Rs. 17,000. Therefore, except for the satisfaction of "-
. auctioning the goods the IAAI in some cases may not be able to campen-
E sate ~tself fully. And yet the consignee stands deprived of his goods. The
construction as has been suggested by the appellants would, therefore, be
unjust to small importers, and as observed self-defeating·for the IAAI or
CWC. To remedy from such hardship sub-paragraph (vii) was enacted by
way of Public Notice. It recorgnises the legal consequences which must
p follow the adjudication by directing that no demurrage should be charged
for that period as in law the decision by the Tribunal dates back to the
date of detention. And by fiction of law it is assumed that the Customs
Department clears the goods as it should have done when the goods had
landed. Even otherwise if the policy decision of capacity to pay is read
along with rate prescribed then levy of demurrage may defeat the very
G purpose and objective of the policy. Payment of three times or four times
of demurrage of value of goods because the goods were detained at the
instance of Customs Authorities does not accord with the policy decision.
It is not in common1interest. One of the settled principles of construction
is to read a proviSion in such manner that it may not be self-defeating. The
INTl!RNATIONAL AIRPORT.-.IJ'll{ORITY v. GRANDSLAM INTERNATIONAL [BHARUCHA, J.) 175
/
levy of demurrage at the prescribed rate by ignoring the Public Notice A
issued by the Customs Department in 1986 is apt to lead to such dis~
-<, asterous consequences.

But before parting it is necessary to observe that from 1976 to 1993
the entire scenario of cargo traffic from air has gone tremenchus change.
The busy traffic, the spate of smuggling, manoeuvring of importing goods B
by camouflaging to avoid payment of duty have multiplied putting immense
pressure on the IAAI and the Customs Department. At the same time the
honest and bona fide consignee should be protected for sake of credibility.
The Customs Department on its part may consider the feasibility of framing
-~
a policy by dividing the imported goods in different categories. Where the c
import is not prohibited or it is against licence or permit and the only
dispute is about valuation or the tariff item under which it falls it may be
1 released on furnishing of bank guarantee or security sufficient to secure
the interest of Department subject to final decision. This determination
should be done at the airport. It would obviate the necessity of storing
goods, save the IAAI or ewe from unnecessary botheration, protect the D
Department and serve the importer better. Till then the Public Notice
issued by CUstoms Department appears to be reasonable and practicable
solution to the problem. The IAAI or ewe may be well advised to change
its regulations and fall in line with the policy decision and refrain from
charging and demurrage for the period Customs Department issues a E
certificate under sub-paragraph (vii) of the Public Notice. It would avoid
litigation, harassment and would be conducive to public interest.

In the result, all the appeats fail and are dismissed.

J, BHARUCHA, J. C.A. Nos. 798192 & 3971/92. F
These are appeals by special leave against the judgments and orders
of a Division Bench of the High Court of Delhi allowing the writ petitions
filed by the first .respondents in each appeal and directing the appellant,
~- the International Airport Authority of India (the Authority), to release the
goods imported by the first respondents without charging any demurrage
G
thereon for the periods for which detention certificates had been issued by

-< the Collector of CUstoms.

The first respondents had imported goods by air and filed bills of
entry with the CUstoms authorities at the Delhi airport, .which is the H
176 SUPREME COURT REPORTS [1995) 2 S.C.R.

A property of the Authority. The Customs authorities detained the goods.
'
Ultimately, they were released and the Collector of Customs issued deten-
tion certificates for the periods of the detentions. The first respondents
thereupon applied to the Authority for waiver of demurrage charges for
the periods covered by the detention certificates. The first respondents
calculated demurrage, granting for these periods waiver on a graded scale.
B The first respondents preferred writ petitions before the Delhi High Court,
impleading the Union of India and the Authority, challenging the require-
ment to pay demurrage for the periods for which the detention certificates
had been issued. The High Court took note of the decision of an earlier
Division Bench in the case of Mis. Trishul I,mpex v. Union of India, (1991)
C 2 Delhi Lawyer 1=43 Delhi Law Times 538. The.High Court took the view
that sing: the Authority was the costodian on behalf of the Customs
authorities.,., the Authority was not entitled to recover any amount on
account of'demurrage charges for the periods for which detention certifi-
cates had be~ issued.
D The judgments and orders under appeal are contrary to the judgment
of the Delhi High Court in the case of Mis Trishul Impex (ibid) as also the
decisions of this ·court in the cases of Trustees of the Port of Madras v. Mis
Aminchand Pyarelal & Ors., (1976) 1 S.C.R. 721; Board of Trustee of the
Port of Bombay v. Indian Goods Supplying Co., (1977] 3 S.C.R. 343 and
E Board of Trustees of the Port of Bombay v. Jai Hind Oil Mills Company &
Ors., (1987) 1 S.C.R. 932.

In the case of Trishul Impex (ibid) a writ petition filed by an importer
had been allowed and the Union of India and the Container Corporation
p of Iildia were directed to issue a detention certificate from. the date on
which a bill of entry was filed until the date of actual clearance and to 1-
release the imported goods without payment of demurrage charges. The
Corporation, the 5th respondent, filed an application before the High
Court in which a declaration was sought that the liability for the demurrage
charges would have to be borne by the importer. The Division Bench th?-t
G heard .the application came to the conclusion that the Corporation was the
custodian of the goods under section 45(2) of the Customs Act. As a
detention certificate had been issued by the Customs authorities, the
' ,....,
Corporation was b.:>und to release the goods to the importer and it was the
Customs ·authorities who: were responsible to the Corporation for the
H demurrage ..~es. The Corporation was, therefore, directed to release
INTERNATIONAL AIRPORT AUTiiORITY v. GRANDSLAM INTERNATIONAL [BHARUCHA, J.) 177

the goods to the importer upon payment by the Customs authorities of the A
4 demurrage charges for the period covered by the detention certificate.

