Pratibha Rani, J.:— The appellant before us is Union of India impugning the judgment and decree dated March 22, 2002 whereby an exparte decree for a sum of Rs. Rs. 46,31,929/- with costs, pendent lite and future interest @ 18% p.a was passed in favour of respondent herein i.e M/s Navshakti Industries P. Ltd.

2. At the outset, we may note that the judgment and decree being ex-parte, appellant had impugned the judgment on its legality, referring the facts pleaded and proved on affidavit by way of ex-parte evidence by the respondent.

3. The case of the respondent (plaintiff in CS(OS) No. 2667/1998) is that it is a company incorporated under The Companies Act, 1956 and was importer, exporter and trader of various kinds of newsprints and printing papers from various countries. The respondent used to place orders and foreign suppliers sent the goods which reached the International Containers Deport (hereinafter referred to as ICD), Tughlakabad. The goods used to be got released by the respondent from there on completing the formalities.

4. The facts giving rise to cause of action for filing the suit pertained to the import of newsprint/printing paper from various countries during the period July, 1997 to December, 1997. On getting the information, respondent filed the bill of entry for release of the goods alongwith complete documents in the office of AC (Customs). The items imported were allowed under Open General Licence but the goods were not released by the Custom on the pretext that previous test reports of such goods were not available.

5. The plaintiff was ready to give the test bonds against each bill of entry alongwith undertaking to pay the custom duty so that it was not burdened with demurrage/detention charges. Despite that, the goods were detailed for want of test reports from the Laboratory.

6. The plaintiff has given the details of each bill of entry alongwith date of arrival of container, name of Shipper, weight and other particulars in para 6 of the plaint and extracted on pages 2 to 8 of the impugned judgment, so we do not consider it necessary to reproduce. The fact of the matter is that 80% of the goods were released to the importer immediately and remaining 20% detained awaiting the test report.

7. The respondent requested the appellants for release of the containers containing goods and respondent was ready to give the Test Bonds against each bill of entry alongwith an Undertaking to pay the custom duty, if found payable. Thereafter respondent filed all the bills of entries and Test Bonds. Despite the Test Bonds having been filed by the respondent, the goods were not released and detained for months.

8. Ultimately on testing, as the consignment/goods imported by respondent were found to be as per the bills of entries, no duty was payable under the Customs Act. The detention certificate was issued to the respondent by Custom Authorities but request made to Container Corporation of India (hereinafter referred to as CCI) and the Shipping Company to remit the demurrage/detention charges was declined on the ground that they were not concerned with the acts of omission and commission of the appellants.

9. The respondent was constrained to pay Rs. 33,16,218/- to CCI and Shipping Company. Apart from that, due to fluctuation in dollar rates, respondent further suffered loss of Rs. 4,58,608/- and the above amount has been claimed alongwith interest @ 18% p.a on the ground that the appellant wrongfully withheld the goods imported thereby making the respondent liable to pay heavy amount towards detention/demurrage charges/ground rent without any fault on its part.

10. As mentioned above, respondent failed to appear despite service and proceeded ex-parte.

11. The ex-parte evidence by way of affidavit is mere reproduction of the averments made in the plaint. Apart from resolution Ex. P1 authorising Mr. K.C Goyal to sign and verify the plaint and institute the suit, various communications and notice under Sec. 80 CPC alongwith receipts and AD cards have been proved as Ex. P2 to P60.

12. To appreciate the reasoning given by learned Single judge while decreeing the suit, it is relevant to extract the reasoning part of the impugned judgment, as under:—

‘In his affidavit Mr. K.C Goel, Director of the plaintiff company has fully substantiated plaintiff's case as contained in the plaint and has proved various documents referred to above. In absence of any version or evidence to the contrary, I find no reason to disbelieve the deposition contained in the affidavit of Mr. K.C Goel from which it is clearly made out that defendants had no justification to detain the goods for months together when no duty was payable in respect thereof. As a result of this casual and negligent attitude of the defendants, the plaintiff had to suffer heavy losses in terms of demurrage and detention charges which he had to pay and other heads referred to above. Thus suit, therefore, deserves to be decreed ex parte.’

