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Bombay High CourtIndian Cases

Dina Baldev Pathak vs Collector Of Customs And Ors. on 20 March 1961

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Bombay High Court
Dina Baldev Pathak vs Collector Of Customs And Ors. on 20 March, 1961
Equivalent citations: AIR1962BOM290, (1961)63BOMLR873, AIR 1962 BOMBAY 290, 63 BOM LR 873
ORDER
(1) This is a petition undr Act 226 of the Constitution challenging the act of the 2nd Respondent, being Rummaging Inspector of Customs, of seizure of a Buick motor car of the ownership of the petitioner. Incidentally, certinas ordrs passed by the Additional Collector of Custom and Assistant Collector of Customs have been argued to be invalid on behlaf of the petitioner as also the respondents.

(2) The relevant facts are as follows:

A Buick (Sedan) 1959 Model two-door convertible car landed at the Port of Bombay on 22nd September 1959 by S.S. “Exchequer”. It was sought to be cleard without payment of duty and without an I.T.C. licenceunder cover of Carnet De passages En Dluance No. 593820 by one V.V. Purie and one Mauji as agents of one Mons, Andra bensimon. The clearance was not allowed to be permitted. Bensimon arrived in India on October 8, 1959. Purie, Mauji and Bensimon wee called upon to show cause why the Buick car should not be confiscated under S 167(8) of the Sea Customs Act read with S. 3(2) of the Imports and Exports (Control) Act, 1947. All the above parties appear to have had a hearing and showed cause.
(3) Before the matter of the above investigation and inquiry was completed, by his order dated November 9, 1960, S, Sarkar, being the Assistant Collector of Customs, in respect of the above Buick car as also diverse other goods, made a finding that evidence had not been produced to the Customs House to show that the goods had been imported In accordance with the Import Control Regulations. He accordingly held that he goods were liable to be confiscted and passded orders confiscatin all the goods, including he Buick car, under Section 167(8) of the Sea Customs Act read with S. 3 (2) of the Imports and Exports (control) Act, 1947. He also imposed fines in respect of each item of the goods ordered to be confiscated. The fine that he imposed under S. 183 of the Sea Customs Act in respect of the Buick car was a sum of Rs. 8,000/- . A copy of the above order of th Assistant Collector of Customs is annexed as Ex. 1 to the affidavit in reply of A. Athaide, the 2nd Respondent, dated January 21, 1961. As appears from the last but one paragraph of his order, the Assistant Collector also stated that the Customs House had no objection under S. 89 of the Ses Customs Act to the Removal and clearance of ahe goods from the port and to an auction sale of each item of the goods mentioned in his order being held under S. 64-A of the Bombay Port Trust Act. The conditions that he attached to the sale were that the Port Trust authorities must guarantee payment of custom duty cvhargeable and the fine imposed by the orde iself. On November 10, 1960, the trusstees of the Post of Bombay under the provisions of S. 64 and S. 64-A of the Bombay Port Trust Act got sold by auction amongst other goods the above Buick car. An advertisement of the the auction sale had been published in the newspapers prior to the above auction. The petitioner purchased the Buick car at the price of Rs. 71,000/- and in accordance with the terms paid 33-1/3 per cent baing Rs. 24,000/- to the auctioneers on the dae of the sale. On November 16, 1960, the Petitioner having paid the balance of the price of Rs. 47,000/-, was given dlivery and possession and the Petitioner then garaged the Buick car with certain third parties being her agents.
(4) On November 26, 1960, the 2nd Respondent seized the goods. The Respondents’ case is that the goods were sezed under the powers available under S. 178 of the Sea Customs Act. The Respondents’ case is that in ignornace of the above order of the Assistant Collector dated November, 9, 1960, by his order dated November 15, 1960, the Additional Collector of Customs made his findings and orders in the matter of adjudication and inquiry that was proceeding against Purie, Mauji and Bensimon. He accordingly made another order of confiscation of the Buick car under S. 167(8) of the Sea Customs Act read with S. 3(3) of the Imports and Exports 9Control) Act, 1947. The respondents’ case is that having regard to and in consequence of the order of confiscation dated November 15, 1960, and by reason of the powers to be found in S. 178 of the Sea Customs Act, the 2nd Respondent had authority and right to seize the Buick car as he did.
(5) The petitioner has challenged the above seizure of the Buick car by th 2nd respondent on several grounds. The petitioner contends that the Buick car was seized without affording to the petitioner the reasons ofr such seizure in accordance with the provisions of S. 181 of the Sea Customs Act. The petitioner’s case is that non-compliance with the provision of S. 181 invalidates the act of seizure altogether and the detention of the car is accordingly illegal. The petitioner further contends that, as is admited by the respondents, in fact the Assitant Collector of Customs was present at the auction sale and the auction was held not only under the order dated November 9, 1960, but also with complete knowledge and consent of the Custome authorities. The petitioner was, having regard to the above order dated November, 9, 1960, and the presence of the Assistant Collector of Customs at the auction, led to believe that threr was no question of the goods continuting to be offending goods and that accordingly all contentions regarding the goods being offending goods must be held to have been waived on behald of the Union of India. The petitioner has also challenged the order dated November 15, 1960, made by the Additional Collector of Customs. The petitionr came to know of the existence of that order only as a result of the statements mede in the affidavit in reply. The petitioner’s case is that having regard to the first order of confiscation dated November 9, 1960, it was not permissible for the Additional Collector of Customs to made a secnod order of confiscation in respect of the same goods and the second order accordingly must be held to be invalid.