In the case of Mis. Tlishul Impex, therefore, it was held that the
authority in whose premises the goods were held pending their clearance
by the Customs authorites was entitled to recover demurrage charges for
the period that they were so held, but that, since such detention had been B
at the insistance of the Customs authorities ard such insistance had been
acknowledged to be wrongful, it was the Customs authorities who should
y· pay the demurrage charges for that period to the authority holding the
\ goods and upon such payment the authority should release the goods to
the importer. The writ petitions filed by the first respondents before the c
Delhi High Court impleaded the Union of India and the Authority. The
High Court did not direct the Union of India to pay to the Authority
demurrage charges for the periods covered by the detention certificates, as
had been done in the case of M/s. Trisliul Impex, but directed the Authority
to release the goods without payment of demurrage charges.
D
_,; In Trustees of the Port of Madras v. M/s. Aminchand Pyarelal & Ors.,
[1976) 1 S.C.R. 721, a detention certificate was issued by the Customs
authorities stating that the detention of imported goods for the period 24th
April, 1963, to 21st August, 1964, was due to no fault or negligence on the
part of the importer. Acting upon the detention certificate, the appellants, E
the Trustees of the Port of Madras (the Board), waived demurrage for the
period covered thereby and charged Rs. 1963, instead of Rs. 3,20,951, by
way of demurrage. The importer paid Rs. 1963 and cleared the goods. In
January, 1965, the Board wrote to the Customs. authorities stating that the
4J. detention certificate had been erroneously issued. The Customs authorities F
owned the mistake. The Board then sued the importer, the Union of India
and the Customs authorities to recover the balance of the demurrage
charges. The importer disputed its liability to pay on the ground that it
__.,.
_ could not be penalised either for the delay caused by the Customs
authorities in clearing the goods or by reason of a wrong detention certifi-
cate. The High Court dismissed the suit. It held, inter alia, that the Board G
could not charge demurrage for the period during which the goods had
~
been detained for no fault or negligence· of the importer or his agent,
demurrage being, in its view, a charge for wilful failure to remove goods.
The Board approached this Court in appeal. This Court noted the
provisions of the Madras Port Trust Act and, particularly, the provisions H
178 SUPREME COURT REPORTS [1995] 2 S.C.R.
'
A of sections 42, 43 and 43A thereof. Section 42 empowered the Board to
frame a scale of rates at which and a statement of the conditions under 'r-
which the services specified therein would be performed by the Board. One
of the clauses thereof referred to· landing of goods from any vessel upon
any land or building in the possession or occupation of the Board or at any
place within the limits of the Board. Another referred to wharfage, storage
B or demurrage of goods at any such place. By reason of section 44, every
scale and every statement of canditions framed by the. Board under sections
42, 43 and 43-A had to be submitted to the Central Government for
sanction and, when so sanctioned and published in the Official Gazette,
had the force of law. Section 44 (la) empowered the Central Government
-y
c to cancel any of the scales framed by the Board and to call upon the Board
to modify any portion thereof. The Board was bound to comply with such
directions. Section 44(2) conferred power upon the Board in special cas~s, )\
for reasons to be recorded in writing, to remit the whole or any portion of
the rates or of any charge leviable according to any scale. Acting in
pursuance of the powers conferred by sections 42, 43 and 43A, the Board
D had framed a scale of rates payable at the Port of Madras which had been
duly sanctioned by the Central Government. Chapter IV in Book I thereof
~-
dealt with demurrage. Demurrage was defined as "chargeable on all goods
left in the Board's transit sheds or yards beyond the expiry pf the free days.
After demurrage begins to accrue no allowance is made for Sundays or
E Board's holdidays. The free days are fixed by the Board from time to time".
Scale 'A' of Chapter IV prescribed conditions governing 'free days', the
normal rule being that three working days in the case of foreign cargo,
excluding Sundays and the Board's holdidays, were treated as free after
complete discharge of a vessel's cargo or the date when the last package
/-:
F was put overside. Free periods also included periods during which goods
were detained by the Customs authorities for a chemical test, which period
was certified by them to be not attributable to any fault or negligence on
the part of importers. Rule 13 (b) read thus :

"(b) where goods are detained by the Collector of Customs, on
"""---
G account of Import Trade Control formalities or for compliance of
formalities prescnoed under the Drug's Act and certified by the ' r=
Collector of Customs to be not attributable to any fault or neglig-
nece on the part of Importers, demurrage shall be recovered for
this period at the rate of 30 per cent of the normal rate, i.e. t~e
H rate at which the goods would incur demurrage had there been no

•
INTERNATIONAL AIRPORT AlTIHORITY v. ORANDSLAM INTBRNATIONAL[BHAlllJCHA, J.) 179

detention by the Customs, this concession in demurrage shall be A
limited to a period of 30 days plus one working day and demurrage
shall be recovered at the full rate (i.e. third slab) for detention
beyond the above said period."

This Court held that Port Trusts were bodies of a public representative
B

-
character which were entrusted by the legislature with authority to frame
a scale of rates and statement of conditions subject to which they would
perform certain services. Every scale and every statement of conditions had
,..., to be submitted by the Board to the Central Government for sanc~on and
it was only when it was so sanctioned that it had the force of law. The
requirement of such sanction was a restraint on unwise, excessive or c
arbitrary fixation of rates. Section 44(2) conferred on the Board the power,
in special cases and for reasons to be recorded in writing, to remit the
whole or any portion of rates or charges leviable according to any scale in
force. Port Trusts did not do the business of warehousing goods and the
rates which the Boards charged for storage of goods were not levied as a
D
means of collecting revenue. The Board was under a statutory obligation
,- to render services-otvarfous kinds and those services had to be rendered
not for the personal benefit of this or that importer but in the larger
national interest. Congestion in the ports affected free movement of ships
and of essential goods. The scale of rates had therefuie to be framed in a
manner which would act both as an incentive and as a compulsion for the E
expeditious removal of goods from the transit area. Ships, like wagons, had
to be kept moving and that could happen only if there was pressure on the
importer to remove goods from the Board's premises with the utmost
~_,...,,_
expedition. Section 42 had not authorised the Board to fix rates of "demur-
rage" but to frame scales of rates and a statement of conditions under
F
which the services specified therein would be performed. The ordinary
meaning of "demurrage" did not, therefore, fetter the Board's powers under
section 42. The High Court was, therefore, found to be in error when it
held that the Board's power to charge demurrage was. limited to cases
where goods were not removed from its premises due to some fault or
negligence on the part of the importer. G
-f
' In Board of Trustees of the Port of Bombay v. Indian Goods Supplying
Co., (1977) 3 S.C.R. 343, Ute appellant Board had framed scales of rates of
demurrage of goods under its statute, which was similar in its terms to the
statut.:! that covered the Portof Madras. The Board ~aim demurrage and, H
)
'
180 SUPREME COURT REPORTS [1995] 2 S.C.R.