13. Mr. A.S Chandhiok, learned ASG assailed the judgment referring to the pleadings and evidence adduced by the respondent. Learned ASG urged that even as per averments made in the plaint, the goods imported were newsprint/printing papers. While serving the notice under Section 80 C.P.C, also the case of the respondent was that it imports newsprint/printing papers. It has been urged that under Open General Licence, the respondent could import printing papers as per specification and for import of newsprint, only the actual user of the newsprint was exempted. Importers other than actual user importing the newsprint required a licence to import newsprint. Referring to the pleadings, learned ASG submitted that it is nowhere the case of the respondent that it was the actual user of newsprint or had a licence to import the newsprint. When the respondent is not clear as to what it was importing i.e whether it was newsprint or printing paper, as items imported have been referred as newsprint/printing paper, there was no method for the appellant to ascertain the same except by getting it tested. The appellant only performed its statutory duty in detaining 20% of the goods imported, getting them tested and on being satisfied that the goods imported were printing paper, releasing the same without imposing any custom duty. Not only that even detention certificate was issued specifying that importer was not at fault. Even as per description on the labels of goods imported were Standard Newsprint, the action was justified and bona fide. It has been contended that if demurrage/detention charges have been paid to the CCI or Shipping Company, the same cannot be recovered by the respondent from the appellant.

14. On behalf of respondent, it has been submitted that the act of the appellant in detaining 20% of the stock was malafide on the ground that goods imported were printing paper which were clearly mentioned on the bill of entries and import was permissible under Open General Licence which did not attract any custom duty. Not only that learned counsel for the respondent has referred to various communications made to custom to release the goods on furnishing test bonds against each bill of entries alongwith an undertaking to pay the custom duty, if found payable on the said newsprint/printing paper imported by the respondent. Despite that, with malafide intention the goods were not released leading to incurring liability to pay demurrage/detention charges more than value of the goods, for which the respondent could not have been blamed.

15. On behalf of respondent, further it has been urged that detention certificate issued by Custom Authorities make it clear that it was for no fault on the part of importer that the goods were detained by the Custom Authorities. In these circumstances, imposing liability to pay demurrage/detention charges more than the value of the goods, in the peculiar circumstances, the claim of respondent has rightly been decreed by learned Single Judge.

16. We have given our thoughtful consideration to the rival contentions. At the best, the respondent could predicate its claim on detention certificate certifying as under:—

‘This is certified that the above container/s had to be detained for carrying out checks necessitated by circumstances of the case. However the importer was not found to be at fault.’

17. In the given circumstances, the respondent, at the most, can rely upon (1998) 9 SCC 647; Union of India v. Sanjeev Woolen Mills to seek directions from the Court that in the peculiar facts and circumstances, the Custom Authorities were liable to pay detention charges/demurrage. We may clarify here that in Sanjeev Woolen Mills's case (Supra) the Supreme Court has whittled down the liability of the importer to pay the demurrage on the assumption that the goods had been detained illegally by the Custom Department, thus making them liable to pay the demurrage. The Apex Court while repelling the apprehension of Union of India that it would constitute a precedent, in para 18 of the report observed thus:—

‘18. Looking to the totality of circumstances pertaining to the import of the consignments under the four Bills of Entry and the inordinate delay of about six years for their release, the High Court has passed the impugned orders directing the appellants to issue a detention certificate and bear the demurrage and container detention charges. They are obviously orders passed in the special circumstances of the present case, and particularly the conduct of the Customs authority in not releasing the goods even after the order of unconditional release dated 11-8-1995 passed by their own Chief Commissioner. The conduct of the Customs Officers concerned is also under investigation. We do not think that this is a case where any intervention at our hands is required. The apprehension of the appellants that this will constitute a precedent is not justified because it is clearly an order which is meant to do justice to the respondent looking to the totality of circumstances and the conduct of the appellants. Obviously, for any delay on the part of the respondent in taking delivery of the goods after 5-4-1997, the respondent will have to bear the consequences. For the period prior to 5-4-1997, however, the order of the High Court does not require any intervention from us. The appellants shall file a progress report relating to the departmental inquiry by 30-11-1998.’

18. Reverting to the facts of this case, first we would like to advert to the circumstances under which the appellant was constrained to detain 20% of the goods for conducting test. Let us start with Ex. P2 which is a letter by the respondent to its indenting agent. The letter Ex. P2 is reproduced as under:—

“December 19, 1997

Anika International Pvt. Ltd.

Nehru Place

NEW DELHI

SUB.: SHIPMENT OF 116.884 M.T PRINTING PAPER VIDE INDENT No. 028/97-98 (UPM) DATED 15/10/97.

---------------------------------------------------------------------------------

Dear Sir,

We have booked the above shipment through you and received original documents in our bank as per the description in your indent No. 028/97-98 (UPM). Accordingly we filed Bill of Entry in customs for the clearance of the same.

On physical examination of the goods it is found that reels are marked “STD. NEWSPRINT” & “DIRECTORY PAPER” both, which has created problem in releasing of the goods by customs. Therefore, we request you to take up the matter with your principals to verify the description of the paper originally despatched and why double marking has been made.

Please treat the matter as most urgent as the consignment is being held up in customs and bearing heavy detention/ground rent. Please also note that we will not be responsible for any amount of detention/ground rent on account of delay to clear the matter and satisfy the customs.