(6) As regards the further order of the Additional Collector of Customs dated December 20, 1960, whereby the Additional Collector of Customes in (exercise of powers of ) revision under S. 190-A purported to cancel the order of the Assistant Collector of Customs dated November, 9, 1960, the petitioner contends that the order in question was made without giving any notive to the petitioner. In the matter of making that order, the Additional Collector of Customs failed to comply with the provisions of Section 190-A of the Sea Customs Act. He also was guilty of violation of principles of natural justice, inasmuch as he failed to afford any opportunity of a hearing or to give any notice of the proposed order to the petitioner.
(7) The respondents have by their affidavit in reply and in Court before me made the following contentions:
(8) The Assistant Collector had no jurisdiction to made the order dated January 9, 1960, as in the matter of the Buick car the Additional Collector was seized of the enquiry for decision of he question of the goods being offending goods and imposition of penalty and fine under Section 167(8). The respondents contnend that the Assistan tCollector adjudicated the matter of the goods being offending gooods without giving notice to Purie and Mauji and Bensimon. The Assistant Collector made his order in ignorance of the proceedings which were initiated and beuing continued by the Additional Collctor of Customs. The respondents, therefore, contend that the order of the Assistant Collector must be treated as not existing. If that contention is not accepted, the respondents contend that by reason of the orderof the “Collector dated December 31, 1960, the order ot the Assistant Collector must be treated as having been cancelled retrospectively and as not existing so as to afford any protecion to the petitioner. The respondents also further contend that the peition is premature. The respondens contend that the order of the Additional Collector dated November 18th is binding order of confiscation.
(9) Now, in connection with the arguments advanced on behalf of the parties, it is first necessary to notice certain provisions of the Sea Customs Act and the Bombay Port Trust Act and slo that both the prties have proceeded on the footing that the Buick car in question had been imported into India contratry to and in breach of the provisions of the Imports and Exports 9Control) Act and Imports Control Order. In connection with the illegal import of the Buick car, it is obvious that pending the investigation, the Customs authorities seized and detained the car. The detention and seizure must be obviously under the provisions of Section 19, 19-A amd 178 of the Sea Customs Act. Provision is made under Secs. 19-A and 178 of the Sea Customs Act for suthorising the officers of Customs ot detain and seize anything “liable to confiscation ” under the Sea Customs Act. Under the Imports and Exports (Control) Act, all goods which are imported contraty to the provisions of that Act are liable to be proceeded with as if the import was prohibited under Section 19 of the Sea Customs Act. Under Section 179 of the Sea Customs Act, all goods detained and seized pending adjudication and confiscation thereof are to be kept with and are kept in custody of Customs Officer authorised to receive such goods. In this connection, it is also necessary to notice hat in respect of all goods imported, it is necessary for the importer to apply to the Customs House for clearance of the goods for home consumption. Under the provisionns of Sections 81 to 88 of the Sea Customs Act, a clear scheme is provided as to the goods being continued in custody and possession of Customs pending their clearance for home consumption. By reason of the scheme of section 89, the imported goods cannot be cleared for home consumption until an order for clearance is made by the Customs House. Under the scheme of Section 88, all uncleared goods can be sold by public auction by the Customs House and in connection wihh the goods sold, under that Section, from the sale proceeds customs duties leviable can be recovered. All amounts payable to the Government can be recovered and the balance is payable to the owner of the goods. In this connection, it is necessary to Calcutta and Bombay a slightly different scheme from that as mentioned in the provisions of Sections 81 to 88 is evolved. The scheme for the Port of Bombay is contained in the Bombay Port Tust Act, 1879. Under that scheme, in connection wih the goods detained by the Customs and not cleared, th rates and wharf charges as liable to be recovered by the port authorities continue against the goods. Right is conferred under Sections 64 and 64-4 of the Bombay Port Trust Act goods of import for recovery of the rates not paid and whenn the goods are not cleared within the period mentioned I the provisions of those sectins. The Port authorities have a lien for the charges on the goods. The lien, however, is subject to the lien for freight, etc., of ship owners as also the right of the Government for all moneys payable to Government as appears form Section 51 of the Act. The sale proceeds of goods sold under Sections 64 and 64-A are directed under Section 65 to be used first for payment of the ship owners freight, etc., and money payable to Government, then towards expenses of sale and thirdly towards rates and expenses of th e import and the surplus is directed to be paid over to the owner of the goods. The scheme in Section 64, 64-A and 65 is similar to the scheme in Section 88 of the Sea Customs Act. The Sections are complimentary of eachother. Having reagrd to the rights of the Custooms ofr collecting customs duty and for enforceing and administration of sea customs, including enforcement of prohibition and restrictions of imports under Secion 19 of the Sea Customs Act and also Imports and Exports (Control) Act and Import (Control) Order, obviously it was necessary to provide that the rights of the Customs must always be paramount. It was accordingly provided by Section 69 of the Bombay Port Trust Act as follows:
“Nothing in this Act shall be deemed to affect (a) the right of the Central Government to collect customs duty………..
(b) any power or authority vested in the Customs authorities under any law for the time being in force for the administration of sea customs.”
(10) Having regard to the above scheme of the above two Acts, in all cases where the goods, are seized and detained and not allowed to be cleared by Customs, it is impossible for the Port authorities to hold auction sales under the provisions of S. 64 or Section 64-A until after rerquisite orders and directions are given by the Customs authorities.