A as the amount thereof was not paid, the goods in respect of which the claim
was made were sold by public auction. The importer filed a suit for the
recovery of the value of the goods; the Board denied the liability and
pleaded that it was entitled to collect demurrage and, since the importer
had failed to pay the demurage, it was entitled to sell the goods by auction.
B The City Civil Court at Bombay decreed the suit and the High Court in
appeal affirmed the decree .. The Board appealed to this Court. This Court
said that under its statute it was the duty of the Board to recover rates. It
had a lien on the goods and the right to seize and detain them until rates
were fully paid; also, to sell the goods to enable recovery. The contention
on behalf of the importer was that it was in no way responsible for the
C delay in clearing the goods as the goods had been detained under the
Import Trade Control Regulations. This Court said :
"r\
"It is no doubt true that beofre clearance is given by the Import
Trade Cont~'Ol authorities and the Customs Department the goods
cannot be cleared by the respondents. Neither can the Port Trust
D deliver the goods without the consent of the Import Trade Control
authorities. Taking into account the hardship caused to the im-
porter because of the delay certain concessions in demurage rates
are pemlitted. The Port Trust has prescribed the :educed demur-
rage levy which is 1/6th of the normal rate from the date of expiry
E of the free days upto the 60th day, 1/3rd of the normal rate after
the expiry of the 60th day, upto the 90th day, half the normal rate
after the expilJ' of 90th day upto the 120th day, 2/3rd of the normal
rate after the expiry of the 120th upto the 150th day and at the full
rate after the expiry of the 150th day. As the scale of rates are
framed by virtue of the statutory powers conferred on the Board
F
under section 43 and as the rates have been approved by the
Central Government udner section 48B the rates have the force of
law and cannot be questioned. Taking into account the hardship
to the importers certain concession has been given but the legality
of the rates which are being levied according to law cannot be
G questioned."
\. ,...
This court then referred to the aforementioned judgment in the case of
Mis. Aminchand Pyarefal and said that it was on all fours with the facts of
the case before it and concluded the question. It was held that the High
H Court was in error in holding that the importer of the goods could not be
· INTERNATIONAL AIRPORT AtJI'HORITY v. ORANDSl.AM INTIJ.RNATIONAL (BHAR.UCHA, J.J 181

held responsible for any delay not attributable to his own default and that A
demurrage under the statute could never be imposed as long as the goods
were detained for the purpose of the operation of the Import Trade
\
Control Regulations.

In Board of Trustees of the Port of Bomaby v. Jai Hind Oil Mills Co.
& Ors., (1987] 1 S.C.R. 932, the provisions of the Major Port Trusts Act, B
1963, were involved and it was found that they were in para materia with
the ·provisions of the individual Port Trusts Acts that preceded it. Reliance
was placed upon the judgments in the cases of Mis Aminchand Pyarelal
and Indian Goods Supplying Co., and it was held :
(
"The power of a Port Trust to fix rates of demurrage and to recover
c
the same from an importer or exporter (although the question of
an exporter paying demurrage arises rarely) under law and to show
.{
concession as regards demurrage charges in certain specified cases
is recognised by the Court in the Trustees of the Port of Madras v.
Mis Aminchand Pyarelal & Others, [1976] 1 S.C.R. 721 and in the D
Board of Trustees of the Port of Bombay v. Indian Goods Supplying
Co., [1977] 3 S.C.R. 343. These decisions are no doubt based on
the relevant laws which were in force at the material time. But the
decisions are still relevant insofar as cases arising under the Act
because the Act also contains praovisions more or less similar to E
the statutory provisions considered in the said decisions Demur-
rage charges are levied in order ensure quick clearance of the
cargo from the harbour. They are always fixed in such a way that
they would make it unprofitable for importers to use the port
premises as a warehouse. It is necessary to do so because conges-
tion in the ports affects the free movementof ships and the loading F
and unlo~ding operations. As stated earlier, the Port Trust shows
concession to the party concerned in certain types of cases.

xxx xxx xxx

It is, however, to be observed that before compelling the Customs G
authorities to issue a Detention Certificate, the High Court should
have issued notice to the Port Trust which was vitally interested in
securing its own interests as rgards the demurrage charges
recoverable by it under law. This was necessary because on the
production of the Detention Certificate issued by the Customs H
182 SUPREME COURT REPORTS [1995] 2 S.C.R.
'
A authorities the Port Trust was under an obligation to permit the
clearance of the goods witout payment of full demurrage charges.
If ultimately the party concerned is found to be at fault and
becomes liable to pay the full demurrage charges the Port Trust
may not be in a position to recover such full demurrage charges
from the party concerned, since it would have no longer any lien
B as provided by section 59 of the Act on the goods which are already
cleared. The Port Trust being a body corporate constituted under
the Act is entitled to be heard by the Court before any order which
affects its interests prejudicially is passed. This case serves as an
illustration to what is stated above. The Port Trust has been asked
c to permit the clearance of-goods in respect of which demurrage
charges of Rs 3,53,514.75 paise are payable in the event of the 1st
1st Respondent being held liable in law to pay the full demurrage
charges. The orders passed by the High Court in the proceedings
to which the Port Trust was not a party which had the effect of
prejudicially affecting the interests of the Port Trust would not be
D
binding on it in view of the violation of the principles of natural
justice."

This Court in the cases aforementioned, therefore, held that the
1
Board of Trustees of a port was, under the statute that created it, entitled
E to charge demurrage even in respect of periods during which the importer
•was unable to clear goods from its premises for no fault or negligence on
his part. It was held that the Boards were entitled to charge demurrage
even in respect of periods during which the importer was unable to clear
goods because of the detention thereof by the Customs authorities or the
F authorities under the Import Trade Control Regulations, which detentions
were thereafter found to be unjustified. This Court also recognised that the
Boards were entities in their own right so that the courts could not direct
.the Customs authorities to issue a detention certificate without hearing the
Board concerned. This was because the issuance of a detention certificate
had the effect of reducing the amount of demurrages that the Board would
G otherwise have charged.

The International Airports Authority Act, 1971 constitutes, under the ...
provisions of section 3(1), the International Airports Authroity ohndia
(the Authority). By reason of section 3(2) the Authority is a body corporate
H having perpetual succession and a common seal, with power to acquire,
1Nl'l!RNA110NALAIRPORT Al1IHOR.ITYv. ORANDSLAM INTBRNA110NAL [BHAP..UCHA, J.J 183

hold and dispose of property, both movable and immovable, and to con- A
tract and to sue and be sued by the aforesaid name. It is, by reason of
section 3(3), to consist of a Chairman, the Director General of Civil
Aviation and not less than six and not more than thirteen members to be
appointed by the Central Government, whose names are required to be
notified in the Official Gazette. By reason of section 12 the Central B
Government is empowered to vest in the AuthDrity, by notification in the ·
Official Gazette, all properties and other assets vested in it for the purposes
of airports. Section 14 empowers the Authority to enter into and perform
any contract necessary for the discharge of its functions. Section 16(1)
states that it shall be the function of the Authority to manage airports
efficiently. Section 16(2) makes it the duty of the Authority to provide at C
the airports such services and facilities as are necessary or desirable for
the efficient operation of air transport services thereat. Specifically, the
Authority is empowered by Section 16(3)(d) to establish warehouses at the
airports for the storage or processing of goods. Section 17 gives power to
the Authority to charge, with the previous approval of the Central Govern- D
ment, fees or rent, inter alia, for the use and enjoyment by persons of its
facilities and other services at any airport. Section 35 directs that the
Authority shall, in the discharge of its functions and duties, be bound by
such directions on questions of policy as the Central Government may give
it in writing from time to time. Section 37 gives the Authority the power to
make regulations to provide for all matters for which provision is necessary E
for the purpose of giving effect to the provisions of the Act. The Authority
is specifically empowered by section 37(2)(d) to make regulations for the
storage or processing of goods in any warehouse established by it under
section 16(3)(d) and the charging of fees for such storage or processing.
F
By virtue of the power vested in the Authority under section 37, the
Authority has framed regulations called the IAA (Storage and Processing
of Goods) Regulations, 1980. Under Regulation 4 the Authority is em-
powered to levy charges, including storage charges and demurrage.
Regulation 5 empowers the Authority to fix and revise from time to time
the scales of charges. By reason of Regulation 6 the Chairman may in his G
discreticmr for reasons to be recorded, waive charges in desreving cases.
The Authority has framed a policy in regard to the waiver of demurrage
charges.It provides, in the case of imports, for a free period of seven
calendar days from the date of landing of commercial cargo. In regard to
detention certificates the policy provides for waiver of demurrage on a H
'
184 SUPREME COURT REPORTS [1995] 2 S.C.R.

