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SUPREME COURT OD INDIA
11th August, 1961
P.B. GAJENDRAGADKAR, K. SUBBA RAO, M. HIDAYATULLAH, J.C. SHAH AND RAGHUBAR DAYAL JJ.
Chandrakant Krishnarao Pradhan and another etc., Petitioners
Verus
Jasjit Singh, the Collector of Customs, Bombay and others (in all Petitions), Respondents.
Tulsidas Khimji and Co. (in Petns. Nos. 80 and 81 of 60), Interveners.
Petitions Nos. 80, 80A, 81 & 116 to 213 of 1960.
Advocates appeared
M/s. S. V. Gupte and M. C. Bhandare, Advocates and M/s. S. N. Andley, Rameshwar Nath and P. L. Vohra, Advocates of M/s. Rajinder Narain and Co., for Petitioners (in all Petitions); Mr. H. N. Sanyal, Addl. Solicitor General of India, (M/s. D. N. Mukherjee and P. D. Menon, Advocates with him), for Respondents (in all Petitions); Mr. Porus A. Mehta, Advocate and M/s. J. R Gagrat and G. Gopalalkrishnan, Advocates of M/s. Gagrat and Co., for Interveners.
Sea Customs Act, 1878 - S. 202 - Rules framed thereunder - Validity - Restrictions on the right to carry on profession or avocation - Reasonableness - Conditions for grant of licence - Scrutiny of application - Examination - Rejection of application - Appeal - Renewal fee - Maintenance of accounts - Inspection - Change in constitution of firm - Cancellation of licence - Security - Liability of agent for short collection of duty - Income-tax clearance certificate.
Fact of the Case:
The petitioners, who were licensed Custom House Agents, challenged the validity of the Custom House Agents Licensing Rules, 1960, framed under S. 202 of the Sea Customs Act, 1878, on the ground that they were in breach of their fundamental rights under Arts. 14 and 19 of the Constitution and also as being in excess of the rule making power conferred by sub-s. (2) of S. 202.
Finding of the Court:
The Court held that the Rules were generally valid and were designed to advance public interest and could not be questioned, unless a person wished to act dishonestly and wanted to avoid control. However, the Court held that R. 10(c), which conferred a very wide discretion on the Customs-collector to reject a candidate for a trumpery reason (which he need not state), even though the candidate may be otherwise suitable, was an unreasonable restriction upon the right of the successful candidate to carry on his avocation. The Court also held that the renewal fee of Rs. 50 prescribed under R. 11 was invalid as it was not a fee but a tax to raise revenue. The Court further held that the condition in the bond prescribed under R. 12, which made the agent and his security liable for short collection of duty, was valid as the agent was deemed to be the owner of the goods under S. 4 of the Act and was, therefore, liable to pay the duty. However, the Court held that the condition was limited to the transactions of one constituent at a time, and the forfeiture of security was also limited to the constituent in default.
Issues: 1. Whether the Custom House Agents Licensing Rules, 1960, were validly framed and were not in breach of the fundamental rights under Arts. 14 and 19 of the Constitution? 2. Whether the Rules were in excess of the rule making power conferred by sub-s. (2) of S. 202 of the Sea Customs Act, 1878? 3. Whether R. 10(c) of the Rules, which conferred a very wide discretion on the Customs-collector to reject a candidate for a trumpery reason, was an unreasonable restriction upon the right of the successful candidate to carry on his avocation? 4. Whether the renewal fee of Rs. 50 prescribed under R. 11 of the Rules was valid or was a tax to raise revenue? 5. Whether the condition in the bond prescribed under R. 12 of the Rules, which made the agent and his security liable for short collection of duty, was valid? 6. Whether the condition in the bond was limited to the transactions of one constituent at a time, and the forfeiture of security was also limited to the constituent in default?