(11) Apparently, in respect of the 125 items of different goods as mentioned in the particulars at the foot of the order of the Assistant Collector of Customs dated November 9, 1960, auction sale thereof by the Port suthorities under the provisions of sections 64 and 64-A of the Bombay Port Trust Act was desired. It was impossible for the Port authorities to sell tese goods until after te requisite orders and directions were given by the Customs authorities. It is accordingly that the Assistant Collector of Customs made his order dated November 9, 1960. The clear effect of the findings in that order is that the goods mentionedin the order were orderred to be confiscated because they were offending goods, i.e. gooda which were imported into India in breach of the provisions of the Imports and Exports (Control) Act, 1947. The goods were confiscated inder section 167(8) of the Sea Customa Act. As I have already mentioned, admittedly, the goods ;in this case were offending goods and were imported in breach of the provisioons of the Imports and Exports (Control) Act, 1947. In connection with such goods, it is apparent that the Assistant Collector of Customs had under the scheme of the Sea Customs Act as contained in Sections 167 to 191 jurisdiction to make the order of confiscation as he in fact did. The further effect of his order was that upon thje sale of these goods by the Port Trust authorities through their auctioneers the Customs had no objection to the clearance of the goods from the Port. The order was accordingly a clearance order as required under Section 89 of the Sea Customs Act. The order also is a permission to the Port Trust authorities to sell off the goods subject to the payment of the suctoms duty chargeable and the fine imposed.

(12) The result of the above order or confiscation, according to the scheme of Section 184 of immediately as a consequence of the order dated November, 9, 1960, became vested in the Government. Under that Section, the officer adjudging confiscation (the Assistant Collector of Customs) became bound to take and hold possession of the thing confiscated. Under that section, it would be the duty of all police officers, on the requiseition of such officer, to assist him in taking and holding such possession. The effect of the provisions of Section 184 must be that upon confiscation and vesting of the goodsin the Government, the goods must cease to be offending gooods. The goods can be subsequent to the order of confiscation dealt with by the officer adjudging confiscation in such manner as is appropriate. The offence and infirmity involved in te import of such goods would not, subsequent to such order of confiscation, in any manner affect or acctaj to the goods. In other words, the goods would be available to be dealt with in the market by the Government or by its consent as if the same were not offending goods. As that is the true effect of Section 184, it is clear to me that at the date of the sale of the Buick ca to the petitioner in the auction sale held on November 10, 1960, the goods were not offending goods and were free from the defect that had attached to the gooda by reason of their illegal import.