A graded basis. The waiver is of 80% for the first 90 days, 50% for the period
beyond 90 days and upto 6 months, and full demurrage is required to be
paid thereafter if the detention is in connection with Import Trade Control
formalities. It the detention is by the Customs authorities for analytical
purposes, a waiver of 80% is available for the full period of the detention.

B The provisions of the International Airports Authority Act, 1971 are,
therefore, similar to the provisions of the Major Port Trusts Act, 1963, and
the Port Trusts Acts that preceded it. The regulations ·framed by the
Authority iri regard to the storage or processing of imported goods and the
policy in regard to the waiver of demurrage are also similar to those of the
C Boards of Trustees of the ports. The ratio of the judgments of this Court
in the cases of Mis Aminchand Pyarelal, Indian Goods Supplying Co. and ' '
Jai Hind Oil Mills Co. applies as much to the Authority as it does to the
Boards of Trustees of the po~ts. )

D It was submitted by learned counsel for the first respondents that the
judgments in the cases of Mis. Aminchand Pyarela~ Indian Goods Supplying
Co. and Jai Hind Oil Mills Company, decided only that an importer had to
pay demurrage though the delay in clearing his goods was not due to his
default or negligence. It was submitted that the contention in these appeals
was different, namely, that the Authority was the custodian of the Customs
E authorities and was obliged, by reason of the detention certificates issued
by the Customs authorities, not to charge demurrage for the periods
"covered by the detention certificates. The judgments aforementioned do
not only hold that an importer is liable to pay demurrage though he is not
responsible for the delay in clearing his goods. The judgments deal with
F detention certificates issued by the Customs authorities and hold that the
importer is liable to pay demurrage at the reduced rate prescribed by the
policy framed in that behalf by the Boards even for the period for which a
detention certificate has been issued. The judgments recognise that the
Boards are entities in their own right and that even the courts cannot
compel the Customs authorities to issue detention certificates without first
G hearing the Board concerned, because detention certificates have the effect
of reducing the revenues of the Boards. The Boards and the Authority
being similarly placed, the judgments determine the questions raised in
these appeals.

H During the course of the hearing reliance was placed upon a Customs
\

~ATIONALAIRPORT AU'IHORITY v. GRAND SLAM INTBRNATIONAL[BHARUCHA,J.J 185

Public Notice dated 30th April 1986 and numbered 30/86. It is issued on A
the subject of "Unloading/loading - custody of Import/export cargo at
Indira Gandhi International Airport, New Delhi". It notifies, for the infor-
mation of airlines, importers, exporters and clearing agents, that the Col-
lector of Customs, New Delhi, in exercise of powers vested in him under .
sections 8, 33, 34 and 45 of the Customs Act, 1962, has specified "limits of B
Customs Area as whole of existing area constituting the Indira Gandhi
International Airport, New Delhi including domestic arrival and departure
area, Cargo Terminal New International Terminal Complex (CTNITC for
short) and the entire premises of Central Warehousing Corporation Ltd.
(CWC for short), located at Gurgaon Road, New Delhi, excluding M/s.
IAA's Import Cargo Wareho\Jse (moDkey farm)". The said Customs public C
notice approves the Authority as custodian of cargo under section 45 of
the Customs Act. The cargo, it is stated, would be stored in the .Authority's
C.T.N.I.T.C. on the condition that it would be subject to the control of the
Customs authorities. Clause (vii), which is another condition, reads thus :

"In case of goods detained/seized etc. by customs, the warehous- D
ing/storage charges shall be calculated by M/s. IAAI for the period
due minus the charge for the period of detention at the instance
of Customs as certified by the Assistant Collector of Customs."

The said Customs public notice states that public notices and instructi~ E
issued earlier would be deemed to have been modified to the extent
mentioned in it.

The said Customs public notice has not been referred to in the
pleadings before the High Court or this Court. It was not brought to the
notice of the High Court. F
As would appear from what has been stated above, the Authority's
policy for the waiver of demurrage still covers Customs detentiQfl certifi-
cates and the Authority has levied demurrage for periods cove~ed by
Customs detention certificates even afer the issuance of the said Custom's
public notice. In the case of M/s. Trishul lmpex referred to above the issue G
was whether demurrage charges for the period covered by a detention
certificate should be borne by the importer or by the Customs authorities
and the Customs authorities did not rely upon the said Custom's public
notice to contend that the Authority could not charge demurrage for the
period covered by a detention certificate and were ordered to make the H
!

186 SUPREME COURT REPORTS (1995) 2 S.C.R.

A payment. It appeaPS, therefore, that th~ said Customs public notice has not
been acted upon by the Authority and by the Customs authorities.

In any event, the provisions of the Customs Act under which the said
Customs public notice was issued may be examined. Section 8 empowers
the Collectors of Custoins to approve proper places in any Customs port
B or Customs 'airport for the unloarung and loading of goods and to specify
the limits of any Customs area. Section 33 debars the unloading of im-
ported goods at any place other than a place approved under section 8.
Section 34 states that imported goods shall not be unloaded from any
conveyance except under the supervision of a proper officer. Section ·45
C reads thus :

""Restrictions on custody and removal of imported goods -

(1) Save as otherwise provided in any law for the time being in
force, all imported goods unloaded in a customs area shall remain
D in the custody of such person as may be approved by the Collector
of Customs until· they are. cleared for home consumption or are
warehoused or are transhipped in accordance with the provisions
of Chapter VII.

(2) The person having custody of any imported goods in a customs
E area, whether under the provisions of sub-section (1) or under any
law for the time being in force, -

(a) shall keep a record of such goods and send a copy ther~of to
the proper officer;

F (b) shall not permit such goods to be removed from the customs
area or otherwise dealt with, except under and in accordance with
the permission in writing of the proper officer.