Thanking You

Yours faithfully

For NAV SHAKTI INDUSTRIES (P) LTD.’

19. Now it would be advantageous to refer Ex. P4 addressed to AC, Custom by respondent to clarify kind of paper imported on the basis of certificate received from the mill. In the letter Ex. P4 (which is typed copy of letter Ex. P3), in first para, the details of the import of 120M. Tones of printing paper through Anika International Pvt. Ltd. were given, and the remaining part of the letter is extracted as under:—

“On physical examination of the goods it was found that the reels marked opelite directory paper which is the printing paper of 36 GSM and not newsprint. GSM is marked on the each reels on top left corner of the label. For your confirmation we are enclosing herewith the detailed product catalogue of the mill and quality certificate issued by the mill strictly confirming the description of the goods other then newsprint.

However to satisfy you that the paper shipped is printing paper and not newsprint, we would request you to order for immediate test of the paper in any lab of your choice. We are also ready to pay testing charges if any required.

As the consignment is under heavy detention/demurrage we also request you to allow for draw sample for us to test at our end. Kaipola Mill of M/S UPM, Kyammone does not manufacture any standard news paper in 36 GSM.

In view of the above we once again request you to please order for immediate test to avoid detention/demurrage charges.”

20. The act of Custom Authorities to detain 20% of the imported goods for testing to find out whether the good imported were newsprint, is in good faith as labeling on the goods was Standard Newsprint that created confusion requiring CCI to inform the respondent that Custom clearance was required for effecting delivery.

21. What is good faith has been dealt with in numerous judgments. In the decision reported as AIR 2001 SC 4004; Union of India v. Ashutosh Kumar Srivastava, it was observed as under:—

‘There is always a presumption in favour of the Administration that is exercise of power shall be in good faith and for public benefit. Therefore, the ‘burden’ is on the individual to produce sufficient material to suggest of the mala fides of the authority concerned and it is not easy to discharge the same’. There is a presumption of bona fides in favour of the Authority. The burden of proving mala fides is on the individual alleging it. Indeed, it is a heavy burden which can be discharged ordinarily by initiation of civil proceedings. The petition in the present case has nowhere set-out in his petition that the Customs Authority detained his consignment imported from Australia without authority or in a mala fide manner or by colourable exercise of its power. Rather, it is his own case that ‘clearance of consignment was stopped by the respondents due to reason that all cases were referred to Special Investigation Bureau as a precautionary measure’. It has been further stated in the petition that the said consignments were imported from October, 1995 to January, 1996 and the petitioners were allowed to clear the goods on 30th January, 1996 after the respondents gave clearance certificate. Thus, even unreasonable delay could not be attributed on the part of the Customs Authority by the Petitioner.’

22. Explaining the concept of exercise of power in good faith, in AIR 1986 SC 872; Express Newspaper (P) Ltd. v. Union of India, it was held thus:—

‘18. The expression ‘good faith’ has not been defined in the Ceiling Act. The expression has several shades of meaning. In the popular sense, the phrase ‘in good faith’ simply means ‘honestly, without fraud, collusion, or deceit; really, actually, without pretence and without intent to assist or act in furtherance of a fraudulent or otherwise unlawful scheme’ (See Words and Phrases, Permanent Edn. Vol. 18-A, p-91). Although the meaning of ‘good faith’ may vary in the context of different statutes, subjects and situations, honest intent free from taint of fraud or fraudulent design, is a constant element of its connotation. Even so, the quality and quantity of the honesty requisite for Constituting ‘good faith’ is conditioned by the context and object of the statute in which this term is employed. It is a cardinal canon of construction that an expression which has no uniform, precisely fixed meaning, takes its colour, light and content from the context.’

23. The case pleaded by the respondent in CS(OS) No. No. 2667/1998, its own documents reveal that action of the Custom Authorities was bona fide in discharge of its statutory duty to ensure that the newsprint could be imported only by the actual user without inviting liability to pay the duty which admittedly the respondent was not. Newsprint could have been imported by the person/the company other than the actual user only under a licence and the respondent had none to import the newsprint. The communication Ex. P2 made by the respondent to the indenting agent and other communications to CCI and Shipper, make it clear that the goods were not released without clearance from the Custom Authorities because the goods were labeled having text marking as Standard Newsprint.

24. The respondent has claimed detention charges/demurrage on the basis of detention certificate issued by the Custom Authorities specifying therein that detention was for no fault of the importer. We are of the considered view that mere issuance of detention certificate to the importer itself does not confer any right on the importer to claim the same from the Custom Authorities. It was so held by the Apex Court in the decision reported as 2001 (8) SCALE; Union of India v. R.C Fabrics (P) LTd., in para 16 as under:—

‘16. The High Court has directed that the Custom Department would pay the demurrage, container charge and ground rent to the Corporation from 16 January, 1991. The said direction is contrary to the decision of this Court in International Airport Authority of India v. Grand Slam International [(1995) 3 SCC 151]. The Corporation is entitled to recover its charges from the importer. Therefore, the direction in the impugned judgment and order that the custom authorities shall pay those charges is set aside.’