(13) According to a printed circular containing general conditions of sale as published by the auctioneers Messra Shankar Ramchandra and Bros. As from the time of the sale thereof the auctioned goods lie at the sole irsk and responsibility of the purchaseer in all respects. The effect of that general condition, in my view, is that though time is permitted for payment of the balance of price, the goods in all respects are of the purchaser as from the date of the sale. This circular has been tendered on behalf of the respondents at the hearing. It contains about 19 printed terms of general conditions of sale. The print does not show that the circular or these general condition, of sale were in existence at the date of the auction of the Buick car. It is not possible to proceed to decide this petition on the footing that all the general conditiond of sale as mentioned in the print were prevalent in November 1960, or binding on the petitioner. From the allegation as appearing in the petition, it is clear that the petitioner paid complete price of Rs. 71,000/- to the auctioneers on November 16, 1960, and received delivery of the car. The petitioner as owner was in possession of the car at the date of seizure thereof on November 26, 1960.

(14) The question is whether by reason of the second order of confiscation made by the Additional Collector of Customs on November 15, 1960, it was permissible for the 2nd respondent to seize the car from the petitioner under secion 178 of the Sea Customs Act. As I have already discussed above, the Buick car was, pending adjudication of confiscation, detained under the povisions of Sections 19-A and 178 and was in legal possession of the Customs House between 22nd September 1959 and November 9, 1960, when the order of the Assistant Collector was passed . thereafter the goods were sold without being the offending goods. The sale was in accordance with the directions containedin the order dated November 9, 1960, and the provisions of Section 88 of the Sea Customs Act and Sections 64 and 64-A of the Bombay Port Trust Act. The sale was in the presence and with knowledge and consent of Assistant Collector of Customs. In the first place, it is apparent that in connection with the goods which had been already vested in the Government under the scheme of Section 184 on November 9, 1960, in consequence of the order of the Assistant Collector of that date it was not permissible and in any event not necessary for the Additional Collector of Customs to make the second order of confiscation dated November 15th 1960. Under the circumstances as above which had arisen in favour of the petitioner that order must be hald to be not binding on the ptitioner.

(15) As the goods were not liable to be confiscated once again, in any event, it was not permissible for the 2nd respondent to proceed to seize the goods under Section 178 under which he purported to act. Section 178 provides as follows:

“Anything liable to confiscation under this Act may be seized …………..”
Now, it appears to me that the clear meaning of the above phrase is that the action of seizure under that Section must precede the order of adjudication of confiscation. The above being the true effect of the Section, it is not permissible to seize any goods already ordered to be confiscated under that Section.

(16) Even if the view which I have taken as above is incorrect, it is clear that afer the petitioner had become the purchaser of the goods (car) on November 10, 1960, it was not permissible for the Additional Collecctor of Customs to make an order of confiscation in respect of the Buick car so as to bind the petitioner without giving appropriate notive to the petitioner and without giving a hearing to the petitioner. On that ground also, it must be held that the order of confiscation dated November 15, 1960, does not bind the petitioner.

(17) The further question to be decided related to the order dated December 31, 1960, made by the Collector of Customs. A copy of that order is annexed as Ex. 3 to the affidavit in reply of A. Athaide dated January 21, 1961. The order is stated to have been made under the revidional powere as contained in Section 190-A of the Sea Customs Act. The finding thast is made in the order is that the Collector of Customs was not satisfied about the correctness o fht order passed by the Assistant Collectolr of Customs on November 9, 1960; only as regards the amount of fine imposed by him. The finding is that he fine appeared to be inadequate liiking to the gravity of the offence. For that sole ground the Collector of Customs exercised his powere under Section 190-A of the Sea Customs Act and directed that the order o fht eAssistant Collector (dated November 9, 1960), in so far as it related to the above car, be set aside and should stand vacated so as to have adjudication of the case according to law.