None of these provisions entitles the Collector of Customs to debar
the collection of demurrage for the storage of imported goods. They do
G not entitle him to impose conditions upon .the proprietors of ports or
airports before they can be approved as Customs ports or airports. Section
45 provides that all imported goods imported in a Customs area must
remain in tlJ.e. custody ·of the person who has been approved by the ·
Collector of ·Customs until.they are cleared and SlJCh person is obliged not
H to permit them to be removed from the Customs area or otherwise dealt
'
IN'IERNATIONALAIRPORT AU1HORITY v. GRAND SLAM INIERNATIONAL[BHARUCHA,J.) 187

with except under and in accordance with the permission of the Customs A
officer. Section 45 does not state that such person shall not be entitled to
recover charges from the importer for such period as the Customs
authorities direct.

The purpose of the Customs Act on the one hand and the Major
Port Trusts Act and the International Airports Authority Act on the other B
hand are different. The former deals with the collection of Customs duties
on imported goods. The latter deals with the maintenance of sea-ports and
airports, the facilities to be provided thereat and the charges to be
recovered therefor. An importer must land the imported goods at a sea-
port or airport. He can clear them only after completion of Customs C
formalities. For this purpose, the sea-ports and airports are approved and
provide storage facilities and Customs officers are accommodated therein
( to facilitate clearance. For the occupation by the imported goods of space
in the sea-port or airport, the Board or the Authority which is its proprietor
is entitled to charge the importer. That until Customs clearance the Board D
or the Authority may not permit the importer to remove his goods from its
premises does not imply that it may not charge the importer for the space
his goods have occupied until their clearance.
'
What is stated in the quoted clause of the said Customs public notice E
would be effective against the Authority only if it were shown that the
Authority had, expressly or impliedly, consented to such arrangement; that
is not even pleaded.

It cannot be gainsaid that, by reason of unjustified detention of his
goods by the Customs authorities, the importer is put to loss by having to F
pay demurrage charges for the periods of such detention. The Central
Government is empowered by section 35 of the International Airports
Authority Act, 1971, and section 111 of the Major Port Trusts Act, 1963,
to issue to the Authority and the Boards of Trustees, respectively, direc-
~·

tions on questions of policy after giving them an opportunity, as far as G
practicable, of expressing their views. The Central Government Can, if so
advised, after giving to the Authority and. the Boards of Trustees the
opport~ty of expressing their views, direct them, under the aforemen-
tioned provisions, not to levy demurrage charges for periods covered by
detention certificates. H
188 SUPREME COURT REPORTS (1995) 2 S.C.R.

A CA. No. 4227/92 ·
The goods of the first respondent in this appeal were stored, pending
their clearance by the Customs auth.orities, at the Container Freight Station
of the appellant, the Central Warehousing Corporation at Patparganj,
Delhi. The Central Warehousing Corporation is established under the
B provisions ·of the Warehousing Corporations Act, 1962. The provisions of
the Warehousing Corporations Act are substantially similar to those of the
International Airports Authority Act, 1971, and the Major Port Trusts Act,·
1963. What has been said above in regard to the International Airports
Authority applies as well to the Central Warehousing Corporation.
c In the result, the appeals (CA. Nos. 798/92, 3971/92 and 4227/92) are
allowed. The judgments and orders under appeal are set aside. The writ
petitions filed by the first respondents in each of the appeals are dismissed.

There shall be no order as to costs.
D
VENKATACBALA, J. The important question which is required to
be considered and answered in deciding the above civil appeal is, whether
the Collector of CUstoms empowered under sub-section (1) of section 45 .. _
of the CUstoms Act, 1962 - "the Act" to approve persons to be custodians
of imported goods in customs areas until they are cleared as provided for
E therein, ,,bile approving the International Airports Authority of India - "the
IAAI" to be the custodian of such imported goods in the customs area of
Indira Gandhi International Airport, New Delhi and Central Warehousing
Corporation - "the CWC" to be the custodians of such imported goods
received at the customs area - the Container Freight Station, ewe Com-
F plex, Pragati Maidan, New Delhi, by issue of public notice or otherwise in
that regard, if by such notice or otherwise directs such custodians not to
collect custody charges from the consignees of such goods - "the Cargo".
because of detention certificates.issued by him or his delegatee, will he be
acting within the powers conferred upon him under the Act, its Rules or
G its Regulations, and, if not, can such direction be enforced against the
custodians?

Divergent views are expressed on the said question by my revered
brethren R.M. Sahai and S.P. Bharuchl!., JJ. in their separate judgments,
the drafts of which I had the advantage of going through. The said question
H being of considerable importance I propose to 'consider it .independently,
JNIBRNATIONALA!RPORTA!JIHORJTYv. GRAND SLAM INil!RNATIONAL[\IENKATACHALAJ.) 189

express my view thereon. and decide the present appeals accordingly. A

Civil Appeal No. 798 of 1992 arises out of the Judgment dated
24.9.1991 of the High Court of Delhi in Civil Writ No. 554of1991, by which
the IAAI was directed to release the goods to respondent-I here
(petitioner in the Writ Petition) without collecting any demurrage charges B
for the period for which the detention certificate had been issued by the
Assistant Collector of Customs. Such direction was issued by the High
Court because of its view that the IAAI when was the custodian of the
goods at the instance of the Collector of Customs, the IAAI was not
entitled to recover demurrage charges from the petitioner in the Writ
Petition (respondent-1 in the appeal) - the consignee, for the period C
covered by the detention certificate issued by the Collector of Customs or
i his delegatee. Such view was taken by the High Court, following its earlier
DiviSion Bench judgment in M/s. Trishul Impex v. Union of India, (1991) 2
Delhi Lawyer 1.

D
Civil Appeal No. 3971 of 1992 arises out of the Judgment dated
3.2.1992 of the High Court of Delhi in Civil Writ Petition No. 3235 of 1989,
whereby the IAAI - the appellant herein, was directed to refund demurrage
charges which it had collected in respect of the goods of the petitioner
therein - respondent-1 herein, despite the detention certificate issued in
respect of such goods by the Asstt. Collector of Customs. Such direction, E
according to the High Court, was issued following its earlier Division
Bench judgments in M/s. Trishul Impex (supra) and Grand Slam Interna-
tional v. Union of India, - C.W. .554 of 1991 decided on 21st September,
1991. .
F
Civil Appeal No. 4227 of 1992 arises out of Judgment dated 22.1.1992
again of the High Court of Delhi iii C.W. No. 1751 of 1991, by which it
directed the ewe to release the goods of the petitioner therein without
1- collecting the demurrae charges from the petitioner therein in respect of
the period covered by the detention certificate issued by the Asstt. Collec- G
tor of Customs. Such direction, it is said in the judgment, was issued
following its Division Bench judgment in M/s. Trishul lmpex (supra),
wherein it was held that the custodian of the goods under section 45 of the
Customs Act being· the custodian on behalf of the Customs authorities, it
was bound to release the goods in favour of the consignee when once a
detention certificate had been issued by the Customs authorities. H
r

190 SUPREME COURT REPORTS [1995) 2 S.C.R.

A It would be convenient to consider and answer the aforesaid question
with reference to Civil Appeal No. 798 of 1992 and Civil Appeal No. 3971
of 1992 in which the appellant, "the IAAI" is common and dispose of the
appeals accordingly, in that, the answere to be given to the said question,
would be sufficient to dispose of Civil Appeal No. 4227 of 1992 as well.