25. Assuming that Custom Authorities have to be blamed for detention of the goods making the importer to pay detention charges/demurrage to CCI or the Shipper, the question arise whether issuance of detention certificate is sufficient to absolve the respondent of its liability to pay detention charges/demurrage.

26. In the decision reported as (1995) 3 SCC 151; International Airports Authority of India v. Grand Slam International, Justice Venkatachala in his concurring judgment after considering the first decision on the subject i.e (1976) 3 SCC 167; Trustees of the Port of Madras v. Amirchand Pyarelal, followed in (1977) 2 SCC 649; Board of Trustees of the Port of Bombay v. Indian Goods Supplying Co. and (1987) 1 SCC 648; Board of Trustees of the Port of Bombay v. Jai Hind Oil Mills Co., in para 66 of the judgment, concluded as under:—

‘66. 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 goods because of the provisions of the Customs Act, 1961, would be entitled to charge demurrages for the imported goods in its custody and make the importer or consignee liable for the same even for periods during which he/it was unable to clear the goods from the customs area, due to fault on the part of the Customs Authorities or of other authorities who might have issued detention certificates owning such fault.’

27. The dichotomy perceived due to two apparently irreconcilable opinion by the Apex Court in Sanjeev Woolen Mill's case (Supra) and Grand Slam International's case., (Supra) resulted in (2001) 5 SCC 345; Shipping Corporation of India v. C.L Jain Woolen Mills being referring to a larger bench. On analysis of the two preceding judgments, the position was clarified as under:—

“8. We have also examined the decision of this Court in Union of India v. Sanjeev Woolen Mills and we do not find any apparent inconsistency between the decisions of this Court in Grand Slam and that of Sanjeev Woolen Mills. In Sanjeev Woolen Mills the imported goods were synthetic waste (soft quality), though the Customs Authorities detained the same, being of the opinion that they were prime fibre of higher value and not soft waste. On account of non-release, the imported goods incurred heavy demurrage charges but the Customs Authorities themselves gave an undertaking before the High Court that in the event the goods are found to be synthetic waste, then the Revenue itself would bear the entire demurrage and container charges. Further the Chief Commissioner of Customs, later had ordered unconditional release of the goods and yet the goods had not been released.

It is under these circumstances and in view of the specific undertaking given by the Customs Authorities, this Court held that from the date of detention of the goods till the Customs Authorities intimated the importer, the importer would not be required to pay the demurrage charges. But in that case even subsequent to the orders of the Customs Authorities on a suit being filed by one of the partners of the importer firm, an order of injunction was issued and, therefore, it was held that for that period, the importer would be liable for paying the demurrage and container charges. The judgment of this Court in Sanjeev Woolen Mills, therefore, was in relation to the peculiar facts and circumstances of the case and the Court had clearly observed that the order in question is meant to do justice to the importer, looking to the totality of the circumstances and the conduct of the Customs Authorities. Thus, we see no inconsistency between the ratio in Sanjeev Woolen Mills and the judgment of this Court in Grand Slam. That apart, the judgment in Grand Slam was a three-Judge Bench judgment.”

28. In the impugned judgment, learned Single Judge has only considered the statement of PW-1 that the goods were illegally detained by Custom Authorities, without caring to look into the documents produced especially the communication by respondent to its indenting agent and the description of the goods imported which necessitated the detention and testing. The bona fide of Custom Department can be gathered from the fact that 80% of the goods were released by the Custom Authorities without any delay.

29. After the detention certificate was issued by the Custom Authorites, instead of getting the goods released without further delay, a three tier approach was adopted by the respondent i.e firstly requesting the Shipper and CCI to release the goods without any detention charges/demurrage in view of the detention certificate issued by the Custom Authorities, thereafter writing letters to them expressing inability to get the goods released on paying detention charges/demurrage which were more than the value of the goods and finally getting the goods released on payment without prejudice. This conduct of the respondent resulted in further delay thereby incurring more liability to pay detention charges/demurrage which could have been minimized by promptly getting the goods released.

30. Thus, we find that neither on facts nor on law, the impugned judgment can be sustained. Resultantly we allow the appeal and set aside the ex-parte judgment and decree dated 22.03.2002 Suit filed by the respondent is dismissed.

31. Parties shall bear their own cost all throughout.

32. Since decreetal amount stands paid to the respondent, appellant is entitled to restitution.