(18) Before referring to the provisions of Section 190-a it is relevant to point out that this petition was presented on 20th December 1960. Notive of the petition and of the contents thereof was admittedly with the Collector of Customs before this revisional order was made. Obviously, it was appaent to the Collector on reading the petition that the order of the Assistant Collector dated November 9, 1960, was such that it was not permissible jfor the 2nd respondent to seize the car as he had done. To bring about a situation whereby the petitioner’s claim must be defeated, the Collector of Customs had thought fit to act in the manner appearing in the order dated December 31, 1960.

(19) The proviso to sub-section (1) of A. 190-A runs as follows:

“Provided that no order prejudicial to any person shall be passed under this Section unless such person has been given a reasonable opportunity of making a representation against the proposed order.
(20) I have alrady pointed out all the circumstances in which th Collector of Customs made the order dated December 31, 1960. I cannot understand how having had the notice of this petition and having read the contents of the petition, it did not strike the Collector that the oly person who was being prejudiced by the revisional order was the petitioner and no one else. The petitioner had claimed to be the owner of the car and had challenged the act of sezure of the car. All the rights of the petitioner folwed form the suction sale held on November 10, 1960, in consequence of the order dated November 9, 1960, which was being set aside by the Collector. Admittedly, the Collector failded to give any notice as compulsorily required under the provisions which I have quoted above. Having regard to that failuree of the Collector, it is clear to me that he Collector proceeded to make his revisional order dated December 31, 1960, illegally and in violation of the provisons of Section 190-A . The Collector having failed to give any notice and any hearing to the petitioner, proceeded to make the orderinviolation of principles of natural justice. The order dated December 31, 1960, is accordingly invalid and not binding on the petitioner. Under the circumstances, that order cannot afford any ground of defence to the respondents.
(21) In this connection, it is also necessary to mention that wher auction sales are held under the provisions of Section 88 of the Sea Customs Act and Section 64 and 64-A of the Bombay Port Trust Act with the consent of the Customs authorities and after confiscation of goods, it would be a highly improper thing for any Customs authority to revise the orders of confiscation. It would be angain furthr inappropriate that such action should be taken solely with a view to nullify the effect of the sale and to deprive the purchaser of possession of the goods pruchased.
(22) I must record that the arguments advanced onbehalf of the petitioner were not on the same lines as discussed by me above. Mr. Patel relied upon the provisions of Section 207 of the Sea Customs Act and contended that the Section when read with the provisions of Sections 64 and 64–A of the Bombay Port Trust Act must lead to the conslusion that once an auction sale is held under the Bombay Port Trust Act delivery of the goods effected to purchaser, the property in the goods passes to the purchaser free from any imfirmity that attached to the goods. He also contended that as the sale of the Buick car was held with concurrence and knowledge of the Assistant Collector of Customs, it was no longer open for under the Sea Customs Act. Now, it is unnecessary for me to consider in detail thes contentions as I have, for the reasons mentioned above, already found that the seizure of the Buick car was invalid.
(23) The other contentions as contained in the petition are also unnecessary to be decided as I am in favour of the petition on the main ground above stated.
(24) The respondents’ contention that the Assistant Collector had no jurisdiction, because Additioanal Collector as seized of the matter of inquiry and investigation of the illegal import of the Buick car, is without any substance. The source of jurisdiction of the Assistant Collector to make the order dated November, 9, 1960, is in the provisions of the Sea Customs Act and the notifications and directions issued thereunder. Because the Additional Collector was seized of the matter, the above provisions whereunder the Assistant Collector had juridiction do not stand nullified. Even in the revidional order of the Collector dated December 31, 1960, the above ground is not referred to as invalidating the order of the Assistant Collector. The above point might have been raised on behald of Bensimon. Butt, prima facie, it is not open to the respondents to raise that contention. This is so because, admittedly, the Buick car had been imported in violation of the Imports and Exports (Control) Act. For the very same reason, the contention that the order of the Assistant Collector I invalid as he had not given notice to Purie, Mauji and Bensimon, must be negatived. I negative the contention of the respondents that the orderof the Assistant Collector must be treated as not existing. I also negative the contention of the respondents that the order of the Collector dated Decembr 31, 1960, is binding on the petitioner.
(25) In the result, the respondents are directed to return and restore to the Petitioner the Buick forthwith. The respondents will pay costs of the petitioner.
(26) Petition allowed.