B
M/s. Trishul Impex case (supra), has been relied upon by the High
Court in giving the directions to the IAAI, in its judgments under appeals,
not to collect demurrage charges in respect of the periods covered by the
detention certificates issued by the Customs authorities. As has already
C be.en pointed out, a Division Bench of the same Court had, in the case,
expressed its view that when the container Corporation concerned there,
was the'-custodian on behalf of the Custqms authorities under section 45(1)
of thi Act, it ~as under an obligation 'to release the goods in its custody
without coilecting demurrage charges in respect of the period covered by ~
the detention certificate issued by the Customs authorities. In Mis. Grand
D Slam International (supra), which is another decision of the Division Bench
of the same Court relied upon by it in its judgment in C.A. No. 3971 of
1992, the view taken is that the goods for which demurrage charges were
levied by the custodian, if was solely on account of the fault of the Customs
authorities the liability for the same would be of those Customs authorities
E and not of the consignee. But, when once the Customs authorities issued
the detention certificate in respect of such period of detention of goods,
the custodian who had the custody of goods on behalf of Customs
authorities had no option but to release the goods to the consignee.
Therefore, the directions given by the High Court in the judgments under
F apj>eals to release the goods in its custody to the consignees w!thout
collecting demurrage charges from them in respect of the periods covered
by the detention certificates issued by the Customs authorities is based on
its view that when, the goods of the consignee had been kept by the
custodian for and on behalf of the Customs authorities, the consignee
cannot be made liable to make goods such demurrage charges in respect
c: of the periods of such detention for which detention certificates were
issued by the Customs authorities, which was taken following the view ".
r
already taken in similar matters by its Division Benches. At the sus-
tainability of the said view of the High Court is under challenge in the
present appeals, the question adverted to at the outset is required to be
ff considered and answered for rendering a proper decision in them.
'
INll!RNATIONALAIRPORTAlJIHORlIYv. GRAND SLAMINIERNATIONAL[VENKATACHAIA,J.) 191

The provision in sub-section (1) of section 45, which bears on the A
-(
question required to be considered, reads thus :

"45. Restrictions on custody and removal of imported goods. - (1)
Save as otherwise provided in any law for the time being in force,
all imported goods unloaded in a customs area shall remain in the
custody of such person as may be approved by the Collector of B
Customs until they are cleared for home consumption or are
warehoused or are transhipped in accordance with the provisions
of Chapter VIII."
< As becomes clear from the above sub-section all imported goods
unloaded in customs areas shall remain in custody of such person as may
c
be approved by the Collector of Customs until they are cleared for the
.( purposes indicated therein. Therefore, under the above provision the Col-
lector of Customs is the person who is empowered to approve the persons
that should. be in custody of goods unloaded in customs areas. The Collec-
tor or Customs, New Delhi who has issued Notice No. 30/86, has by clause D
(d) of that Notice approved the IAAI as the custodian of cargo to be stored
in Cargo Terminal, New International Terminal Complex - "the CTNITC",
obviously exercising the powers conferred upon him by sub-section (1) of
Section 45 of the Act. But, the Collector of Customs who has approved the
IAAI as custodian of the cargo to be stored in its CTNITC by the said E
clause (d) requires IAAI to comply with condition (vii) imposed against it
thereunder, thus :

"(vii). In case of goods detained/seized etc. by customs, the
) warehousing/storage charges shall be calculated by M/s. IAAI for
the period due minus the charges for the period of detention at
F
the instance of Customs as certified by the Assistant Collector of
Customs."

,+-· No doubt, as to what obligations should the custodian - the IAAI ap-
proved by the Collector of Customs under sub-section (1) of Section 45 by G
clause (d) of the said public Notice, perform, are specified in sub-section
/
(2) thereof which reads :

"45. Restrictions on custody and removal of imported goods. -

(1) ......................................... H
)
192 SUPREME COURT REPORTS [1995] 2 S.C.R.

A (2)The person having custody of any imported goods in a customs
area, whether under the provisions of sub-section (1) or under any
law for the time being in force, -

(a) shall keep a record of such goods and send a copy thereof to
the proper officer;
B
(b) shall not permit such goods to be removed from the customs
area or otherwise dealt with, except under and in accordance with
the permission in writing of the proper officer."

C But, the said sub-section (2) of Section 45 as is seen therefrom, does
not in any way impose an obligation on the custodian approved under
sub-section (1) thereof not to collect charges leviable on the consignee by
it according to Rules or Regulations made by the S'tatute creating it for
keeping the imported goods in its custody.

D That is why, it is claimed on behalf of the IAAI, the appellant in the
appeals that condition (vii) of clause (d) of the said public Notice has been
imposed by the Collector of Customs without any power or authority
conferred upon him in that regard under any provision of the Act or its
Rules or its Regulations and hence unenforceable.
E
Learned counsel appearing for respondents were not able to invite
·Court's attention to any provision either i..11 the Act or the Rules or the
Regulations made thereunder which empowered the Collector of Customs
to impose by issue of public Notice the above condition (vii) in clause (d)
thereof denying the IAAI which is approved as the custodian of imported .' ..,.

F . goods in Customs area, the right to collect the charges from the consignee
for keeping his imported goods detained or seized by the Customs
authorities nor my effort to find any provision in the Act or its Rules or its
Regulations enabled me to find any provision which conferred such power
of imposing such condition upon the IAAI merely because it is approved
G as the custodian of imported goods on behalf of Customs Department.
However, as to whether the Parliament in enacting the Act intended that
custodians to be approved thereunder to keep the goods coming into
customs areas should relieve the owners (consignees) of such goods of their
liability for payment of charges for such keeping or otherwise could be
H gathered froni the provision in section 63 of the Act, it is excerpted :
\

INIE&NATIONALAIRPORTAlTIHOR!IYv.GRANDsu.MNIBRNATIONAL(VENKAT~J.) 193

"63. Payment of rent and warehouse charges. - (10) The owner of A
any warehoused goods shall pay to the warehouse- keeper rent and
warehouse charges at the i;ates fixed under any law for the time
being in fo· or where no rates are so fixed, at such rates as may
be fixed by the Collector of CUstoms.
B
(2). If any rent or warehouse charges are not paid within ten
~ays from the date when they became due, the warehouse-keeper
may, after notice to the owner of the warehoused goods and with
the permission of the proper officer cause to be sold (any transfer
of the warehoused goods notwithstanding) such sufficient portion
of the goods as the wa:ehouse-keeper may select." C
"';
/