Ratio Decidendi: 1. The Rules were generally valid and were designed to advance public interest and could not be questioned, unless a person wished to act dishonestly and wanted to avoid control. 2. The Rules were not in excess of the rule making power conferred by sub-s. (2) of S. 202 of the Sea Customs Act, 1878. 3. R. 10(c) of the Rules, which conferred a very wide discretion on the Customs-collector to reject a candidate for a trumpery reason, was an unreasonable restriction upon the right of the successful candidate to carry on his avocation. 4. The renewal fee of Rs. 50 prescribed under R. 11 of the Rules was invalid as it was not a fee but a tax to raise revenue. 5. The condition in the bond prescribed under R. 12 of the Rules, which made the agent and his security liable for short collection of duty, was valid as the agent was deemed to be the owner of the goods under S. 4 of the Act and was, therefore, liable to pay the duty. 6. The condition in the bond was limited to the transactions of one constituent at a time, and the forfeiture of security was also limited to the constituent in default.
Final Decision: The petitions were dismissed except to the extent that R. 10(c) was declared to be an unreasonable restraint upon the right of the petitioners to carry on their avocation, and R. 11, when it prescribed a renewal fee of Rs. 50, was declared invalid inasmuch as it had provided not for a fee but for a tax. The petitioners were directed to pay the costs of the other side (one set only).
Judgment
HIDAYATULLAH, J. (on behalf of himself, Gajendrajadkar; Shah & Raghubar Dayal JJ,) : These writ petitions raise identical questions, and a common argument was addressed to the Court in all of them. Petitions Nos. 80 and 80A of 1960 have been filed by two petitioners. One petitioner holds a permanent licence and the other, a temporary licence renewable trienially, to work as Dalals at New Customs House, Bombay. In the other petitions also , Petitioners Nos. 1 to 50 hold permanent licences, and petitioners Nos. 51 to 99 hold temporary but renewable licences. Some of the permanent licences were issued in 1936, and some of the temporary licences were issued as far back as 1944. These licences, whether permanent or temporary, were issued under S.202 of the Sea Customs Act, 1878, prior to its amendment by the Sea Customs (Amendment ) Act, 1955 (Act 21 of 1955), They were issued after a brief enquiry and subject to the fulfilment by the applicant of the following conditions :
"(1) He must produce at least 2 certificates of character each from a Justice of Peace or other persons of known respectability.
(2) He must certify that he has not been convicted of any criminal offence.
(3) He must declare that he will have no claim to any accommodation in the Custom House.
(4) He must also give a security of Rs. 2000 in cash or Government paper having an equivalent market value and execute a Bond for Rs. 2000 on a fifteen rupees Stamp Paper in the attached form."
2. In 1955, by the amending Act, S. 202 was substituted by another section. The section now reads :
202. (1) With effect from such date as the Central Government may, by notification in the Official Gazette specify, no person shall act as an agent for the transaction of any business relating to the entrance or clearance of any vessel or the import or export of goods or baggage in any custom house unless such person holds a licence granted in this behalf in accordance with the rules made under sub-section (2).
(2) The Chief Customs-authority may make rules for the purpose of carrying out the provisions of this section and in particular, such rules may provide for-
(a) the authority by which a licence may be granted under this section and the period of validity of any such licence;
(b) the form of the licence and the fees payable therefor;
(c) the qualifications of persons who may apply for a licence;
(d) the restrictions and conditions (including the furnishing of a security by the licencee for his faithful behaviour as regards the custom-house regulations and officers) subject to which a licence may be granted;
(e) the circumstances in which a licence may be suspended or revoked; and
(f) the appeals, if any, against an order of suspension or revocation of a licence, and the period within which such appeals shall be filed."
3. As a result of the enactment of this section, the original licences, whether permanent or temporary, would have become ineffective after the date to be specified by the Central Government. It became necessary for the petitioners and others to apply for licences granted in accordance with the rules framed under sub-s. (2). These rules were framed, and public notices were issued inviting applications; but the dates were postponed till the rules were published i.e. the Gazette on May14, 1960. It is not necessary to refer to the prior history of case rules and to the many representations that were made, as they are not relevant. On June 18, 1960, a public notice (No. 87) was issued fixing June 25, 1900, as the last date for making applications for the new licences, and the persons affected were informed that the operation of the new licences under the rules would commence on July 14, 1960. On June 27,1960, Writ Petitions Nos. 80 and 80A of 1960 were filed, followed by Writ Petitions Nos. 81 and 116 to 213 of 1960 filed on July 12, 1960. An ex parte ad interim stay of the revocation of the existing licences was of obtained from this Court, and subsequently, the respon
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