I When sub-section (1) above, does not relieve the owner of any
warehoused goods to pay to the warehouse-keeper rent and warehouse
charges at the rates fixed under any law for the time being in force or where
no rates are so fixed, at such rates as may be fixed by the Collector of D
Customs, although such goods were kept by the warehouse-keeper for and
on behalf of the Customs Department and again when sub-section (2)
enables the warehouse-keeper even to sell the warehouse goods with the
permission of the proper officer for unpaid rent or warehouse charges, it
is difficult to think that there could be any provision in the Act or the Rules B
or the Regulations made thereunder \\'.bich confers on the Collector of
Customs power to direct the release of the goods kept in the custody, as
custodian of the Customs Department without demanding payment of
keeping charges from the consignee of goods because of detention cel'ti!i-
cates issued in that regard by the Customs authorities, inasmuch as, the
said provision shows. the legislative intendment to be to the contrary. F

In fact, when the IAAI in exercise of its powers conferred by sub-
section (1) of section 37 of the International Airports Authority Act, 1971
- "the IAA Act", and with the prior approval of the Central GovefllJllent
have made regulations called the international Airport Authority (Storage G
and Preservation of Goods) Regulations, 1980, regula~ levy of charges
·-< or surcharges, scale of charges and waiver of charges payable by the owner
in case of warehoused goods. with the IAAI, those Regulations not only-do
not come in conflict with the Act or its Regulations or its Rules but
conform to the requirement of the provision of section 63 of the Act. When. H
' ,,-~-
_,,._ .~·--;-,. ....
. ·.......

SUPREMECOURTREPORTS . (1995]2S.C.R.

A in pursuance of. the said Regulations ·policy' directions are issued by the
IAAI in supersession of earlier instriictions on the subject of waiver of
demurrage charges on production of detention certificate issued by the
Customs authorities showing that detention of goods was for no fault of
comignce,it can be safely concluded that any directions issued by customs
B Collector contrary to such Regulations and the policy_directions as those
.issued without authority in law are ullTa virei bis powers: Therefore, I have
no hesitation in holding that the aforesaid condition (vii) in clause (d) of
the Customs Public Notice No. 30/86 directing the IAAI not to collect the
custody charges in respect of the goods for which detention certificates
c may be issued by the Collector of Customs or bis delegatee, has to be
regarded as a condition imposed by the Collector of Customs without being
conferred any power in that regard either in the Act o~ the Rules or the
RcgulationS. If condition (vii) of cluase (d) of the Customs Public Notice
No; 30/86 is regarded as that imposed by the Collector cif Customs without
D authority of liw, it having bCcn imposed ullTa vires bis powers under the
Act or Rules or Regulations no Court can direct the IAAI to release the
· goods of the consignee, without collecting from him demurrage chitrges
levied according to its Regulations in respect of the goods, which it had
taken care of as the custodian merely because there was a detention
E certificate of ihc Collccior of Customs or bis delegatee issued to the IAAI
which had bCen approved as thC custodian of such goods by the Collector
of Customs under sub- Sccti~ (1) of section 45 of the Act.
As the above view expressed by me on condition (vii) under clause
(d) of the Customs Public Notice No. 30/86 receives considerable support
F trom the decisions of this Court, where this Court while dealing with the .
· liability.· of consignees of· imported goods\ or cargo· to pay· demurrage
charges levied in respect of them according to scales of charges prescnl>cd
· under Rules or Regulations made under respective Ports Acts because of
their non-clearance from Customs areas in Ports, notwithstanding the fact
G that conccrncd Port Authority was the approved Custodian under the
Customs Act, 1962 and tlicJact that Customs Collector or bis delegate had .
issued .ktcntion certificates which made it clear that the goods were ·
detained for no· fault of the consignee and the goods shall be released .
without collcction of dcmurrage charges, they shall be adverted to present-
H ly•

•
\

NIER.NATIONAL AIRPORT AU'IHORITY "·GRAND SIAM NIER.NATIONAL (VENKATACHAl..A, J.) 195

Trustees of the Port of Madras v. Mis. Aminchand Pyarelal & Ors., A
(1976) 1 SCR 721 is the first· of such decisions of this Court. That was a
case, where imported goods of M/s Aminchand Pyarelal - 'the importer'
were not cleared from the customs area of the Port of Madras by the
Customs authorities before the expiry of free days. The goods, therefore,
continued to be in the custody of Trustees of the Port of Madras • "the B
Board", as approved custodian of such goods on behalf of the Customs
authorities. However, a detention certificate was issued to the importer by
the Customs authorities stating that the detention of the imported goods
beyond the free days was not due to fault or negligence on tlte part of the
importer. The Board, based on the detention certificate waived demurrage
charges payable by the importer amounting to Rs. 3,20,951, and released C
the goods to the importer. Later, when the Customs authorities owned their
f mistake of issuing the detention certificate wrongly, the Board, filed a suit
against the importer, the Union of India and the Customs authorities for
recovery of the demurrage charges which had not been recovered on
account of the detention certificate. But, that suit was resisted by the D
importer on the plea that the delay in clearing the goods was due to fault
on the part of the Customs authorities and hence there was no legal
obligation on its part to pay the demurrage charges. The suit was dismissed
by the High Court accepting the plea of the importer. When the Board
brought up the matter before this Collrt in appeal, the provisions of the. E
Madras Port Trust Act and the scale of rates fixed by the Board with the
approval of tne Central Government pursuant to the provisions of the Act
having been thoroughly examined, it was held that the High Court was in
error in its conclusion that the Board had no power to charge demurrage
)
wher~ goods were not removed from its premises not due to the fault or p
negligence on the part of the importer, but due to fault of the Customs
authorities.

Board of Trustees of the Port of Bombay v. Indian Goods Supplying
Co.,. [1977) 3 SCR' 343 is the second of such decisions of this Court, where G
this Court examined the sustainability of scales of rates of demurrage of
goods framed by the Board of Trustees of the Port of :aombay • "the
-< Board", the provisions of which were in pari materia with the Madras Port
Trust Act. This Court held that the case it was examining being in all force
with the case of M/s. Aminchand Pyare Lal (supra) it had to be concluded
on the basis of the decision rendered therein. Consequently; it reversed the H
'
196 SUPREME COURT REPORTS [1995) 2 S.C.R.

A judgment of the High Court in appeal by holding that the High ,Court was
in error in its view that the importer of the goods could not be held
responsible for any delay not attributable to his own fault and that the
demurrage under the statute could never be imposed as long as goods were
detained for the purpose of Import Trade Control Regulations.

B Board of Trustees of the Port of Bombay v. lai Hind Oil Mills Co. &
Ors., (1987) 1 SCR 932 is the third of such decisions of this Court. There,
the provisions of the Major Port Trust Act, 1963, which were under
examination of this Court having been found to be in pari materia with the
provisions of the Ports Act considered by this Court in Mis Aminchand
C Pyare Lall(supra) and Indian Goods Supplying Co. (supra), by following
the decisi~ rendered therein, it was held thus :

Thb -p~wer of a Port Trust to fix rates of demurrage and to :recover
the same from an importer or exporter (although the question of
an exporter paying demurrage arises rarely) under law and to show
D
concession as regards demurrage charges in certain specified cases
is recognised by the Court in the Trustees of the Port of Madras v.
M/s. Aminchand Pyarelal & Others, '(1976) l S.C.R. 721 and in the
Board of Trustees of the Port of Bombay v. Indian Goods Supplying
CO., (1977) 3 S.C.R~ 343. These decisions are no doubt based on ·
E the relevant laws which were in force at the material time. But the
decisions are still relevant insofar as cases arising under the Act
because the Aet also contains provisions more or less similar to
the statutory provisions considered in the said decisions. Demur-
rage charges are levied in order to ensure quick clearance of the
cargo from the harbour. They are always fixed in such a way that
F
they would make it- unprofitable for importers to use the port
premises as a warehouse. It is necessary to do so because conges-
tion in the ports affects the free movement of ships and the loading
and unloading operations. As stated' earlier, the Port Trust shows
concession. to the party concerned in certain types of cases."
G
From the above decisions. of this Court it becomes clear that an
authority created under a statute even if is _the custodian of the imported 'r
goods because of the provisions of the ~ustoms Act, 1%1, would b~
entitled to charge demurrages for the imported goods in its custody and
H make the importer or consignee liable for the same even for periods during
'
INIERNATIONALAJRPORT AlJIHORITY v. GRAND SLAMINIERNATIONAL[VENKATAOIALA. J.) 197

which he/it was unable to clear the goods from the Customs area, due to A
fault- on the part of the Customs authorities or of other authorities who
might have issued detention certificates owning such fault.

Thus, the above decisions of this Court which uphold the power of
Ports Trusts created under Ports Act to levy and collect demurrage charges B
for goods they keep as Custodians for Customs Department from the
consignees notwithstanding the detention certificates issued by the Cus-
toms Department clearly support the view I have taken that the IAAI, an
authority constituted under the International Airports Authority Act, 1971,
when is entitled to collect charges for keeping custody of the imported
goods by regulations made thereunder and according to its policy, the C
Collector of Customs or his delegatee could not direct the IAAI by
issuance of a detention certificate to release the goods of the importer
without collection of the charges liable to be paid in respect thereof,
inasmuch as the Collector of Customs or his delegatee has not been
empowered under the provisions of the Act or its Rules or its Regulations D
to direct release of the imported goods without collection of keeping
charges, for the keeping of which by the IAAI, charges are to be paid under
the Rules made under the International All'Ports Authority Act, 1971.

Since Central Warehousing Corporation created under Warehousing
Corporation Act, 1962 stands in the same footing as that of the lAAI E
created under the International Airports Authority Act, 1971 in the matter
of keeping of goods as custodians on behalf of the Customs Department
and. the entitlement of both of them under the respective Acts, Rules and
Regulations to levy and collect demurrage charges from the owners or
consignees of such goods, not being different, the view I have taken on the F
entitlement of IAAI to levy and collect charges or demurrage charges for
keeping gqods by it as custodian on behalf of the Customs Department,
equally holds good for Central Warehousing Corporation.

Therefore, my answer to the question considered by me is in the
negative i.e. the Collector of Customs empowered under sub- section (1) G
of section 45 of the Customs Act, 1962 to approve persons to be custodians
of imported goods in customs areas until they are cleared as provided for
therein, while approving the International Airports Authority of India to
be the custodian of such imported goods in the customs area of Indira
Gandhi International Airport, New Delhi and Central Warehousing Cor- ·H
'
198 SUPREME COURT REPORTS (1995) 2 S.C.R.

A poration to be the custodians of such imported goods received at the
customs area - the Container Freight Station, CWC Complex, Pragati
Maidan, New Delhi, by issue of Public notice or otherwise in that regard, )-
if by such notice or otherwise directs such custodians not to collect custody
charges from the consignees of such goods - "the Cargo", because of
B detention certificates issued by him or his delegatee, will not be acting
within the powers conferred upon him under the Act, its Rules or its
Regulations and hence directions given by the Customs Collector or his
delegatees to release the goods of importers or consignees without collect-
ing demurrage charges from tht:m cannot be enforced by Courts either
against IAAI or ewe. -, i
c
The view I have so taken makes the judgment of High Court of Delhi
under appeals unsustainable, for the view of its earlier decisions in M/s.
Trishul Impex case (supra) and Grand Slam case (supra) which it has
followed, also cannot be sustained.

D Civil Appeal No. 4227 of 1992 :
,
The Central Warehousing Corporation established under the \.._
provisions of the Warehousing Corporation Act, 1962 is a creature of
statute as is the IAAI under the International Airports Authority Act, 1971.
E Th~ entitlement of the ewe to recover demurrages for the goods of which
it becomes the custodian under the provisions of the Act cannot ·be
different from that of the IAAI, as indicated in the earlier judgment. If that
be so, what I have said in the aforesaid appeals of the IAAI would equally
apply to the CWC also. The High Court having directed the Customs
F authorities to issue detention certificates in respect of the goods of which
the ewe was the _owner has relieved the importer - respondent-1 in the
appeal from his liability to pay demurragc charges. Because of the view I
have taken in my judgment in the earlier appeals it has to be held that the
High Court's direction relieving respondent-1 from his liability to pay
demurrage charges cannot be sustained.
G
In the result, Civil Appeal Nos. 798 of 1992, 3971 of 1992 and 4227
of 1992 arc allowed. The judgments of the High Court under appeals arc
set aside. The Writ Petitions filed by rcspondcnt-1 in each of the cases
before the High Court are dismissed. In the facts of the present app~als,
H there shall be no order as to costs.
...
·1-1',,,---_,-.-...

IN"IE.RNATIONALAIRPORT A1JIHORII'YM. GRANDsu.MOOERNAlDNAL
1
199

• ORDER- A
For reasons given by us in our separate judgments (R.M. Sahai, J.
for dismissal of the appeals whereas S.P. Bharucha and N. Venkatachala,
JJ. for allowing the appeals) the appeals succeed and are allowed. The
orders passed by the High Court are set aside. And the Writ Petiton shall
stand dismissed. But in the circumstances of the case, there shall be no , B
order as to costs.

R.A. L. Appeals allowed.

'

..